<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 22, 1999
REGISTRATION NO. 333-90709
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC RTI CAPITAL CORP.
(EXACT NAME OF REGISTRANT CO-ISSUER (EXACT NAME OF REGISTRANT CO-ISSUER
AS SPECIFIED IN ITS CHARTER) AS SPECIFIED IN ITS CHARTER)
DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
3312 3312
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER) (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
NONE 34-1900904
(I.R.S. EMPLOYER IDENTIFICATION NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
</TABLE>
------------------------
3770 EMBASSY PARKWAY
AKRON, OHIO 44333-8367
(330) 670-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOHN GEORGE
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
3770 EMBASSY PARKWAY
AKRON, OHIO 44333-8367
(330) 670-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANTS' AGENT FOR SERVICE)
------------------------
With a copy to:
JOHN D. LOBRANO, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 455-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act Registration number of the earlier effective
Registration Statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Registration Statement number of the earlier effective Registration
Statement for the same offering. / /
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF REGISTRANT GUARANTORS
<TABLE>
<CAPTION>
ADDRESS, INCLUDING ZIP
CODE, AND TELEPHONE
NUMBER, INCLUDING AREA
EXACT NAME OF REGISTRANT STATE OR OTHER JURISDICTION CODE, OF REGISTRANT
GUARANTOR AS SPECIFIED OF INCORPORATION OR I.R.S. EMPLOYER GUARANTOR'S PRINCIPAL
IN ITS CHARTER ORGANIZATION IDENTIFICATION NUMBER EXECUTIVE OFFICES
- ------------------------------ --------------------------- --------------------- ------------------------
<S> <C> <C> <C>
Republic Technologies Delaware None 3770 Embassy Parkway
International Holdings, LLC Akron, Ohio 44333-8367
(330) 670-3000
Nimishillen & Tuscarawas, LLC Delaware None 3770 Embassy Parkway
Akron, Ohio 44333-8367
(330) 670-3000
Bliss & Laughlin, LLC Delaware None 3770 Embassy Parkway
Akron, Ohio 44333-8367
(330) 670-3000
Canadian Drawn Steel Canada None 133 Chatham Street
Company, Inc. Hamilton, Ontario
(905) 546-5656
</TABLE>
<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 to the Form S-4 registration statement is being filed
for the sole purpose of filing exhibits.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) Republic Technologies International Holdings, LLC; Republic
Technologies International, LLC; Nimishillen & Tuscarawas, LLC; Bliss &
Laughlin, LLC (each a Delaware limited liability company and collectively, the
"LLCs")
The LLCs are each empowered by Section 18-108 of the Delaware Limited
Liability Company Act, subject to the procedures and limitations stated therein,
to indemnify any person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with any threatened, pending or completed action, suit or proceeding
in which such person is made a party by reason of his being or having been a
director, officer, employee or agent of such LLC, respectively. The statute
provides that indemnification pursuant to its provisions is not exclusive of
other rights of indemnification to which a person may be entitled under any
agreement, vote of members or disinterested directors or otherwise.
(b) RTI Capital Corp. ("RTI CapCo")
Section 145 of the Delaware General Corporation Law (the "DGCL") permits
RTI CapCo's board of directors to indemnify any person against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with any
threatened, pending or completed action (except settlements or judgments in
derivative suits), suit or proceeding in which such person is made a party by
reason of his or her being or having been a director, officer, employee or agent
of RTI CapCo, in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement of expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act"). The statute provides that indemnification pursuant to its provisions is
not exclusive of other rights of indemnification to which a person may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors, or otherwise.
As permitted by sections 102 and 145 of the DGCL RTI CapCo's certificate of
incorporation eliminates a director's personal liability for monetary damages to
the company and its stockholders arising from a breach of a director's fiduciary
duty, except as otherwise provided under the DGCL.
RTI CapCo's by-laws provide for the mandatory indemnification of its
directors, officers, employees and other agents to the fullest extent permitted
by the DGCL.
(c) Canadian Drawn Steel Company, Inc. ("CDSC")
Under the Canada Business Corporations Act and CDSC's by-laws, CDSC may
indemnify a present or former director or officer or a person who acts or acted
at CDSC's request as a director or officer of another corporation of which CDSC
is or was a stockholder or creditor, and his heirs and legal representatives (an
"indemnifiable person"), against all costs, charges and expenses, including an
amount paid to settle an action or satisfy a judgment, reasonably incurred by
him in respect of any civil, criminal or administrative action or proceeding to
which he is made a party by reason of his position if:
(i) he acted honestly and in good faith with a view to the best
interests of CDSC; and
(ii) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful.
II-1
<PAGE>
An indemnifiable person is entitled to such indemnity from CDSC if he was
substantially successful on the merits in his defense of the action or
proceeding and fulfilled the conditions set out in (i) and (ii) above. CDSC may,
with the approval of a court, also indemnify an indemnifiable person in respect
of an action by or on behalf of CDSC or a corporation to procure a judgment in
its favor, to which such person is made party by reason of being or having been
a director or an officer of CDSC or a corporation, if he fulfills the conditions
set out in (i) and (ii) above. CDSC's by-laws provide for indemnification of
directors and officers to the fullest extent authorized by the Canada Business
Corporations Act.
ITEM 21. EXHIBITS
The following exhibits are filed with this registration statement or
incorporated into this registration statement by reference.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Purchase Agreement, dated as of August 6, 1999, among Republic Technologies International, LLC
("Republic Technologies"), RTI Capital Corp. ("RTI CapCo"), Republic Technologies International,
Inc. ("RTI"), Nimishillen & Tuscarawas, LLC ("N&T"), Bliss & Laughlin, LLC ("B&L"), Canadian Drawn
Steel Company, Inc. ("CDSC"), Republic Technologies International Holdings, LLC ("Holdings"),
Chase Securities Inc. ("Chase"), Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and
BancBoston Robertson Stephens Inc. ("BBRS"). *
2.1 -- Master Restructuring Agreement, dated as of August 13, 1999, among RTI, RES Holding Corporation
("RES Holding"), Republic Engineered Steels, Inc., Blackstone Capital Partners II Merchant Banking
Fund L.P. ("BCP II"), Blackstone Offshore Capital Partners II L.P. ("BOCP II"), Blackstone Family
Investment Partnership II L.P. ("BFIP II"), The Veritas Capital Fund L.P. ("Veritas Fund"), HVR
Holdings, L.L.C. ("HRV"), USX Corporation ("USX"), Kobe Steel, Ltd. ("Kobe"), Kobe Delaware Inc.
("Kobe Delaware"), USS Lorain Holding Company, Inc. ("USS Lorain"), USX RTI Holdings, Inc. ("USX
Holdings"), Kobe/Lorain Inc. ("Kobe/Lorain"), Kobe RTI Holdings, Inc. ("Kobe Holdings"), Holdings,
Republic Technologies, Lorain Tubular Company, LLC ("Lorain") and USS/Kobe Steel Company
("USS/Kobe SteelCo"). *
3.1 -- Limited Liability Company Agreement of Republic Technologies *
3.2 -- Certificate of Incorporation of RTI CapCo *
3.3 -- By-laws of RTI CapCo *
3.4 -- Limited Liability Company Agreement of Holdings *
3.5 -- Limited Liability Company Agreement of B&L *
3.6 -- Limited Liability Company Agreement of N&T *
3.7 -- Certificate of Incorporation of CDSC *
3.8 -- By-laws of CDSC **
4.1 -- Indenture, dated as of August 13, 1999, among Republic Technologies, RTI CapCo, Holdings, N&T,
B&L, CDSC and United States Trust Company of New York, as Trustee. *
4.2 -- Form of 13 3/4% Senior Secured Note due 2009 (included in Exhibit 4.1)
4.3 -- Form of 13 3/4% Senior Secured Note due 2009, Series B (included in Exhibit 4.1)
4.4 -- Notes Exchange and Registration Rights Agreement, dated as of August 13, 1999, among Republic
Technologies, RTI CapCo, Holdings, N&T, B&L, CDSC, Chase, DLJ and BBRS. *
4.5 -- Security Agreement, dated as of August 13, 1999, among Republic Technologies, RTI CapCo, Holdings,
N&T, B&L, CDSC and United States Trust Company of New York, as Collateral Agent. *
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
4.6 -- Mortgage, Assignment of Leases, Security Agreement and Fixture Filing, dated as of August 13,
1999, by Republic Technologies to United States Trust Company of New York, as Mortgagee. *
4.7 -- Master Pledge Agreement, dated as of August 13, 1999, among Republic Technologies, RTI CapCo,
Holdings, N&T, B&L, CDSC and United States Trust Company of New York, as Collateral Agent. *
4.8 -- Amended and Restated Intercreditor and Subordination Agreement, dated as of August 13, 1999, among
United States Trust Company of New York, as Collateral Agent, United States Trust Company of New
York, as Trustee, the Pennsylvania Lenders (as defined therein), BankBoston, N.A., as Agent,
Holdings, Republic Technologies, RTI CapCo, N&T, B&L and CDSC. *
4.9 -- Pledge Intercreditor Agreement, dated as of August 13, 1999, among the Secured Parties (defined
therein) and United States Trust Company of New York, as Collateral Agent. *
5 -- Opinion of Simpson Thacher & Bartlett **
10.1 -- Revolving Credit Agreement, dated as of August 13, 1999, among Republic Technologies, BankBoston,
N.A, as Administrative Agent and Co-Book Manager, Bank of America, N.A., as Syndication Agent and
Co-Book Manager, The Chase Manhattan Bank, as Documentation Agent and Co-Book Manager, the Lending
Institutions Named Therein, and BancBoston Robertson Stephens Inc. and Bank of America, N.A., as
Co-Arrangers. *
10.2 -- Security Agreement, dated as of August 13, 1999, among Republic Technologies, Holdings, RTI CapCo,
N&T, B&L, CDSC and BankBoston, N.A. *
10.3 -- Trademark Collateral Security and Pledge Agreement, dated as of August 13, 1999, between Republic
Technologies and BankBoston, N.A. *
10.4 -- Patent Collateral Security and Pledge Agreement, dated as of August 13, 1999, between Republic
Technologies and BankBoston, N.A. *
10.5 -- Canadian Security Agreement, dated as of August 13, 1999, between CDSC and BankBoston, N.A. *
10.6 -- Assignment of Intellectual Property, dated as of August 13, 1999, by CDSC to BankBoston, N.A. *
10.7 -- Open-End Mortgage, Security Agreement, Assignment of Rents, Income and Proceeds, dated as of
August 13, 1999, from Republic Technologies to BankBoston, N.A. *
10.8 -- Amended and Restated Equityholders Agreement, dated as of August 13, 1999, among BCP II, BOCP II,
BFIP II, Veritas Fund, Veritas Capital, L.L.C., KDJ, L.L.C., BRW Steel Holdings, L.P., BRW Steel
Holdings II, L.P., BRW Steel Offshore Holdings, L.P., RTI, RES Holding, Republic Technologies,
USX, USX Holdings, Kobe Delaware, Kobe, Kobe Holdings, HVR, Sumitomo Corporation of America,
FirstEnergy Services Corp., Triumph Capital Investors II, L.P., TCI-II Investors, L.P., First
Dominion Capital L.L.C., TCW Leveraged Income Trust, L.P., TCW Leveraged Income Trust II, L.P.,
TCW Shared Opportunity Fund, L.P., Shared Opportunity Fund IIB, L.L.C., Shared Opportunity Fund
III, L.L.C. and the other equityholders named therein. *
10.9 -- Round Supply Agreement, dated as of August 13, 1999, between Republic Technologies and USX. **
10.10 -- Master Energy Services and Supply Agreement, dated as of August 13, 1999, between Republic
Technologies and FirstEnergy Services Corp. *
10.11 -- Transition, Administrative and Utilities Services Agreement, dated as of August 13, 1999, between
Lorain Tubular Company, LLC and Republic Technologies. *
10.12 -- Letter Agreement, dated August 13, 1999, between Republic Technologies and USX. *
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.13 -- Letter Agreement, dated August 13, 1999, among Republic Technologies, Lorain Tubular Company, LLC,
Kobe and USX. *
10.14 -- Master Agreement dated July 18, 1994, by and among the Commonwealth of Pennsylvania, acting by and
through the Department of Commerce, the Pennsylvania Industrial Development Authority, the
Commonwealth of Pennsylvania, acting by and through the Department of Community Affairs, the
Johnstown Industrial Development Corporation, the County of Cambria, the City of Johnstown,
Republic Technologies and BRW Steel Corporation-Johnstown. (1)
10.15 -- Amendment No. 1 to the Master Agreement dated September 21, 1994 among Commonwealth of
Pennsylvania, acting by and through the Department of Commerce, the Pennsylvania Industrial
Development Authority, the Commonwealth of Pennsylvania, acting by and through the Department of
Community Affairs, the Johnstown Industrial Development Corporation, the County of Cambria, the
City of Johnstown and Republic Technologies. (1)
10.16 -- Amendment No. 2 to the Master Agreement dated August 1999 among the Johnstown Industrial
Development Corporation, the County of Cambria, the City of Johnstown and Republic Technologies. *
10.17 -- Economic Development Partnership Loan Agreement dated September 21, 1994 between the City of
Johnstown and Republic Technologies. (1)
10.18 -- Economic Development Set-Aside Loan Agreement dated July 6, 1995 between the City of Johnstown and
Republic Technologies. (1)
10.19 -- Economic Development Set-Aside Loan Agreement dated July 6, 1995 between the City of Johnstown and
Republic Technologies. (1)
10.20 -- Section 108 Loan Agreement dated July 20, 1994 among the City of Johnstown, the County of Cambria
and Republic Technologies. (1)
10.21 -- Amendment No. 1 dated August 1994 to Section 108 Loan Agreement among the City of Johnstown, the
County of Cambria and Republic Technologies. (1)
10.22 -- Community Development Block Grant Loan Agreement dated November 3, 1995 between Cambria County and
Republic Technologies. (1)
10.23 -- BID Loan Agreement dated March 12, 1996 between Johnstown Industrial Development Corporation and
Republic Technologies. (1)
10.24 -- Loan Agreement dated December 1, 1998 between Development Authority of Cartersville and B&L. (2)
10.25 -- Trust Indenture dated as of October 1, 1994 between BankOne, Columbus, N.A. ("BankOne") and the
Ohio Water Development Authority (the "Authority"). (3)
10.26 -- Trust Indenture dated as of June 1, 1996 between BankOne and the Authority. (4)
10.27 -- Loan Agreement dated as of October 1, 1994 between Republic Technologies and the Authority. (3)
10.28 -- Loan Agreement dated as of June 1, 1996 between Republic Technologies and the Authority. (4)
10.29 -- Project Note dated October 1, 1994 by Republic Technologies to the Trustee. (3)
10.30 -- Project Note dated June 1, 1996 by Republic Technologies to the Trustee. (4)
10.31 -- Project Bond dated October 1, 1994 issued by the Authority. (3)
10.32 -- Project Bond dated June 1, 1996 issued by the Authority. (4)
10.33 -- Participation Agreement dated as of August 13, 1999 between Republic Technologies and USX. *
10.34 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and Thomas N. Tyrrell.
(5)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.35 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and Joseph Lapinsky.
(5)
10.36 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and Robert L. Meyer.
(5)
10.37 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and John Asimou. (5)
10.38 -- Employment Agreement, dated July 1, 1999, between Republic Technologies and George F. Babcoke. *
10.39 -- Master Collective Bargaining Agreement dated as of September 30, 1998 among Republic Technologies,
RTI and the United Steel Workers of America. *
10.40 -- 1999 Settlement Agreement, dated as of August 2, 1999 between BarTech, RESI, Republic Technologies
and the United Steelworkers of America.*
10.41 -- Agreement dated as of November 2, 1998 between Pension Benefit Guaranty Corporation and RES
Holding. *
10.42 -- Transaction and Monitoring Fee Agreement dated August 13, 1999 among Blackstone Management
Partners L.P., Veritas, USX, Kobe and Republic Technologies. *
12 -- Computation of Ratio of Earnings to Fixed Charges ***
21 -- List of subsidiaries *
23.1 -- Consent of Simpson Thacher & Bartlett (to be included in the opinion filed as Exhibit 5)
23.2 -- Consents of Deloitte and Touche LLP ***
23.3 -- Consent of KPMG LLP ***
23.4 -- Consent of Ernst & Young LLP ***
23.5 -- Consent of Arthur Andersen LLP ***
24 -- Powers of Attorney ***
25 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of United States Trust
Company of New York, as Trustee *
99.1 -- Form of Letter of Transmittal *
99.2 -- Form of Notice of Guaranteed Delivery *
</TABLE>
- ------------------
* Filed herewith.
** To be filed by amendment.
*** Previously filed.
(1) Filed as exhibits to the Registration Statement on Form S-4 of Bar
Technologies Inc. (SEC Registration No. 333-4254) and incorporated by
reference and made a part hereof.
(2) Filed as exhibit to Annual Report on Form 10-K of Bliss & Laughlin
Industries Inc. for the fiscal year ended September 30, 1989 and
incorporated by reference and made a part hereof.
(3) Filed as exhibits to Quarterly Report on Form 10-Q of Republic Engineered
Steels, Inc. for the quarter ended September 30, 1994 and incorporated by
reference and made a part hereof.
(4) Filed as exhibits to Annual Report on Form 10-K of Republic Engineered
Steels, Inc. for the fiscal year ended June 30, 1996 and incorporated by
reference and made a part hereof.
(5) Filed as exhibits to Annual Report on Form 10-K of Bar Technologies Inc. for
the fiscal year ended January 2, 1999 and incorporated by reference and made
a part hereof.
II-5
<PAGE>
ITEM 22. UNDERTAKINGS
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrants hereby undertake as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuers undertake that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The registrants undertake that every prospectus: (i) that is filed pursuant
to paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrants of expenses
incurred or paid by the director, officer or controlling person of the
registrants in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrants will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such
II-6
<PAGE>
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
following registrants has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 22nd day of November, 1999.
REPUBLIC TECHNOLOGIES INTERNATIONAL,
LLC
By: /s/ JOHN B. GEORGE
----------------------------------
John B. George
Vice President of Finance
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed below by the following
persons in the capacities indicated on November 22, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ---------------------------------------------------- -------------------------------------------------------
<S> <C>
* Chief Executive Officer and Principal Executive
- ----------------------------------------------------
Thomas N. Tyrrell Officer; Director of Republic Technologies
International, Inc.**
/s/ John B. George Vice President of Finance, Treasurer and Secretary and
- ---------------------------------------------------- Principal Financial and Accounting Officer
John B. George
* Director of Republic Technologies International, Inc.**
- ----------------------------------------------------
Richard C. Lappin
* Director of Republic Technologies International, Inc.**
- ----------------------------------------------------
Robert Friedman
* Director of Republic Technologies International, Inc.**
- ----------------------------------------------------
David A. Stockman
* Director of Republic Technologies International, Inc.**
- ----------------------------------------------------
David Blitzer
* Director of Republic Technologies International, Inc.**
- ----------------------------------------------------
Robert B. McKeon
* Director of Republic Technologies International, Inc.**
- ----------------------------------------------------
Thomas J. Campbell
* Director of Republic Technologies International, Inc.**
- ----------------------------------------------------
Lynn R. Williams
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ---------------------------------------------------- -------------------------------------------------------
<S> <C>
* Director of Republic Technologies International, Inc.**
- ----------------------------------------------------
Paul J. Wilhelm
Director of Republic Technologies International, Inc.**
- ----------------------------------------------------
Albert E. Ferrara, Jr.
Director of Republic Technologies International, Inc.**
- ----------------------------------------------------
Susumu Okushima
* Director of Republic Technologies International, Inc.**
- ----------------------------------------------------
Tadashi Takeuchi
*By: /s/ John B. George
- ----------------------------------------------------
John B. George
Attorney-in-fact
</TABLE>
- ------------------
** Republic Technologies International, Inc. is the managing member of Republic
Technologies International Holdings, LLC. Republic Technologies International
Holdings, LLC is the sole member of Republic Technologies International, LLC.
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
following registrants has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 22nd day of November, 1999.
RTI CAPITAL CORP.
By: /s/ John B. George
----------------------------------
John B. George
Vice President of Finance
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed below by the following
persons in the capacities indicated on November 22, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ----------------------------------------------- -----------------------------------------------------------------
<S> <C>
* Chief Executive Officer and Principal Executive
- ----------------------------------------------- Officer
Thomas N. Tyrrell
/s/John B. George Vice President of Finance, Treasurer and Secretary and Principal
- ----------------------------------------------- Financial and Accounting Officer
John B. George
* Director
- -----------------------------------------------
Richard C. Lappin
* Director
- -----------------------------------------------
David A. Stockman
* Director
- -----------------------------------------------
David Blitzer
*By: /s/ John B. George
- -----------------------------------------------
John B. George
Attorney-in-fact
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
following registrants has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 22nd day of November, 1999.
REPUBLIC TECHNOLOGIES INTERNATIONAL
HOLDINGS, LLC
By: /s/ John B. George
----------------------------------
John B. George
Vice President of Finance
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed below by the following
persons in the capacities indicated on November 22, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ----------------------------------------------- -----------------------------------------------------------------
<S> <C>
* Chief Executive Officer and Principal Executive Officer; Director
- ----------------------------------------------- of Republic Technologies International, Inc.**
Thomas N. Tyrrell
/s/ John B. George Vice President of Finance, Treasurer and Secretary and Principal
- ----------------------------------------------- Financial and Accounting Officer
John B. George
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Richard C. Lappin
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Robert Friedman
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
David A. Stockman
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
David Blitzer
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Robert B. McKeon
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Thomas J. Campbell
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Lynn R. Williams
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Paul J. Wilhelm
- ----------------------------------------------- Director of Republic Technologies International, Inc.**
Albert E. Ferrara, Jr.
</TABLE>
II-11
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ----------------------------------------------- -----------------------------------------------------------------
<S> <C>
Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Susumu Okushima
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Tadashi Takeuchi
*By: /s/ John B. George
- -----------------------------------------------
John B. George
Attorney-in-fact
</TABLE>
** Republic Technologies International, Inc. is the managing member of Republic
Technologies International Holdings, LLC.
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
following registrants has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 22nd day of November, 1999.
BLISS & LAUGHLIN, LLC
By: /s/ John B. George
----------------------------------
John B. George
Vice President of Finance
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed below by the following
persons in the capacities indicated on November 22, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------------- --------------------------------------------------------
<S> <C>
* Chief Executive Officer and Principal Executive Officer;
- ----------------------------------------------- Director of Republic Technologies International, Inc.**
Thomas N. Tyrrell
/s/ John B. George Vice President of Finance, Treasurer and Secretary and
- ----------------------------------------------- Principal Financial and Accounting Officer
John B. George
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Richard C. Lappin
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Robert Friedman
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
David A. Stockman
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
David Blitzer
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Robert B. McKeon
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Thomas J. Campbell
* Director of Republic Technologies International, Inc.**
- -----------------------------------------------
Lynn R. Williams
</TABLE>
II-13
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------------- --------------------------------------------------------
<S> <C>
/s/ Paul J. Wilhelm Director of Republic Technologies International, Inc.**
- ---------------------------------------------------
Paul J. Wilhelm
Director of Republic Technologies International, Inc.**
- ---------------------------------------------------
Albert E. Ferrara, Jr.
Director of Republic Technologies International, Inc.**
- ---------------------------------------------------
Susumu Okushima
* Director of Republic Technologies International, Inc.**
- ---------------------------------------------------
Tadashi Takeuchi
*By:/s/ John B. George
- ---------------------------------------------------
John B. George
Attorney-in-fact
</TABLE>
- ------------------
** Republic Technologies International, Inc. is the managing member of Republic
Technologies International Holdings, LLC, which is the sole member of
Republic Technologies International, LLC. Republic Technologies
International, LLC is the sole member of Bliss & Laughlin, LLC.
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
following registrants has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 22nd day of November, 1999.
NIMISHILLEN & TUSCARAWAS, LLC
By: /s/ John B. George
---------------------------------
John B. George
Vice President of Finance
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed below by the following
persons in the capacities indicated on November 22, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ ---------------------------------------------------------
<S> <C>
* Chief Executive Officer and Principal Executive Officer;
- ------------------------------------------ Director of Republic Technologies International, Inc.**
Thomas N. Tyrrell
/s/ John B. George Vice President of Finance, Treasurer and Secretary and
- ------------------------------------------ Principal Financial and Accounting Officer
John B. George
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Richard C. Lappin
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Robert Friedman
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
David A. Stockman
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
David Blitzer
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Robert B. McKeon
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Thomas J. Campbell
</TABLE>
II-15
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ ---------------------------------------------------------
<S> <C>
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Lynn R. Williams
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Paul J. Wilhelm
Director of Republic Technologies International, Inc.**
- ------------------------------------------
Albert E. Ferrara, Jr.
Director of Republic Technologies International, Inc.**
- ------------------------------------------
Susumu Okushima
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Tadashi Takeuchi
*By: /s/ John B. George
- ------------------------------------------
John B. George
Attorney-in-fact
</TABLE>
- ------------------
** Republic Technologies International, Inc. is the managing member of Republic
Technologies International Holdings, LLC, which is the sole member of
Republic Technologies International, LLC. Republic Technologies
International, LLC is the sole member of Nimishillen & Tuscarawas, LLC.
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
following registrants has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 22nd day of November, 1999.
CANADIAN DRAWN STEEL COMPANY, INC.
By: /s/ John B. George
------------------------------
John B. George
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed below by the following
persons in the capacities indicated on November 22, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ --------------------------------------------------------
<S> <C>
* President and Principal Executive Officer
- ------------------------------------------
John G. Asimou
/s/ John B. George Vice President and Principal Financial and Accounting
- ------------------------------------------ Officer
John B. George
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Richard C. Lappin
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Robert Friedman
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
David Stockman
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
David Blitzer
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Robert B. McKeon
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Thomas J. Campbell
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Lynn R. Williams
</TABLE>
II-17
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ --------------------------------------------------------
<S> <C>
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Paul J. Wilhelm
Director of Republic Technologies International, Inc.**
- ------------------------------------------
Albert E. Ferrara, Jr.
Director of Republic Technologies International, Inc.**
- ------------------------------------------
Susumu Okushima
* Director of Republic Technologies International, Inc.**
- ------------------------------------------
Tadashi Takeuchi
*By: /s/ John B. George
- ------------------------------------------
John B. George
Attorney-in-fact
</TABLE>
- ------------------
** Republic Technologies International, Inc. is the managing member of Republic
Technologies International Holdings, LLC, which is the sole member of
Republic Technologies International, LLC. Republic Technologies
International, LLC has signing authority for Canadian Drawn Steel Company,
Inc. pursuant to the Canadian Drawn Steel Company, Inc. Shareholder
Agreement.
II-18
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Purchase Agreement, dated as of August 6, 1999, among Republic Technologies International, LLC
("Republic Technologies"), RTI Capital Corp. ("RTI CapCo"), Republic Technologies International,
Inc. ("RTI"), Nimishillen & Tuscarawas, LLC ("N&T"), Bliss & Laughlin, LLC ("B&L"), Canadian Drawn
Steel Company, Inc. ("CDSC"), Republic Technologies International Holdings, LLC ("Holdings"),
Chase Securities Inc. ("Chase"), Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and
BancBoston Robertson Stephens Inc. ("BBRS"). *
2.1 -- Master Restructuring Agreement, dated as of August 13, 1999, among RTI, RES Holding Corporation
("RES Holding"), Republic Engineered Steels, Inc., Blackstone Capital Partners II Merchant Banking
Fund L.P. ("BCP II"), Blackstone Offshore Capital Partners II L.P. ("BOCP II"), Blackstone Family
Investment Partnership II L.P. ("BFIP II"), The Veritas Capital Fund L.P. ("Veritas Fund"), HVR
Holdings, L.L.C. ("HRV"), USX Corporation ("USX"), Kobe Steel, Ltd. ("Kobe"), Kobe Delaware Inc.
("Kobe Delaware"), USS Lorain Holding Company, Inc. ("USS Lorain"), USX RTI Holdings, Inc. ("USX
Holdings"), Kobe/Lorain Inc. ("Kobe/Lorain"), Kobe RTI Holdings, Inc. ("Kobe Holdings"), Holdings,
Republic Technologies, Lorain Tubular Company, LLC ("Lorain") and USS/Kobe Steel Company
("USS/Kobe SteelCo"). *
3.1 -- Limited Liability Company Agreement of Republic Technologies *
3.2 -- Certificate of Incorporation of RTI CapCo *
3.3 -- By-laws of RTI CapCo *
3.4 -- Limited Liability Company Agreement of Holdings *
3.5 -- Limited Liability Company Agreement of B&L *
3.6 -- Limited Liability Company Agreement of N&T *
3.7 -- Certificate of Incorporation of CDSC *
3.8 -- By-laws of CDSC **
4.1 -- Indenture, dated as of August 13, 1999, among Republic Technologies, RTI CapCo, Holdings, N&T,
B&L, CDSC and United States Trust Company of New York, as Trustee. *
4.2 -- Form of 13 3/4% Senior Secured Note due 2009 (included in Exhibit 4.1)
4.3 -- Form of 13 3/4% Senior Secured Note due 2009, Series B (included in Exhibit 4.1)
4.4 -- Notes Exchange and Registration Rights Agreement, dated as of August 13, 1999, among Republic
Technologies, RTI CapCo, Holdings, N&T, B&L, CDSC, Chase, DLJ and BBRS. *
4.5 -- Security Agreement, dated as of August 13, 1999, among Republic Technologies, RTI CapCo, Holdings,
N&T, B&L, CDSC and United States Trust Company of New York, as Collateral Agent. *
4.6 -- Mortgage, Assignment of Leases, Security Agreement and Fixture Filing, dated as of August 13,
1999, by Republic Technologies to United States Trust Company of New York, as Mortgagee. *
4.7 -- Master Pledge Agreement, dated as of August 13, 1999, among Republic Technologies, RTI CapCo,
Holdings, N&T, B&L, CDSC and United States Trust Company of New York, as Collateral Agent. *
4.8 -- Amended and Restated Intercreditor and Subordination Agreement, dated as of August 13, 1999, among
United States Trust Company of New York, as Collateral Agent, United States Trust Company of New
York, as Trustee, the Pennsylvania Lenders (as defined therein), BankBoston, N.A., as Agent,
Holdings, Republic Technologies, RTI CapCo, N&T, B&L and CDSC. *
</TABLE>
II-19
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
4.9 -- Pledge Intercreditor Agreement, dated as of August 13, 1999, among the Secured Parties (defined
therein) and United States Trust Company of New York, as Collateral Agent. *
5 -- Opinion of Simpson Thacher & Bartlett **
10.1 -- Revolving Credit Agreement, dated as of August 13, 1999, among Republic Technologies, BankBoston,
N.A, as Administrative Agent and Co-Book Manager, Bank of America, N.A., as Syndication Agent and
Co-Book Manager, The Chase Manhattan Bank, as Documentation Agent and Co-Book Manager, the Lending
Institutions Named Therein, and BancBoston Robertson Stephens Inc. and Bank of America, N.A., as
Co-Arrangers. *
10.2 -- Security Agreement, dated as of August 13, 1999, among Republic Technologies, Holdings, RTI CapCo,
N&T, B&L, CDSC and BankBoston, N.A. *
10.3 -- Trademark Collateral Security and Pledge Agreement, dated as of August 13, 1999, between Republic
Technologies and BankBoston, N.A. *
10.4 -- Patent Collateral Security and Pledge Agreement, dated as of August 13, 1999, between Republic
Technologies and BankBoston, N.A. *
10.5 -- Canadian Security Agreement, dated as of August 13, 1999, between CDSC and BankBoston, N.A. *
10.6 -- Assignment of Intellectual Property, dated as of August 13, 1999, by CDSC to BankBoston, N.A. *
10.7 -- Open-End Mortgage, Security Agreement, Assignment of Rents, Income and Proceeds, dated as of
August 13, 1999, from Republic Technologies to BankBoston, N.A. *
10.8 -- Amended and Restated Equityholders Agreement, dated as of August 13, 1999, among BCP II, BOCP II,
BFIP II, Veritas Fund, Veritas Capital, L.L.C., KDJ, L.L.C., BRW Steel Holdings, L.P., BRW Steel
Holdings II, L.P., BRW Steel Offshore Holdings, L.P., RTI, RES Holding, Republic Technologies,
USX, USX Holdings, Kobe Delaware, Kobe, Kobe Holdings, HVR, Sumitomo Corporation of America,
FirstEnergy Services Corp., Triumph Capital Investors II, L.P., TCI-II Investors, L.P., First
Dominion Capital L.L.C., TCW Leveraged Income Trust, L.P., TCW Leveraged Income Trust II, L.P.,
TCW Shared Opportunity Fund, L.P., Shared Opportunity Fund IIB, L.L.C., Shared Opportunity Fund
III, L.L.C. and the other equityholders named therein. *
10.09 -- Round Supply Agreement, dated as of August 13, 1999, between Republic Technologies and USX. **
10.10 -- Master Energy Services and Supply Agreement, dated as of August 13, 1999, between Republic
Technologies and FirstEnergy Services Corp. *
10.11 -- Transition, Administrative and Utilities Services Agreement, dated as of August 13, 1999, between
Lorain Tubular Company, LLC and Republic Technologies. *
10.12 -- Letter Agreement, dated August 13, 1999, between Republic Technologies and
USX. *
10.13 -- Letter Agreement, dated August 13, 1999, among Republic Technologies, Lorain Tubular Company, LLC,
Kobe and USX. *
10.14 -- Master Agreement dated July 18, 1994, by and among the Commonwealth of Pennsylvania, acting by and
through the Department of Commerce, the Pennsylvania Industrial Development Authority, the
Commonwealth of Pennsylvania, acting by and through the Department of Community Affairs, the
Johnstown Industrial Development Corporation, the County of Cambria, the City of Johnstown,
Republic Technologies and BRW Steel Corporation-Johnstown. (1)
</TABLE>
II-20
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.15 -- Amendment No. 1 to the Master Agreement dated September 21, 1994 among Commonwealth of
Pennsylvania, acting by and through the Department of Commerce, the Pennsylvania Industrial
Development Authority, the Commonwealth of Pennsylvania, acting by and through the Department of
Community Affairs, the Johnstown Industrial Development Corporation, the County of Cambria, the
City of Johnstown and Republic Technologies. (1)
10.16 -- Amendment No. 2 to the Master Agreement dated August 1999 among the Johnstown Industrial
Development Corporation, the County of Cambria, the City of Johnstown and Republic Technologies. *
10.17 -- Economic Development Partnership Loan Agreement dated September 21, 1994 between the City of
Johnstown and Republic Technologies. (1)
10.18 -- Economic Development Set-Aside Loan Agreement dated July 6, 1995 between the City of Johnstown and
Republic Technologies. (1)
10.19 -- Economic Development Set-Aside Loan Agreement dated July 6, 1995 between the City of Johnstown and
Republic Technologies. (1)
10.20 -- Section 108 Loan Agreement dated July 20, 1994 among the City of Johnstown, the County of Cambria
and Republic Technologies. (1)
10.21 -- Amendment No. 1 dated August 1994 to Section 108 Loan Agreement among the City of Johnstown, the
County of Cambria and Republic Technologies. (1)
10.22 -- Community Development Block Grant Loan Agreement dated November 3, 1995 between Cambria County and
Republic Technologies. (1)
10.23 -- BID Loan Agreement dated March 12, 1996 between Johnstown Industrial Development Corporation and
Republic Technologies. (1)
10.24 -- Loan Agreement dated December 1, 1998 between Development Authority of Cartersville and B&L. (2)
10.25 -- Trust Indenture dated as of October 1, 1994 between BankOne, Columbus, N.A. ("BankOne") and the
Ohio Water Development Authority (the "Authority"). (3)
10.26 -- Trust Indenture dated as of June 1, 1996 between BankOne and the Authority. (4)
10.27 -- Loan Agreement dated as of October 1, 1994 between Republic Technologies and the Authority. (3)
10.28 -- Loan Agreement dated as of June 1, 1996 between Republic Technologies and the Authority. (4)
10.29 -- Project Note dated October 1, 1994 by Republic Technologies to the Trustee. (3)
10.30 -- Project Note dated June 1, 1996 by Republic Technologies to the Trustee. (4)
10.31 -- Project Bond dated October 1, 1994 issued by the Authority. (3)
10.32 -- Project Bond dated June 1, 1996 issued by the Authority. (4)
10.33 -- Participation Agreement dated as of August 13, 1999 between Republic Technologies and USX. *
10.34 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and Thomas N. Tyrrell.
(5)
10.35 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and Joseph Lapinsky.
(5)
10.36 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and Robert L. Meyer.
(5)
10.37 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and John Asimou. (5)
10.38 -- Employment Agreement, dated July 1, 1999, between Republic Technologies and George F. Babcoke. *
</TABLE>
II-21
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.39 -- Master Collective Bargaining Agreement dated as of September 30, 1998 among Republic Technologies,
RTI and the United Steel Workers of America. *
10.40 -- 1999 Settlement Agreement, dated as of August 2, 1999 between BarTech, RESI, Republic Technologies
and the United Steelworkers of America. *
10.41 -- Agreement dated as of November 2, 1998 between Pension Benefit Guaranty Corporation and RES
Holding. *
10.42 -- Transaction and Monitoring Fee Agreement dated August 13, 1999 among Blackstone Management
Partners L.P., Veritas, USX, Kobe and Republic Technologies. *
12 -- Computation of Ratio of Earnings to Fixed Charges ***
21 -- List of subsidiaries *
23.1 -- Consent of Simpson Thacher & Bartlett (to be included in the opinion filed as Exhibit 5)
23.2 -- Consents of Deloitte and Touche LLP ***
23.3 -- Consent of KPMG LLP ***
23.4 -- Consent of Ernst & Young LLP ***
23.5 -- Consent of Arthur Andersen LLP ***
24 -- Powers of Attorney ***
25 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of United States Trust
Company of New York, as Trustee *
99.1 -- Form of Letter of Transmittal *
99.2 -- Form of Notice of Guaranteed Delivery *
</TABLE>
- ------------------
* Filed herewith.
** To be filed by amendment.
*** Previously filed.
(1) Filed as exhibits to the Registration Statement on Form S-4 of Bar
Technologies Inc. (SEC Registration No. 333-4254) and incorporated by
reference and made a part hereof.
(2) Filed as exhibit to Annual Report on Form 10-K of Bliss & Laughlin
Industries Inc. for the fiscal year ended September 30, 1989 and
incorporated by reference and made a part hereof.
(3) Filed as exhibits to Quarterly Report on Form 10-Q of Republic Engineered
Steels, Inc. for the quarter ended September 30, 1994 and incorporated by
reference and made a part hereof.
(4) Filed as exhibits to Annual Report on Form 10-K of Republic Engineered
Steels, Inc. for the fiscal year ended June 30, 1996 and incorporated by
reference and made a part hereof.
(5) Filed as exhibits to Annual Report on Form 10-K of Bar Technologies Inc. for
the fiscal year ended January 2, 1999 and incorporated by reference and made
a part hereof.
II-22
<PAGE>
INDEX TO EXHIBIT
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Purchase Agreement, dated as of August 6, 1999, among Republic Technologies International, LLC
("Republic Technologies"), RTI Capital Corp. ("RTI CapCo"), Republic Technologies International,
Inc. ("RTI"), Nimishillen & Tuscarawas, LLC ("N&T"), Bliss & Laughlin, LLC ("B&L"), Canadian Drawn
Steel Company, Inc. ("CDSC"), Republic Technologies International Holdings, LLC ("Holdings"),
Chase Securities Inc. ("Chase"), Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and
BancBoston Robertson Stephens Inc. ("BBRS"). *
2.1 -- Master Restructuring Agreement, dated as of August 13, 1999, among RTI, RES Holding Corporation
("RES Holding"), Republic Engineered Steels, Inc., Blackstone Capital Partners II Merchant Banking
Fund L.P. ("BCP II"), Blackstone Offshore Capital Partners II L.P. ("BOCP II"), Blackstone Family
Investment Partnership II L.P. ("BFIP II"), The Veritas Capital Fund L.P. ("Veritas Fund"), HVR
Holdings, L.L.C. ("HRV"), USX Corporation ("USX"), Kobe Steel, Ltd. ("Kobe"), Kobe Delaware Inc.
("Kobe Delaware"), USS Lorain Holding Company, Inc. ("USS Lorain"), USX RTI Holdings, Inc. ("USX
Holdings"), Kobe/Lorain Inc. ("Kobe/Lorain"), Kobe RTI Holdings, Inc. ("Kobe Holdings"), Holdings,
Republic Technologies, Lorain Tubular Company, LLC ("Lorain") and USS/Kobe Steel Company
("USS/Kobe SteelCo"). *
3.1 -- Limited Liability Company Agreement of Republic Technologies *
3.2 -- Certificate of Incorporation of RTI CapCo *
3.3 -- By-laws of RTI CapCo *
3.4 -- Limited Liability Company Agreement of Holdings *
3.5 -- Limited Liability Company Agreement of B&L *
3.6 -- Limited Liability Company Agreement of N&T *
3.7 -- Certificate of Incorporation of CDSC *
3.8 -- By-laws of CDSC **
4.1 -- Indenture, dated as of August 13, 1999, among Republic Technologies, RTI CapCo, Holdings, N&T,
B&L, CDSC and United States Trust Company of New York, as Trustee. *
4.2 -- Form of 13 3/4% Senior Secured Note due 2009 (included in Exhibit 4.1)
4.3 -- Form of 13 3/4% Senior Secured Note due 2009, Series B (included in Exhibit 4.1)
4.4 -- Notes Exchange and Registration Rights Agreement, dated as of August 13, 1999, among Republic
Technologies, RTI CapCo, Holdings, N&T, B&L, CDSC, Chase, DLJ and BBRS. *
4.5 -- Security Agreement, dated as of August 13, 1999, among Republic Technologies, RTI CapCo, Holdings,
N&T, B&L, CDSC and United States Trust Company of New York, as Collateral Agent. *
4.6 -- Mortgage, Assignment of Leases, Security Agreement and Fixture Filing, dated as of August 13,
1999, by Republic Technologies to United States Trust Company of New York, as Mortgagee. *
4.7 -- Master Pledge Agreement, dated as of August 13, 1999, among Republic Technologies, RTI CapCo,
Holdings, N&T, B&L, CDSC and United States Trust Company of New York, as Collateral Agent. *
4.8 -- Amended and Restated Intercreditor and Subordination Agreement, dated as of August 13, 1999, among
United States Trust Company of New York, as Collateral Agent, United States Trust Company of New
York, as Trustee, the Pennsylvania Lenders (as defined therein), BankBoston, N.A., as Agent,
Holdings, Republic Technologies, RTI CapCo, N&T, B&L and CDSC. *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
4.9 -- Pledge Intercreditor Agreement, dated as of August 13, 1999, among the Secured Parties (defined
therein) and United States Trust Company of New York, as Collateral Agent. *
5 -- Opinion of Simpson Thacher & Bartlett **
10.1 -- Revolving Credit Agreement, dated as of August 13, 1999, among Republic Technologies, BankBoston,
N.A, as Administrative Agent and Co-Book Manager, Bank of America, N.A., as Syndication Agent and
Co-Book Manager, The Chase Manhattan Bank, as Documentation Agent and Co-Book Manager, the Lending
Institutions Named Therein, and BancBoston Robertson Stephens Inc. and Bank of America, N.A., as
Co-Arrangers. *
10.2 -- Security Agreement, dated as of August 13, 1999, among Republic Technologies, Holdings, RTI CapCo,
N&T, B&L, CDSC and BankBoston, N.A. *
10.3 -- Trademark Collateral Security and Pledge Agreement, dated as of August 13, 1999, between Republic
Technologies and BankBoston, N.A. *
10.4 -- Patent Collateral Security and Pledge Agreement, dated as of August 13, 1999, between Republic
Technologies and BankBoston, N.A. *
10.5 -- Canadian Security Agreement, dated as of August 13, 1999, between CDSC and BankBoston, N.A. *
10.6 -- Assignment of Intellectual Property, dated as of August 13, 1999, by CDSC to BankBoston, N.A. *
10.7 -- Open-End Mortgage, Security Agreement, Assignment of Rents, Income and Proceeds, dated as of
August 13, 1999, from Republic Technologies to BankBoston, N.A. *
10.8 -- Amended and Restated Equityholders Agreement, dated as of August 13, 1999, among BCP II, BOCP II,
BFIP II, Veritas Fund, Veritas Capital, L.L.C., KDJ, L.L.C., BRW Steel Holdings, L.P., BRW Steel
Holdings II, L.P., BRW Steel Offshore Holdings, L.P., RTI, RES Holding, Republic Technologies,
USX, USX Holdings, Kobe Delaware, Kobe, Kobe Holdings, HVR, Sumitomo Corporation of America,
FirstEnergy Services Corp., Triumph Capital Investors II, L.P., TCI-II Investors, L.P., First
Dominion Capital L.L.C., TCW Leveraged Income Trust, L.P., TCW Leveraged Income Trust II, L.P.,
TCW Shared Opportunity Fund, L.P., Shared Opportunity Fund IIB, L.L.C., Shared Opportunity Fund
III, L.L.C. and the other equityholders named therein. *
10.09 -- Round Supply Agreement, dated as of August 13, 1999, between Republic Technologies and USX. **
10.10 -- Master Energy Services and Supply Agreement, dated as of August 13, 1999, between Republic
Technologies and FirstEnergy Services Corp. *
10.11 -- Transition, Administrative and Utilities Services Agreement, dated as of August 13, 1999, between
Lorain Tubular Company, LLC and Republic Technologies. *
10.12 -- Letter Agreement, dated August 13, 1999, between Republic Technologies and
USX. *
10.13 -- Letter Agreement, dated August 13, 1999, among Republic Technologies, Lorain Tubular Company, LLC,
Kobe and USX. *
10.14 -- Master Agreement dated July 18, 1994, by and among the Commonwealth of Pennsylvania, acting by and
through the Department of Commerce, the Pennsylvania Industrial Development Authority, the
Commonwealth of Pennsylvania, acting by and through the Department of Community Affairs, the
Johnstown Industrial Development Corporation, the County of Cambria, the City of Johnstown,
Republic Technologies and BRW Steel Corporation-Johnstown. (1)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.15 -- Amendment No. 1 to the Master Agreement dated September 21, 1994 among Commonwealth of
Pennsylvania, acting by and through the Department of Commerce, the Pennsylvania Industrial
Development Authority, the Commonwealth of Pennsylvania, acting by and through the Department of
Community Affairs, the Johnstown Industrial Development Corporation, the County of Cambria, the
City of Johnstown and Republic Technologies. (1)
10.16 -- Amendment No. 2 to the Master Agreement dated August 1999 among the Johnstown Industrial
Development Corporation, the County of Cambria, the City of Johnstown and Republic Technologies. *
10.17 -- Economic Development Partnership Loan Agreement dated September 21, 1994 between the City of
Johnstown and Republic Technologies. (1)
10.18 -- Economic Development Set-Aside Loan Agreement dated July 6, 1995 between the City of Johnstown and
Republic Technologies. (1)
10.19 -- Economic Development Set-Aside Loan Agreement dated July 6, 1995 between the City of Johnstown and
Republic Technologies. (1)
10.20 -- Section 108 Loan Agreement dated July 20, 1994 among the City of Johnstown, the County of Cambria
and Republic Technologies. (1)
10.21 -- Amendment No. 1 dated August 1994 to Section 108 Loan Agreement among the City of Johnstown, the
County of Cambria and Republic Technologies. (1)
10.22 -- Community Development Block Grant Loan Agreement dated November 3, 1995 between Cambria County and
Republic Technologies. (1)
10.23 -- BID Loan Agreement dated March 12, 1996 between Johnstown Industrial Development Corporation and
Republic Technologies. (1)
10.24 -- Loan Agreement dated December 1, 1998 between Development Authority of Cartersville and B&L. (2)
10.25 -- Trust Indenture dated as of October 1, 1994 between BankOne, Columbus, N.A. ("BankOne") and the
Ohio Water Development Authority (the "Authority"). (3)
10.26 -- Trust Indenture dated as of June 1, 1996 between BankOne and the Authority. (4)
10.27 -- Loan Agreement dated as of October 1, 1994 between Republic Technologies and the Authority. (3)
10.28 -- Loan Agreement dated as of June 1, 1996 between Republic Technologies and the Authority. (4)
10.29 -- Project Note dated October 1, 1994 by Republic Technologies to the Trustee. (3)
10.30 -- Project Note dated June 1, 1996 by Republic Technologies to the Trustee. (4)
10.31 -- Project Bond dated October 1, 1994 issued by the Authority. (3)
10.32 -- Project Bond dated June 1, 1996 issued by the Authority. (4)
10.33 -- Participation Agreement dated as of August 13, 1999 between Republic Technologies and USX. *
10.34 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and Thomas N. Tyrrell.
(5)
10.35 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and Joseph Lapinsky.
(5)
10.36 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and Robert L. Meyer.
(5)
10.37 -- Employment Agreement, dated October 1, 1998, between Republic Technologies and John Asimou. (5)
10.38 -- Employment Agreement, dated July 1, 1999, between Republic Technologies and George F. Babcoke. *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.39 -- Master Collective Bargaining Agreement dated as of September 30, 1998 among Republic Technologies,
RTI and the United Steel Workers of America. *
10.40 -- 1999 Settlement Agreement, dated as of August 2, 1999 between BarTech, RESI, Republic Technologies
and the United Steelworkers of America. *
10.41 -- Agreement dated as of November 2, 1998 between Pension Benefit Guaranty Corporation and RES
Holding. *
10.42 -- Transaction and Monitoring Fee Agreement dated August 13, 1999 among Blackstone Management
Partners L.P., Veritas, USX, Kobe and Republic Technologies. *
12 -- Computation of Ratio of Earnings to Fixed Charges ***
21 -- List of subsidiaries *
23.1 -- Consent of Simpson Thacher & Bartlett (to be included in the opinion filed as Exhibit 5)
23.2 -- Consents of Deloitte and Touche LLP ***
23.3 -- Consent of KPMG LLP ***
23.4 -- Consent of Ernst & Young LLP ***
23.5 -- Consent of Arthur Andersen LLP ***
24 -- Powers of Attorney ***
25 -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of United States Trust
Company of New York, as Trustee *
99.1 -- Form of Letter of Transmittal *
99.2 -- Form of Notice of Guaranteed Delivery *
</TABLE>
- ------------------
* Filed herewith.
** To be filed by amendment.
*** Previously filed.
(1) Filed as exhibits to the Registration Statement on Form S-4 of Bar
Technologies Inc. (SEC Registration No. 333-4254) and incorporated by
reference and made a part hereof.
(2) Filed as exhibit to Annual Report on Form 10-K of Bliss & Laughlin
Industries Inc. for the fiscal year ended September 30, 1989 and
incorporated by reference and made a part hereof.
(3) Filed as exhibits to Quarterly Report on Form 10-Q of Republic Engineered
Steels, Inc. for the quarter ended September 30, 1994 and incorporated by
reference and made a part hereof.
(4) Filed as exhibits to Annual Report on Form 10-K of Republic Engineered
Steels, Inc. for the fiscal year ended June 30, 1996 and incorporated by
reference and made a part hereof.
(5) Filed as exhibits to Annual Report on Form 10-K of Bar Technologies Inc. for
the fiscal year ended January 2, 1999 and incorporated by reference and made
a part hereof.
<PAGE>
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
RTI CAPITAL CORP.
REPUBLIC TECHNOLOGIES INTERNATIONAL, INC.
425,000 Units consisting of
$425,000,000
13 3/4% Senior Secured Notes due 2009
of Republic Technologies International, LLC
and RTI Capital Corp.
and
425,000 Warrants to Purchase Shares of
Class D Common Stock
of Republic Technologies International, Inc.
PURCHASE AGREEMENT
August 6, 1999
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th Floor
New York, New York 10017
Ladies and Gentlemen:
Republic Technologies International, LLC, a Delaware limited
liability company ("Republic Technologies"), and RTI Capital Corp., a Delaware
corporation ("RTI Capital" and, together with Republic Technologies, the "Notes
Issuers"), propose to issue and sell $425,000,000 aggregate principal amount of
13 3/4% Senior Secured Notes due 2009 (the "Notes"), and Republic Technologies
International, Inc. a Delaware corporation (formerly Bar Technologies Inc.)
("RTI" and, together with the Notes Issuers, the "Companies"), proposes to issue
and sell in combination with the Notes 425,000 Warrants (the "Warrants" and,
together with the Notes, the "Units") to purchase 822,386 shares of Class D
Common Stock, par value $.001 per share, of RTI (the "Warrant Shares" and,
together with the Warrants, the Notes, the Guarantees (as defined below) and the
Units, the "Securities"). Each Unit will consist of
<PAGE>
$1,000 principal amount of Notes and one Warrant, which Warrant is exercisable
to purchase 1.935025 Warrant Shares.
The Notes will be guaranteed (the "Guarantees"), on a senior basis,
jointly and severally, by Republic Technologies' parent, Republic Technologies
International Holdings, LLC ("Holdings"), and the following of Republic
Technologies' directly and indirectly owned subsidiaries (after giving effect to
the Combination (as defined below)): Nimishillen & Tuscarawas, LLC ("NT") Bliss
& Laughlin, LLC ("B&L") and Canadian Drawn Steel Company, Inc. ("CDSC" and,
together with NT and B&L, the "Subsidiary Guarantors" and, together with
Holdings, the "Guarantors"). The only other direct and indirect subsidiaries of
Republic Technologies (after giving effect to the Combination), RTI Capital and
Oberlin Insurance Company, will not guarantee the Notes. The Companies together
with the Guarantors are collectively referred to as the "Issuers." The Notes
will be issued pursuant to an Indenture to be dated as of August 13, 1999 (the
"Indenture") among the Notes Issuers, the Guarantors and United States Trust
Company of New York, as Trustee (the "Trustee") and United States Trust Company
of New York, as Collateral Agent (the "Collateral Agent"). The Guarantee of CDSC
is subject to the limitations set forth in Section 10.10 of the Indenture. The
Warrants are to be issued under a Warrant Agreement to be dated as of August 13,
1999 (the "Warrant Agreement") between RTI and United States Trust Company of
New York, as Warrant Agent (the "Warrant Agent"). The Units will be issued under
a Unit Certificate dated as of August 13, 1999 (the "Unit Certificate") among
the Issuers, and United States Trust Company of New York, as Unit Agent (the
"Unit Agent").
The Notes and Guarantees will be secured as provided in the
Indenture, pursuant to mortgages or deeds of trust (the "Mortgages"), a security
agreement (the "Security Agreement", and a master pledge agreement (the "Master
Pledge Agreement") and, together with the Mortgages and all other documentation
relating to any of the foregoing, the "Security Documents"). Each Pledgor under
the Security Documents will be a Notes Issuer or a Guarantor. The Companies
hereby confirm their agreement with Chase Securities Inc. ("CSI"), Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") and BancBoston Robertson
Stephens Inc. ("BancBoston" and, together, with CSI and DLJ, the "Initial
Purchasers") concerning the purchase of the Units from the Companies by the
several Initial Purchasers.
The Units will be offered and sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon an exemption therefrom. The Issuers have prepared a
preliminary offering memorandum dated July 22, 1999 (the "Preliminary Offering
Memorandum") and will prepare an offering memorandum dated the date hereof (the
"Offering Memorandum") and setting forth information concerning the Issuers and
the Units. Copies of the Preliminary Offering Memorandum have been, and copies
of the Offering Memorandum will be, delivered by the Issuers to the Initial
Purchasers pursuant to the terms of this Agreement. Any references herein to the
Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to
include all amendments and supplements thereto, unless otherwise noted. Each of
the Issuers hereby
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<PAGE>
confirms that it has authorized the use of the Preliminary Offering Memorandum
and the Offering Memorandum in connection with the offering and resale of the
Units by the Initial Purchasers in accordance with Section 2.
Holders of the Notes (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of (a) a Notes
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A-1 (the "Notes Registration Rights Agreement"), among the Notes
Issuers, the Guarantors and the Initial Purchasers, pursuant to which the Notes
Issuers and the Guarantors will agree to file with the Securities and Exchange
Commission (the "Commission") (i) a registration statement under the Securities
Act (the "Exchange Offer Registration Statement") registering an issue of senior
secured notes of the Notes Issuers (the "Exchange Notes") which are identical in
all material respects to the Notes and which are unconditionally guaranteed by
each of the Guarantors (except that the Exchange Notes will not contain terms
with respect to transfer restrictions or payment of liquidated damages) and (ii)
under certain circumstances, a shelf registration statement pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement") and (b) a Common
Stock Registration Rights Agreement, substantially in the form attached hereto
as Annex A-2 (the "Stock Registration Rights Agreement" and, together with the
Notes Registration Rights Agreement, the "Registration Rights Agreements"),
among RTI, Blackstone Capital Partners II Merchant Banking Fund L.P., Blackstone
Offshore Capital Partners II L.P. and Blackstone Family Investment Partnership
II L.P. (collectively, "Blackstone") and the Initial Purchasers, pursuant to
which RTI will agree to provide certain registration rights with respect to the
Warrants and Registrable Securities (as defined in the Stock Registration Rights
Agreement) and Blackstone will agree to provide certain tag-along and holders
will agree to certain drag-along rights and with respect to the Warrants and
Registrable Securities.
The Units are being offered in connection with (i) the Combination
of Republic Engineered Steels, Inc. ("Republic"), Bar Technologies Inc.
("BarTech") and the bar products line of USS/Kobe Steel Company ("USS/Kobe"), a
50/50 joint venture between USX Corporation and Kobe Steel, Ltd., resulting in
the formation of Holdings and its subsidiaries (the "Combination") and (ii) the
refinancing (the "Refinancing") of indebtedness under (a) Republic's Revolving
Credit Facility (the "Republic Revolving Credit Facility"); (b) Republic's
$208.5 million Mortgage Notes Credit Facility (the "Mortgage Notes Credit
Facility"); (c) RES Holding Corporation's $65 million credit facility (the
"Holdings Credit Facility"); (d) BarTech's 13 1/2% Senior Secured Notes due 2001
through a redemption (the "BarTech Notes"); (e) BarTech's Revolving Credit
Facility (the "BarTech Revolving Credit Facility"); (f) certain of BarTech's
government loans (the "BarTech Government Loans"); (g) USS/Kobe's Revolving
Credit Facility (the "USS/Kobe Revolving Credit Facility"); and (h) USS/Kobe's
Senior Notes due 2002, 2005 and 2010 (the "USS/Kobe Senior Notes") through a
redemption (the "USS/Kobe Senior Notes Redemption"; the documents referred to in
clauses (a)-(h) collectively, the "Refinancing Documents"). The Refinancing is
more fully described under "Use of Proceeds" in the Offering Memorandum.
-3-
<PAGE>
The Combination will be effected pursuant to a Master Restructuring
Agreement dated August 1999 (the "Master Agreement" and, together with all
agreements contemplated thereby that are not Offering Documents or Financing
Documents, as defined below, the "Combination Documents"), among, inter alia,
Republic, RES Holding Corporation, which is the parent of Republic, BarTech, USX
Corporation, Kobe Steel, Ltd. and USS/Kobe, which contemplates the completion of
the Combination through a series of mergers, asset transfers and related steps.
The Refinancing will be financed through (i) the net proceeds from
the Offering; (ii) borrowings under Republic Technologies' new $425 million
credit facility (the "New Credit Facility"); and (iii) cash equity investments
of not less than $155 million (the "Equity Contribution") by Blackstone, Veritas
USX Corporation, Kobe Steel, Ltd. and other investors (the "Equity Investors").
This Agreement, the Indenture, the Warrant Agreement, the Unit
Certificate, the Notes, the Exchange Notes, the Private Exchange Notes, the
Registration Rights Agreements, the Security Documents and the Intercreditor
Agreements (as defined in the Indenture) are collectively referred to as the
"Offering Documents." The New Credit Facility and related security agreements
and the documentation for the Equity Contribution are collectively referred to
as the "Financing Documents." The Offering Documents, the Financing Documents
and the Combination Documents are collectively referred to as the "Transaction
Documents."
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Issuers. Each
of the Issuers represents and warrants to, and agrees with, the several Initial
Purchasers on and as of the date hereof and on and as of the Closing Date (as
defined in Section 3) that (it being understood that, where the context
requires, it is assumed that the Combination has occurred):
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date
the Offering Memorandum will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided
that the Issuers make no representation or warranty as to information
contained in or omitted from the Preliminary Offering Memorandum or the
Offering Memorandum in reliance upon and in conformity with written
information relating to the Initial Purchasers furnished to the Issuers by
or on behalf of any Initial Purchaser specifically for use therein (the
"Initial Purchasers' Information").
(b) When the Notes, Guarantees, Warrants and Units are issued and
delivered pursuant to this Agreement, such securities will not be of the
same class (within
-4-
<PAGE>
the meaning of Rule 144A) as securities of any of the Issuers which are
listed on a national securities exchange registered under Section 6 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
quoted in a U.S. automated interdealer quotation system. The Issuers have
been advised that the Units, Notes and Warrants have been designated
PORTAL eligible securities in accordance with the rules and regulations of
the National Association of Securities Dealers, Inc. (the "NASD").
(c) Neither the Issuers nor any of their affiliates (as defined in
Rule 501(b) under the Securities Act) has, directly or through any agent,
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act) which is or
will be integrated with the sale of the Securities in a manner that would
require the registration of the Securities under the Securities Act, other
than as contemplated by the Registration Rights Agreements.
(d) None of the Issuers or any of their affiliates (as such term is
defined in Rule 501(b) under the Securities Act) or any person (other than
the Initial Purchaser, as to which the Issuers make no representation)
acting on the Issuers' behalf has engaged, in connection with the offering
of the Securities, (A) in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act,
(B) in any directed selling efforts within the meaning of Rule 902 under
the Securities Act in the United States in connection with the Securities
being offered and sold pursuant to Regulation S under the Securities Act,
(C) in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act or (D) in any action which would
require the registration of the offering and sale of the Securities
pursuant to this Agreement or which would violate applicable state "blue
sky" laws.
(e) Assuming that the representations and warranties of the Initial
Purchasers contained in Section 4 are true, correct and complete and
assuming compliance by the Initial Purchasers with their respective
covenants in Section 4, it is not necessary in connection with the offer,
sale and delivery of the Units to the Initial Purchasers in the manner
contemplated by, or in connection with the initial resale of such Units by
the Initial Purchasers in accordance with, this Agreement, the Indenture
and the Warrant Agreement to register any of the Securities under the
Securities Act or to qualify any indenture in respect of the Notes and
Guarantees under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(f) The subsidiaries of, and the share or partnership interest
ownership thereof by, Republic, BarTech and USS/Kobe (the "Predecessor
Companies") before giving effect to the Combination are listed on Schedule
1 hereto (the "Predecessor Companies Subsidiaries"). The subsidiaries of,
and the share ownership thereof by, Republic Technologies after giving
effect to the Combination are listed on Schedule 1 hereto (the
"Subsidiaries"). The subsidiaries of, and share ownership thereof by, RTI
after giving effect to the Combination are listed on Schedule 1 hereto
(the "RTI Sub-
-5-
<PAGE>
sidiaries"). The Companies, the Predecessor Companies, the Predecessor
Companies Subsidiaries and the Subsidiaries and the RTI Subsidiaries are
collectively referred to as the "Combined Companies". Before and after
giving effect to the Combination, except to the extent any of the Combined
Companies ceases to exist as a result of the Combination, each of the
Combined Companies has been duly organized and is validly existing in good
standing as a corporation, limited liability company or partnership under
the laws of its jurisdiction of formation, with all requisite corporate,
company or partnership power and authority, as the case may be, under such
laws, and all necessary authorizations, approvals, orders, licenses,
certificates and permits ("Authorizations") of and from regulatory or
governmental officials, bodies and tribunals, (a) to own, lease, license
and operate its respective properties and to conduct its businesses as now
conducted and as described in the Offering Memorandum and (b) to enter
into, deliver, incur and perform its obligations under the Transaction
Documents to which it is a party, except for such Authorizations as may be
required in connection with the security documents under the New Credit
Facility (the "Bank Security Documents"), the Security Documents and
Registration Rights Agreements or in connection with the completion of the
Combination, except as described in the Offering Memorandum and except, in
the case of clause (a), where the failure to have obtained an
Authorization would not reasonably be expected to have a material adverse
effect on (i) the business, financial condition, assets, results of
operations or prospects of either RTI and the RTI Subsidiaries, taken as a
whole, or Republic Technologies and its Subsidiaries, taken as a whole, or
(ii) the power or ability of any of the Combined Companies to perform any
of their obligations under any of the Transaction Documents to which it is
a party or (iii) the consummation by any of the Combined Companies of any
of the transactions contemplated by any of the Transaction Documents or
the Offering Memorandum (in any such case, a "Material Adverse Effect").
Before and after giving effect to the Combination, except to the extent
any of the Combined Companies ceases to exist as a result of the
Combination, each of the Combined Companies is duly qualified to do
business as a foreign corporation or partnership in good standing in all
other jurisdictions where the ownership or leasing of its properties or
the conduct of its businesses requires such qualification, except where
the failure to be so qualified would not reasonably be expected to have a
Material Adverse Effect.
(g) Each of the Issuers has all requisite corporate power and
authority to execute, deliver and perform each of its respective
obligations under the Offering Documents to which it is a party, and, to
the extent it is a party, to execute, issue and deliver the Units, the
Notes, the Guarantees of the Notes, the Warrants, the Warrant Shares, the
Exchange Notes and the Private Exchange Notes (as defined in the Notes
Registration Rights Agreement), if any, and the Guarantees of the Notes
and the Private Exchange Notes, if any, and to perform its obligations
provided for therein; this Agreement has been duly and validly authorized,
executed and delivered by each of the Issuers.
-6-
<PAGE>
(h) The Units, the Notes, the Exchange Notes and the Private
Exchange Notes, if any, and the Guarantees of any of the foregoing have
been duly and validly authorized by the applicable Issuer. The Notes, when
executed, authenticated, issued and delivered in accordance with the terms
of the Indenture (assuming the due authorization, execution and delivery
of the Indenture by the Trustee) and when delivered against payment of the
purchase price for the Units as provided in this Agreement, and the
Exchange Notes and the Private Exchange Notes, if any, when executed,
authenticated, issued and delivered by the Notes Issuers in exchange for
the Notes, will constitute the valid and legally binding obligations of
the Notes Issuers, entitled to the benefits of the Indenture, enforceable
against each of the Notes Issuers in accordance with the terms thereof,
except to the extent such enforceability may be limited by the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing (the "Enforceability Limitations"). Each Guarantee, when
executed and delivered by the applicable Guarantor in accordance with the
terms of the Indenture, will constitute a valid and legally binding
obligation of such Guarantor, entitled to the benefits of the Indenture,
enforceable against the applicable Guarantor in accordance with its terms,
subject to the Enforceability Limitations.
(i) The Units and the Warrants have been duly and validly authorized
by RTI and, when executed by RTI and countersigned by the Warrant Agent in
accordance with the provisions of the Warrant Agreement, and delivered
against payment of the purchase price for the Units as provided in this
Agreement, will be entitled to the benefits of the Warrant Agreement and
will constitute valid and legally binding obligations of RTI enforceable
in accordance with their terms, subject to the Enforceability Limitations.
(j) When issued in accordance with the terms and conditions
contained in the Warrant Agreement upon exercise of the Warrants, the
Warrant Shares will be duly authorized, validly issued, fully paid and
non-assessable and will not be subject to any preemptive or similar
rights. The Warrant Shares have been duly reserved for issuance in
accordance with the terms of the Warrants and the Warrant Agreement.
(k) Each Offering Document has been duly and validly authorized and,
as of the Closing Date, each Offering Document will have been duly
executed and delivered by each of the Issuers to which it is a party, and,
upon such execution by such Issuers (assuming the due authorization,
execution and delivery by the Collateral Agent, Trustee, Unit Agent or
Warrant Agent, as applicable), the Offering Documents will constitute the
valid and legally binding obligations of such Issuer enforceable against
such Issuer, in accordance with the terms thereof (subject to clauses (bb)
through (ee) below, which separately address the matters covered therein),
subject to the Enforceability Limitations, and except as rights to
indemnity and contribution which may
-7-
<PAGE>
arise under such Offering Document may be limited by considerations of
public policy. No consent, authorization, approval, license or order of,
or filing, registration or qualification with, any court or governmental
body or agency, domestic or foreign, is required for the performance by
any of the Issuers of their respective obligations under the Transaction
Documents or for the consummation of the transactions contemplated thereby
except such as may be required (A) in connection with the registration
under the Securities Act of the Notes, the Guarantees, the Exchange Notes,
the Private Exchange Notes, if any, or the Warrants, the Financing
Warrants (as defined in the Warrant Agreement) or Registrable Securities
pursuant to the Registration Rights Agreements (including any filing with
the NASD), (B) in connection with the qualification of the Indenture under
the Trust Indenture Act, (C) by state securities or "blue sky" laws in
connection with the offer and sale of the Units, the Notes, the
Guarantees, the Exchange Notes, the Private Exchange Notes, if any, the
Warrants or Registrable Securities pursuant to the Registration Rights
Agreements, (D) in connection with the creation of security interests, (E)
in connection with the Combination, which as of the Closing Date shall
have been made or obtained, or (F) in connection with the Refinancing,
which as of the Closing Date shall have been made or obtained and except
as set forth in the Offering Memorandum.
(l) (1) The issuance, sale and delivery of the Units, the Notes, the
Exchange Notes, the Private Exchange Notes, if any, the Warrants and, upon
exercise of the Warrants, the Warrant Shares, (2) the execution, delivery
and performance by each of the Combined Companies of any Transaction
Document to which it is a party and (3) the consummation by each of the
Combined Companies of the transactions contemplated by the Transaction
Documents do not, and, at the Closing Date, will not, conflict with or
constitute or result in a breach or violation by any of the Combined
Companies of (A) any of the terms or provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) by any of the Combined Companies, or give rise to
any right to accelerate the maturity or require the prepayment of any
indebtedness under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of any of the Combined
Companies under, any contract, indenture, mortgage, deed of trust, loan
agreement, note, lease, license, franchise agreement, authorization,
permit, certificate or other agreement or document to which any of the
Combined Companies is a party or by which any of them may be bound, or to
which any of them or any of their respective assets or businesses is
subject, other than liens contemplated by the Transaction Documents and
repayments contemplated in connection with the completion of the
Refinancing and except for breaches, violations or defaults as to which
consents from the counterparties have been obtained, (B) the articles or
by-laws or similar organizational documents (each, an "Organizational
Document") of any of the Combined Companies, or (C) any law, statute, rule
or regulation, or any judgment, decree or order, in any such case, of any
domestic or foreign court or governmental or regulatory agency or other
body having jurisdiction over any of the Combined Companies or any
-8-
<PAGE>
of their respective properties or assets, except in the case of each of
clauses (A) and (C), for such conflicts, breaches or violations as would
not have or would not reasonably be expected to have a Material Adverse
Effect and other than as set forth in the Offering Memorandum.
(m) Each of the Combined Companies has or will have on the Closing
Date, to the extent each is or will be a party thereto, all requisite
corporate company or partnership power and authority, as the case may be,
to execute, deliver and perform each of their respective obligations under
each of the Transaction Documents (other than the Offering Documents) to
which it is a party; each of the Transaction Documents (other than the
Offering Documents) has been, or will have been on the Closing Date, duly
and validly authorized, executed and delivered by each of the Combined
Companies, to the extent each is or will be a party thereto; and each of
the Transaction Documents (other than the Offering Documents) constitutes
a valid and legally binding agreement of the Combined Companies, to the
extent each is or will be a party thereto, enforceable against each of the
Combined Companies, subject to the Enforceability Limitations.
(n) The Securities conform, and the Exchange Notes will conform, in
all material respects to the descriptions thereof in the Offering
Memorandum. The summaries of the Transaction Documents which are included
in the Offering Memorandum fairly summarize in all material respects each
such document as of the Closing Date.
(o) The audited and unaudited consolidated financial statements of
each of the Predecessor Companies contained in the Offering Memorandum,
together with the related notes thereto, present fairly the financial
position, results of operations and cash flows of each of the Predecessor
Companies and their respective subsidiaries, at the dates and for the
periods to which they relate, and have been prepared in accordance with
generally accepted accounting principles ("GAAP"). Deloitte & Touche LLP
are independent certified public accountants with respect to BarTech and
its subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public
Accountants ("AICPA") and its interpretations and rulings thereunder. KPMG
LLP are independent certified public accountants with respect to Republic
and its subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and rulings
thereunder. Ernst & Young LLP are independent certified public accountants
with respect to USS/Kobe within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and rulings
thereunder. Arthur Andersen LLP were, during the periods covered by their
audit opinion included in the Offering Memorandum, independent certified
public accountants with respect to Republic and its subsidiaries within
the meaning of Rule 101 of the Code of Professional Conduct of the AICPA
and its interpretations and rulings thereunder.
-9-
<PAGE>
(p) (i) The pro forma financial statements and other pro forma
financial information (including the notes thereto) included in the
Offering Memorandum (the "Pro Forma Information") and the projected
financial data included in the Projections section of the Offering
Memorandum (the "Projections") (A) present fairly, in all material
respects, the information shown therein, (B) in the case of the Pro Forma
Information, have been prepared in all material respects in accordance
with the applicable requirements of Rule 11-02 of Regulation S-X
promulgated under the Exchange Act and (C) have been properly compiled on
the bases described therein, and (ii) the assumptions used in the
preparation of the Pro Forma Information and the Projections are, in the
reasonable judgment of the Issuers, reasonably and fairly presented and
the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein. Except as set forth in
the Offering Memorandum, the Projections reflect the effects of GAAP
applied on a basis consistent with the historical financial statements of
BarTech in all material respects.
(q) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, there has been no (A)
material adverse change in the business, financial condition, assets,
results of operations or prospects of either RTI and the RTI Subsidiaries,
taken as a whole, or Republic Technologies International and the
Subsidiaries, taken as a whole (a "Material Adverse Change"), (B)
transaction entered into by any of the Combined Companies, other than in
the ordinary course of business, that is material to either RTI and the
RTI Subsidiaries, taken as a whole, or Republic Technologies International
and the Subsidiaries, taken as a whole, or (C) dividend or distribution of
any kind declared, paid or made by any of the Combined Companies on its
capital stock, except as contemplated by the Transaction Documents.
(r) Immediately after the Combination, Republic Technologies and RTI
each will have the authorized, issued and outstanding capitalization set
forth in Schedule 2 hereto; all of the outstanding equity interests of
Republic Technologies and capital stock of RTI will have been duly
authorized and, after giving effect to the Combination, will have been
validly issued and will be fully paid and nonassessable and will not have
been issued in violation of any preemptive or similar rights. Immediately
after the Combination, Republic Technologies and RTI will not own,
directly or indirectly, any shares or any other equity securities or have
any equity interest in any partnership, joint venture or other entity
other than their Subsidiaries indicated on Schedule 1 hereto. No holder of
any securities of any Issuer is entitled to have such securities (other
than the Notes, the Exchange Notes, the Private Exchange Notes, if any,
and the Warrants, the Financing Warrants and Registrable Securities, the
existing BarTech Warrants and equity securities of RTI and RTI
Subsidiaries held by affiliates of USX Corporation, Kobe Steel, Ltd. and
purchasers of equity securities in connection with the Combination)
registered under any registration statement contemplated by the
Registration Rights Agreements. Immediately after the Combination, all of
the
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outstanding capital stock or other equity interests of each RTI Subsidiary
will have been duly authorized and validly issued, will be fully paid and
nonassessable and will not have been issued in violation of any preemptive
or similar rights (whether provided contractually or pursuant to any
Organizational Document) and the outstanding shares of capital stock or
other equity interests owned by Republic Technologies of the Subsidiaries
and by RTI of the RTI Subsidiaries are owned beneficially and of record,
directly and indirectly, by Republic Technologies and RTI, respectively,
free and clear of all Liens (other than Liens created by the Security
Documents) and claims or restrictions on transferability or voting, other
than as contemplated by the Equityholders Agreement, the Organizational
Documents and the Transaction Documents.
(s) None of the Combined Companies is (A) in violation of their
respective Organizational Documents, (B) in default (or, with notice or
lapse of time or both, would be in default) in the performance or
observance of any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, deed of trust, loan agreement, note,
lease, license, franchise agreement, authorization, permit, certificate or
other agreement or instrument to which any of them is a party or by which
any of them may be bound, or to which any of their respective assets or
properties is subject, or (C) in violation of any law, statute, judgment,
decree, order, rule or regulation of any domestic or foreign court with
jurisdiction over any of the Combined Companies or any of their assets or
properties, or other governmental or regulatory authority, agency or other
body, other than such defaults or violations which, individually or in the
aggregate, would not reasonably be expected to have or result in, in the
case of clause (A), (B) or (C), a Material Adverse Effect.
(t) Each of the Combined Companies owns or possesses, or can acquire
on reasonable terms, adequate licenses, trademarks, service marks, trade
names, copyrights and know-how (including trade secrets and other
proprietary or confidential information, systems or procedures)
(collectively, "Intellectual Property") necessary to conduct the business
now or proposed to be operated as described in the Offering Memorandum,
except where the failure to own, possess or have the ability to acquire
any such Intellectual Property would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect; and
none of them has received any notice of infringement of or conflict with
(and neither knows of any such infringement of or conflict with) asserted
rights of others with respect to any of such Intellectual Property which,
if any such assertions of infringement or conflict were sustained,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
(u) Except as set forth in the Offering Memorandum and except as
would not reasonably be expected to have a Material Adverse Effect, there
is no legal action, suit, proceeding, inquiry or investigation before or
by any court or governmental body or agency, domestic or foreign, now
pending or, to the best knowledge of the Issuers,
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threatened against any of the Combined Companies. Except as set forth in
the Offering Memorandum and except as would not reasonably be expected to
have a Material Adverse Effect, none of the Combined Companies has
received any notice or claim of any default (or event, condition or
omission which with notice or lapse of time or both would result in a
default) under any of its respective material contracts or has knowledge
of any breach of any of such material contracts by the other party or
parties thereto.
(v) Each of the Combined Companies and their respective Subsidiaries
has filed all necessary federal, state and foreign income and franchise
tax returns, except where the failure to so file such returns would not
reasonably be expected to result in a Material Adverse Effect, and has
paid all taxes shown as due thereon; and there is no tax deficiency that
has been asserted against any of the Companies or any of their respective
Subsidiaries that would reasonably be expected to result in a Material
Adverse Effect.
(w) Each of the Combined Companies has good and marketable title to
all real and personal property described in the Offering Memorandum as
being owned by it and has valid rights to each lease under valid,
subsisting and enforceable leases in the real and personal property
described in the Offering Memorandum as being leased by it, except, in
each case, as described in the Offering Memorandum or to the extent the
failure to have such title would not reasonably be expected to result in a
Material Adverse Effect.
(x) None of the Issuers is an "investment company" or a company
"controlled by" an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
and the rules and regulations thereunder.
(y) No labor problem, dispute or disturbance with the employees of
any of the Combined Companies exists or, to the best knowledge of the
Issuers, is threatened which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(z) (i) Immediately after the consummation of the Combination, and
the transactions contemplated by the Transaction Documents, the fair value
and present fair saleable value of the assets of Republic Technologies
will exceed the sum of its stated liabilities and identified contingent
liabilities; and (ii) Republic Technologies is not, nor will it be, after
giving effect to the execution, delivery and performance of the
Transaction Documents, to the extent it is a party thereto, and the
consummation of the transactions contemplated thereby, (a) left with
unreasonably small capital with which to carry on its business as it is
proposed to be conducted, (b) unable to pay its debts (contingent or
otherwise) as they mature or (c) insolvent.
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(aa) Except as disclosed in the Offering Memorandum, and except as
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, (A) each of the Combined Companies is in
compliance with all applicable Environmental Laws, (B) each of the
Combined Companies has all permits, authorizations and approvals required
under any applicable Environmental Laws and is in compliance with their
requirements and (C) there are no pending or, to the knowledge of any of
the Issuers, threatened Environmental Claims against any of the Combined
Companies.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any federal, state, local or
municipal statute, law, rule, regulation, ordinance, code, policy or rule
of common law and any published judicial or administrative interpretation
thereof including any judicial or administrative order, consent decree or
judgment binding on any of the Combined Companies, relating to the
environment, health, safety or any chemical, material or substance,
exposure to which is prohibited, limited or regulated by any such
governmental authority. "Environmental Claims" means any and all
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental
Law.
(bb) Upon execution and delivery (and, where applicable, payment of
any mortgage recording tax) by the Pledgors at the Closing Date and
assuming due recording, the Mortgages will create and constitute (A) valid
and enforceable mortgage liens on the real properties and fixtures
described therein (the "Real Property") and (B) a valid and enforceable
security interest in such of the Mortgaged Properties (as defined in the
Mortgages collectively), other than the Real Property, in which a security
interest can be created under Article 9 (the "UCC Property") of the
Uniform Commercial Code (the "UCC") as in effect in the state in which
such Mortgaged Property is located or the similar laws of Canada or the
Province of Ontario with respect to Mortgaged Properties of CDSC. The
Mortgages will be in proper form under the laws of the states or the
province in which the Mortgaged Properties encumbered thereby are located,
to be accepted for recording in the counties, provinces or other
appropriate jurisdictions where such Mortgaged Properties are located.
(cc) Upon execution and delivery by the Pledgors at the Closing
Date, the Security Documents will create and constitute valid, enforceable
and, subject to all required filings contemplated by clause (dd) below and
actions contemplated by clause (ee) below, perfected security interests
in, liens on or pledges of all of the Pledged Collateral (as defined in
the Security Agreement) and the Collateral (as defined in the Master
Pledge Agreement).
(dd) Upon (A) execution and delivery of the Security Documents by
the Pledgors at the Closing Date and (B) the filing of the UCC-1 financing
statements or
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their equivalent in other jurisdictions (the "Financing Statements")
relating to (1) the Mortgages in the appropriate recording office of the
political subdivision where Mortgaged Property is situated and (2) the
Security Agreement in each office where such filing is necessary or
appropriate, the security interest, lien or pledge created by (x) the
Security Agreement in the Pledged Collateral will be a perfected security
interest with respect to that portion of such Pledged Collateral described
therein in which a security interest can be perfected by filing a
financing statement, prior to all other claims or security interests
therein which may be perfected by the filing of a financing statement or
by possession, except for prior liens and encumbrances permitted by the
Security Agreement, and (y) the Mortgages in UCC Property will be a
perfected security interest with respect to that portion of the UCC
Properties in which a security interest can be perfected by filing a
financing statement, prior to all other security interests therein which
may be perfected by filing a financing statement or by possession, except
for prior liens and encumbrances permitted by the applicable Mortgage.
(ee) Upon execution and delivery by the Pledgors at the Closing Date
and assuming delivery of certificates representing the Pledged Shares (as
defined in the Master Pledge Agreements (as defined in the Indenture)) and
that the Collateral Agent holds such certificates in accordance with the
Master Pledge Agreements, the Securities Pledge Agreements will create and
constitute valid, enforceable and perfected security interests in, liens
on and pledges of all of the Pledged Collateral prior to all other claims
or security interests therein, except for pari passu liens and
encumbrances permitted by the Master Pledge Agreements.
(ff) Any certificate signed by any officer of any Issuer and
delivered on the Closing Date to the Initial Purchasers or to counsel for
the Initial Purchasers pursuant to the terms of this Agreement shall be
deemed a representation and warranty by such Issuer to the Initial
Purchasers as to the matters covered thereby.
(gg) (A) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code")) or "accumulated funding deficiency" (as defined in Section 302 of
ERISA) or any of the events set forth in Section 4043(b) of ERISA (other
than events with respect to which the 30-day notice requirement under
Section 4043 of ERISA has been waived) has occurred with respect to any
employee benefit plan of the Combined Companies; (B) each such employee
benefit plan is in compliance in all material respects with applicable
law, including ERISA and the Code; (C) the Combined Companies have not
incurred liability under Title IV of ERISA with respect to the termination
of, or withdrawal from, any pension plan for which the Combined Companies
would have any liability; and (D) each such pension plan that is intended
to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act,
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which could reasonably be expected to cause the loss of such
qualification, except for such transaction, deficiencies, events,
non-compliance, liabilities, non-qualifications actions or failures to act
which, individually or in the aggregate, would not reasonably be expected
to have or result in, in the case of clauses (A), (B), (C) or (D), a
Material Adverse Effect.
(hh) The contracts listed on Schedule 3 hereto represent an
aggregate list of all of the material contracts for the Combined Companies
following the completion of the Transactions.
2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Issuers agree to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Issuers, the number of Units set forth opposite the name of such Initial
Purchaser on Schedule 4 hereto at a purchase price of $952.10 per Unit. The
Issuers shall not be obligated to deliver any of the Units except upon payment
for all of the Units to be purchased as provided herein.
(b) The Initial Purchasers have advised the Issuers that they
propose to offer the Units for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents and warrants to, and agrees
with, the Issuers that (i) it is a Qualified Institutional Buyer (as defined
herein) purchasing the Units pursuant to a private sale exempt from registration
under the Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the Units by means of
any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D under the Securities Act ("Regulation D") or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the Units
only from, and has offered or sold and will offer, sell or deliver the Units, as
part of its initial offering, only (A) within the United States to persons whom
it reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the Securities Act
(provided that, if any such person is buying for one or more institutional
accounts for which such person is acting as fiduciary or agent, such person has
represented to it that each such account is a Qualified Institutional Buyer) to
whom notice has been given that such sale or delivery is being made in reliance
on Rule 144A, and in transactions in accordance with Rule 144A and (B) outside
the United States to persons other than U.S. persons in reliance on Regulation
S.
(c) Each Initial Purchaser acknowledges and agrees that the
Securities have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except pursuant to an exemption from, or in transactions not
subject to, the registration requirements of the Securities Act.
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<PAGE>
(d) In connection with the offer and sale of Securities in reliance
on Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) Such Initial Purchaser has offered and sold the Securities, and
will offer and sell the Securities, (A) as part of their distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the Closing Date with
respect to Notes and until one year after the later of the commencement of
the offering of the Securities and the Closing Date with respect to the
Units, the Warrants and the Warrant Shares, in each case, only in
accordance with Regulation S or Rule 144A.
(ii) None of such Initial Purchaser or any of its affiliates or any
other person acting on its or their behalf has engaged or will engage in
any directed selling efforts with respect to the Securities, and all such
persons have complied and will comply with the offering restrictions
requirement of Regulation S.
(iii) At or prior to the confirmation of sale of any Securities sold
in reliance on Regulation S, it will have sent to each distributor, dealer
or other person receiving a selling concession, fee or other remuneration
that purchase Securities from it during the restricted period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering of the Securities and the
date of original issuance of the Securities, in the case of the
Notes, or until one year after the commencement of the offering of
the Securities and the date of original issuance of the Securities,
in the case of the Units, the Warrants and the Warrant Shares,
except in accordance with Regulation S or Rule 144A. Terms used
above have the meanings given to them by Regulation S."
(iv) It has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the
Companies.
(v) Such Initial Purchaser represents, warrants and agrees not to
engage in hedging transactions with respect to the Securities unless in
compliance with the Securities Act.
Terms used in this Section 2(d) have the meanings given to them by Regulation S.
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<PAGE>
(e) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; and (iii)
it has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(f) Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from the Companies pursuant hereto, such Initial Purchaser shall
furnish to that purchaser a copy of the Offering Memorandum (and any amendment
or supplement thereto that the Companies shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Companies
and, for purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Sections 5(d) and (e), counsel for the Companies and for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchasers and their compliance with their agreements
contained in this Section 2, and each Initial Purchaser hereby consents to such
reliance.
(g) The Issuers acknowledge and agree that the Initial Purchasers
may sell Securities to any affiliate of an Initial Purchaser and that any such
affiliate may sell Securities purchased by it to an Initial Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of the
Securities and payment for the Units shall be made at the offices of Simpson
Thacher & Bartlett, New York, New York, or at such other place as shall be
agreed upon by the Initial Purchasers and the Companies, at 10:00 A.M., New York
City time, on August 13, 1999 or at such other time or date, not later than two
(2) full business days thereafter, as shall be agreed upon by the Initial
Purchasers and the Companies (such date and time of payment and delivery being
referred to herein as the "Closing Date").
(b) On the Closing Date, payment of the purchase price for the Units
shall be made to Republic Technologies, on behalf of the Companies, by wire or
book-entry transfer of same-day funds to such account or accounts as the
Companies shall specify prior to the Closing Date or by such other means as the
parties hereto shall agree prior to the Closing Date
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against delivery to the Initial Purchasers of the certificates evidencing the
Units. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligations
of the Initial Purchasers hereunder. Upon delivery, the Units shall be in global
form, registered in such names and in such denominations as CSI on behalf of the
Initial Purchasers shall have requested in writing not less than two full
business days prior to the Closing Date. The Issuers agree to make one or more
global certificates evidencing the Units available for inspection by CSI on
behalf of the Initial Purchasers in New York, New York at least 24 hours prior
to the Closing Date. The receipt by Republic Technologies of any portion of the
proceeds attributable to the Warrants will be evidence of a capital contribution
of such amount by RTI to Republic Technologies.
4. Further Agreements of the Issuers. Each of the Issuers agrees
with each of the several Initial Purchasers:
(a) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(b) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers
and counsel for the Initial Purchasers and not to effect any such
amendment or supplement to which the Initial Purchasers shall reasonably
object by notice to the Companies after a reasonable period to review;
(c) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue or
which requires the making of any additions to or changes in the Offering
Memorandum (as amended or supplemented from time to time) in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; to advise the Initial Purchasers promptly of
any order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any jurisdiction
and of the initiation or threatening of any proceeding for any such
purpose; and to use its reasonable best efforts to prevent the issuance of
any such order preventing or suspending the use of the Preliminary
Offering Memorandum or the Offering Memorandum or suspending any such
qualification and, if any such suspension is issued, to obtain the lifting
thereof at the earliest possible time;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Issu-
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ers, to amend or supplement the Offering Memorandum in order that the
Offering Memorandum will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time
it is delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Offering Memorandum to comply with applicable law,
to prepare promptly such amendment or supplement as may be necessary to
correct such untrue statement or omission or so that the Offering
Memorandum, as so amended or supplemented, will comply with applicable
law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request of
such holders or such prospective purchasers, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless
the Issuers are then subject to and in compliance with Section 13 or 15(d)
of the Exchange Act (the foregoing agreement being for the benefit of the
holders from time to time of the Securities and prospective purchasers of
the Securities designated by such holders);
(f) for a period of three years after the Closing Date, to furnish
to the Initial Purchasers copies of any annual reports, quarterly reports
and current reports filed by the Issuers with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission, and such other documents, reports and information as shall
be furnished by the Issuers to the Trustee and Warrant Agent or to the
holders of the Securities pursuant to the Indenture and Warrant Agreement
or the Exchange Act or any rule or regulation of the Commission
thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchasers may designate and to continue such qualifications
in effect for so long as required for the resale of the Securities; and to
arrange for the determination of the eligibility for investment of the
Securities under the laws of such jurisdictions as the Initial Purchasers
may reasonably request; provided that the Issuers and their subsidiaries
shall not be obligated to qualify as foreign corporations in any
jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction or to take any action
which would subject them to taxation in any jurisdiction where they are
not so subject;
(h) to assist the Initial Purchasers in arranging for the Units,
Notes and Warrants to be designated Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market securities in accordance with
the rules and regulations adopted by the National Association of
Securities Dealers, Inc. ("NASD") relating to
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trading in the PORTAL Market and for the Securities to be eligible for
clearance and settlement through The Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, or as otherwise contemplated by the Registration Rights
Agreements, not to, and to cause its affiliates not to, and not to
authorize or knowingly permit any person acting on their behalf to,
solicit any offer to buy or offer to sell the Securities by means of any
form of general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and not to offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or
disposition would cause the exemption afforded by Section 4(2) of the
Securities Act to cease to be applicable to the offering and sale of the
Securities as contemplated by this Agreement and the Offering Memorandum;
(k) for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by the Issuers (other than the
Securities), except as contemplated by the Registration Rights Agreements,
without the prior written consent of the Initial Purchasers;
(l) during the period from the Closing Date until two years after
the Closing Date, without the prior written consent of the Initial
Purchasers, not to, and not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Securities that
have been reacquired by them, except for Securities purchased by the
Issuers or any of their respective affiliates and resold in a transaction
registered under the Securities Act;
(m) not to, for so long as the Securities are outstanding, be or
become an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act, and to not be or become a
closed-end investment company required to be registered, but not
registered thereunder;
(n) in connection with the offering of the Securities, until CSI on
behalf of the Initial Purchasers shall have notified the Companies of the
completion of the resale
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of the Securities, not to, and to cause its affiliated purchasers (as
defined in Regulation M under the Exchange Act) not to, either alone or
with one or more other persons, bid for or purchase, for any account in
which it or any of its affiliated purchasers has a beneficial interest,
any Securities, or attempt to induce any person to purchase any
Securities; and not to, and to cause its affiliated purchasers not to,
make bids or purchase for the purpose of creating actual, or apparent,
active trading in or of raising the price of the Securities;
(o) in connection with the offering of the Securities, to make its
officers, employees, the independent accountants for itself and the
Predecessor Companies and legal counsel reasonably available upon request
by the Initial Purchasers;
(p) to furnish to each of the Initial Purchasers on the Closing Date
a copy of the independent accountants' reports included in the Offering
Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and performed
by it under this Agreement that are within its control prior to or after
the Closing Date, and to use its reasonable best efforts to satisfy all
conditions precedent on its part to the delivery of the Securities;
(r) to apply the net proceeds from the sale of the Units as set
forth in the Offering Memorandum under the heading "Use of Proceeds"; and
(s) to, not later than 30 days after the Closing Date, file or cause
to be filed by the appropriate Issuer with the Commission on a Report on
Form 8-K that includes the Projections, "The Consolidation Plan," the pro
forma financial information and related risk factors, and such other
information as the Issuers shall determine.
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of each of the Issuers contained herein, to the
accuracy of the statements of each of the Issuers and their respective officers
made in any certificates delivered pursuant hereto, to the performance by each
of the Issuers of their respective obligations hereunder to be performed on or
before the Closing Date, and to each of the following additional terms and
conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchasers may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or
threatened.
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(b) None of the Initial Purchasers shall have discovered and
disclosed to the Issuers on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Initial
Purchasers, is material or omits to state any fact which, in the opinion
of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents,
and all other legal matters relating to the Transaction Documents and the
transactions contemplated thereby, shall be satisfactory in all material
respects to the Initial Purchasers, and the Issuers shall have furnished
to the Initial Purchasers all documents and information that they or their
counsel may reasonably request to enable them to pass upon such matters.
(d) Simpson Thacher & Bartlett shall have furnished to the Initial
Purchasers their written opinion, as counsel to the Issuers and
Blackstone, addressed to the Initial Purchasers and dated the Closing
Date, substantially in the form of Annex A-3 hereto.
(e) Borden & Elliot shall have furnished to the Initial Purchasers
their written opinion, as special Canadian counsel for CDSC, addressed to
the Initial Purchasers dated as of the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers to the effect that:
(1) CDSC has been duly incorporated under the laws of Canada
and has not been discontinued or dissolved;
(2) CDSC has all necessary corporate power and corporate
authority to own, lease and operate its assets and properties and
conduct its business as described in the Offering Memorandum;
(3) CDSC is duly qualified to carry on business in Ontario;
(4) the authorized capital of CDSC consists of an indicated
number of shares, of which an indicated number of shares have been
validly allotted and issued and are outstanding as fully paid and
nonassessable and were not issued in violation of (a) the articles
or by-laws of CDSC, or (b) to the best of such counsel's knowledge
any written agreement as to which CDSC is bound;
(5) CDSC has the necessary corporate power and authority to
execute, deliver and perform its obligations under each Offering
Document to which it is a party;
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(6) the execution, delivery and performance by CDSC of each
Offering Document to which it is a party has been duly authorized by
all necessary corporate action of CDSC; and each of the Offering
Documents has been duly executed and delivered by CDSC, to the
extent a party thereto;
(7) no consent, approval, authorization, license,
qualification or order of or filing or registration with, any court
or governmental or regulatory agency or body of Canada or the
Province of Ontario is required as a condition for the execution and
delivery by CDSC of the Offering Documents to the extent it is a
party thereto or the performance of its obligations thereunder;
(8) the execution and delivery by CDSC of the Offering
Documents to which it is a party and the performance of its
obligations thereunder do not, and, at the Closing Date, will not,
conflict with or constitute or result in a breach or violation by
CDSC of the Organizational Documents of CDSC or any law, rule or
regulation of Canada or the Province of Ontario, to the best of such
counsel's knowledge, or any order, decree or judgment, of any court
or governmental body of the Province of Ontario applicable to CDSC.
In rendering such opinions, such counsel (A) need not express any
opinion with regard to the application of laws of any jurisdiction other
than the Federal laws of Canada and the laws of the Province of Ontario,
(B) may rely, as to matters of fact, to the extent they deem proper on
representations or certificates of responsible officers of the Issuers and
certificates of public officials and (C) will make such assumptions and
qualifications as are necessary and reasonable.
(f) Counsel to USS/KOBE, shall have furnished to the Initial
Purchasers their written opinion, as counsel for USS/KOBE, dated the
Closing Date, in form and substance satisfactory to the Initial
Purchasers.
(g) The Initial Purchasers and the Collateral Agent shall have
received opinions from local counsel for the Companies in Pennsylvania,
Illinois, Ohio, New York, Connecticut, Indiana and Canada, each such
opinion dated the Closing Date and in form and substance reasonably
satisfactory to the Initial Purchasers.
(h) The Initial Purchasers shall have received from Cahill Gordon &
Reindel, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Issuers shall have furnished to
such counsel such documents and information as they request for the
purpose of enabling them to pass upon such matters.
(i) Each of the Companies shall have furnished to the Initial
Purchasers a certificate, dated the Closing Date, of its chief executive
officer and its chief financial officer stating that
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(A) such officers have carefully examined the Offering
Memorandum,
(B) to the best of their knowledge, the Offering Memorandum,
as of its date, did not include any untrue statement of a material
fact and did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, and since the date of the Offering Memorandum, no event
has occurred which should have been set forth in a supplement or
amendment to the Offering Memorandum so that the Offering Memorandum
(as so amended or supplemented) would not include any untrue
statement of a material fact and would not omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, and
(C) as of the Closing Date, the representations and warranties
of the Issuers in this Agreement are true and correct in all
material respects, the Issuers have complied in all material
respects with all agreements and satisfied in all material respects
all conditions on its part to be performed or satisfied hereunder on
or prior to the Closing Date, and subsequent to the date of the most
recent financial statements contained in the Offering Memorandum,
there has been no material adverse change in the business, assets,
financial position or results of operation of the Issuers and the
Combined Companies, taken as a whole, except as set forth in the
Offering Memorandum.
(j) The Initial Purchasers shall have received letters (the "Initial
Letters") of Deloitte & Touche LLP, KPMG Peat Marwick LLP, Arthur Andersen
LLP and Ernst & Young LLP, addressed to the Initial Purchasers and dated
the date hereof, in form and substance satisfactory to the Initial
Purchasers.
(k) The Initial Purchasers shall have received letters (the
"Bring-Down Letters") of Deloitte & Touche LLP and Ernst & Young LLP,
addressed to the Initial Purchasers and dated the Closing Date (i)
confirming that they are independent public accountants with respect to
the Predecessor Companies, as applicable, within the meaning of Rule 101
of the Code of Professional Conduct of the AICPA and its interpretations
and rulings thereunder, (ii) stating, as of the date of the Bring-Down
Letters (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is
given in the Offering Memorandum, as of a date not more than three
business days prior to the date of the Bring-Down Letters), that the
conclusions and findings of such accountants with respect to the financial
information and other matters covered by the Initial Letters are accurate
and (iii) confirming in all material respects the conclusions and findings
set forth in the Initial Letters.
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(l) The Initial Purchasers shall have received a counterpart of each
of the Registration Rights Agreements which shall have been executed and
delivered by a duly authorized officer of each of the Issuers.
(m) The Indenture shall have been duly executed and delivered by
each of the Notes Issuers, the Guarantors and the Trustee, and the Notes
shall have been duly executed and delivered by each of the Notes Issuers
and duly authenticated by the Trustee and the Guarantee of each Guarantor
shall have been endorsed thereon.
(n) The Initial Purchasers shall have received a counterpart of the
Warrant Agreement which shall have been executed and delivered by a duly
authorized officer of RTI.
(o) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(p) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission which in the judgment of the Initial Purchasers
would materially impair the ability of the Initial Purchasers to purchase,
hold or effect resales of the Units as contemplated hereby.
(q) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations, business or
prospects of either RTI and the RTI Subsidiaries, taken as a whole, or
Republic Technologies and the Subsidiaries, taken as a whole, the effect
of which, in any such case described above, is, in the judgment of the
Initial Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Units on the terms
and in the manner contemplated by this Agreement and the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(r) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance
or sale of the Securities; and no injunction, restraining order or order
of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Units.
(s) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Notes or any
of the Issuers'
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other debt securities or preferred stock by any "nationally recognized
statistical rating organization," as such term is defined by the
Commission for purposes of Rule 436(g)(2) of the rules and regulations of
the Commission under the Securities Act, and (ii) no such organization
shall have publicly announced that it has under surveillance or review
(other than an announcement with positive implications of a possible
upgrading), its rating of the Notes or any of the Issuers' other debt
securities or preferred stock.
(t) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on any such exchange or market
by the Commission, by any such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in any securities
of the Issuers on any exchange or in the over-the-counter market shall
have been suspended or (ii) any moratorium on commercial banking
activities shall have been declared by federal or New York state
authorities or (iii) an outbreak or escalation of hostilities or a
declaration by the United States of a national emergency or war or (iv) a
material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) the effect of which, in the
case of this clause (iv), is, in the judgment of the Initial Purchasers,
so material and adverse as to make it impracticable or inadvisable to
proceed with the sale or the delivery of the Units on the terms and in the
manner contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(u) The Collateral Agent shall have received the Security
Agreements, duly executed by the appropriate Issuer or Guarantor party
thereto and dated on or before the Closing Date, together with:
(i) duly executed UCC-1 financing statements or other
documents under the provisions of the Uniform Commercial Code or any
other applicable state law in proper form for filing in each office
where such filing is necessary or appropriate to grant to the
Collateral Agent for its benefit and the benefit of Trustee and the
holders of the Securities the Liens of the character and priority
contemplated by the Security Agreements;
(ii) any certificates representing outstanding pledged
securities as contemplated by the Master Pledge Agreement; and
(iii) evidence that all other actions necessary to perfect and
protect the Liens created by the Security Agreements have been
taken.
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(v) On or before the Closing Date, the Initial Purchasers and the
Collateral Agent shall have received the Intercreditor Agreements, duly
executed by the applicable Issuers and each other party thereto.
(w) On or before the Closing Date, the Issuers shall have caused to
be delivered to the Collateral Agent, the following documents and
instruments with regard to each Mortgaged Property:
(i) a Mortgage encumbering the Note Issuers' or applicable
Subsidiary Guarantor's fee interest or leasehold interest, as the
case may be, in each such Mortgaged Property, duly executed and
acknowledged by the owner or holder of the fee interest or leasehold
interest, as the case may be, constituting such Mortgaged Property
and otherwise in form for recording in the appropriate recording
office of the political subdivision where such Mortgaged Property is
situated, together with such certificates, affidavits,
questionnaires or returns as shall be required in connection with
the recording or filing thereof and such UCC-1 financing statements
and other similar statements as are contemplated in respect of such
Mortgage by the counsel opinions described in Section 5(g) of this
Agreement, and any other instruments necessary to grant the
interests purported to be granted by such Mortgage under the laws of
any applicable jurisdiction, which Mortgage and financing statements
and other instruments shall be effective to create a Lien on such
Mortgaged Property subject to no Liens other than Liens permitted to
be outstanding pursuant to such Mortgage;
(ii) a policy of title insurance (or commitment to issue such
a policy) insuring (or committing to insure) the Lien of such
Mortgage as a valid first mortgage Lien on the real property and
fixtures described therein in respect of the Notes in an amount not
less than the fair market value of such real/property and fixtures,
which policy or commitment shall (a) be issued by Title Associates
Inc., as agent for Chicago Title Insurance Company (the "Title
Company"), (b) include such reinsurance arrangements (with
provisions for direct access) as shall be reasonably acceptable to
the Collateral Agent, (c) have been supplemented by such
endorsements, or, where such endorsements are not available at
commercially reasonable premium costs, opinion letters of special
counsel, architects or other professionals, which counsel,
architects or other professionals shall be reasonably acceptable to
the Collateral Agent, as shall be reasonably requested by the
Collateral Agent (including, without limitation, endorsements or
opinion letters on matters relating to usury, first loss, last
dollar, zoning, non-imputation, public road access, contiguity
(where appropriate), cluster, survey, doing business, variable rate
and so-called comprehensive coverage over covenants and
restrictions) and (d) contain only such exceptions to title as shall
be agreed to by the Collateral Agent prior to the Closing Date with
respect to such Mortgaged Property;
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(iii) a survey (i) in such form as shall be sufficient to
cause the Title Company to issue the survey endorsement under
paragraph (ii) hereof and to remove the standard survey exception
from such policy (or commitment) or and (ii) to the extent
commercially reasonable, complying with the minimum detail
requirements of the American Land Title Association (as such
requirements are in effect on the date of delivery of such survey)
certified to the Trustee and dated (or redated) not earlier than
twelve months prior to the date of delivery thereof, or if earlier,
accompanied by an officers' certificate stating that there have been
no material changes to the applicable Mortgaged Property since the
date of the survey, unless there shall have occurred any material
exterior change in the property affected thereby during such period,
in which event such survey shall be dated or redated to a date after
the completion of such change;
(iv) policies or certificates of insurance as required by the
Mortgages relating thereto, which policies or certificates shall
bear mortgagee endorsements of the character required by such
Mortgages;
(v) UCC, PPSA, judgment and tax lien searches confirming that
the personal property comprising a part of such Mortgaged Property
is subject to no Liens other than Liens permitted by the Mortgages;
(vi) such affidavits, certificates and instruments of
indemnification as shall reasonably be required to induce the title
company to issue the policy or policies (or commitment) contemplated
in subparagraph (ii) above;
(vii) checks payable to the appropriate public officials in
payment of all recording costs and transfer taxes (or checks or wire
transfers to the title insurance company in respect of such amounts)
due in respect of the execution, delivery or recording of such
Mortgages, together with a wire transfer for the title company in
payment of its premium, search and examination charges, and any
other amounts due in connection with the issuance of its policies
(or commitments);
(viii) copies of all Leases (as defined in the Mortgages), all
of which Leases shall, to the extent not previously approved in
writing by the Initial Purchasers and the Collateral Agent, be
reasonably satisfactory to the Initial Purchasers and the Collateral
Agent;
(ix) an Officers' Certificate (as defined in the Indenture)
stating that there has been issued and is in effect a valid and
proper certificate of occupancy or local equivalent, if required by
the local codes or ordinances for the use then being made of the
applicable Mortgaged Property and that there is not
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outstanding any citation, violation or similar notice indicating
that such Mortgaged Property contains conditions which are not in
compliance with local codes or ordinances relating to building or
fire safety or structural soundness; and
(x) such consents, approvals, amendments, supplements,
estoppels, tenant subordination agreements or other instruments as
shall be reasonably necessary in order for the owner or holder of
the fee interest to grant the Lien contemplated by the Mortgage with
respect to such Mortgaged Property.
(x) The Equity Contribution of not less than $155 million shall have
been made on or prior to the Closing Date and in accordance with the terms
of each of the Equity Contribution Documents; provided that it shall not
be a failure of this condition (x) solely by virtue of the fact that the
Initial Purchasers have not purchased equity securities in RTI.
(y) The executed version of the Master Agreement and the other
Combination Documents (including the disclosure schedules, exhibits and
annexes thereto) shall not include any material terms or conditions which
differ materially from the description of the Combination in the Offering
Memorandum and the Combination shall have been, or shall be concurrently,
consummated in accordance with the terms of each of the Combination
Documents and any certificate of mergers, liquidation or dissolution with
respect to any of the Combined Companies shall have been filed with the
Secretary of State of the appropriate jurisdictions and shall have become
effective.
(z) The New Credit Facility shall have been duly executed and
delivered by each party thereto. There shall exist at and as of the
Closing Date (after giving effect to the Transactions) no condition that
would constitute a default (or an event that, with notice, a lapse of
time, or both, would constitute a default) under the New Credit Facility.
(aa) The Refinancing shall have been, or shall be concurrently,
consummated pursuant to the terms of the Refinancing Documents as
described in the Offering Memorandum. All material consents, approvals
and/or authorizations necessary in connection with the Refinancing shall
have been obtained.
(bb) The Initial Purchasers shall have received a signed written
opinion from Murray, Devine & Co., Inc., reasonably satisfactory to the
Initial Purchasers, regarding the solvency of Republic Technologies
immediately after the consummation of the Transactions as contemplated by
the Transaction Documents.
(cc) The Initial Purchasers shall have received the signed written
reports of (x) Beddows & Company and (y) Metal Strategies, Inc. reasonably
satisfactory to the Initial Purchasers.
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(dd) The employees of USS/Kobe (before giving effect to the
Combination) represented by United Steelworkers Union shall have ratified
the new labor agreement.
(ee) There shall have been no material amendments, alterations,
modifications, or waivers of any provisions of the Transaction Documents
since the date of the execution and delivery thereof by the parties
thereto.
(ff) The Issuers shall, to the extent each is a party thereto, have
complied in all material respects with all agreements and covenants in the
Transaction Documents, performed all conditions specified therein that the
terms thereof require to be complied with or performed at or prior the
Closing Date and delivered to the Initial Purchasers executed copies of
each of the Transaction Documents conforming in all material respects to
any descriptions thereof set forth in the Offering Memorandum.
(gg) The Equityholders Agreement (as defined in the Master
Agreement) and all other Combination Documents, including the coke, pellet
and rounds supply agreements, shall have been entered into and shall be in
full force and effect.
(hh) The Initial Purchasers shall have received reliance letters
from counsel to the Issuers delivering an opinion, if any, pursuant to the
Master Agreement or the New Credit Facility allowing the Initial
Purchasers to rely on the opinion delivered by such counsel pursuant to
the Master Agreement or the New Credit Facility as if such opinion had
been addressed to the Initial Purchasers.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Companies prior to delivery of and payment
for the Securities if, prior to that time, any of the events described in
Section 5(p), (q), (r), (s) or (t) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser agreed but
failed to purchase by other persons satisfactory to the Issuers and the
non-defaulting Initial Purchasers, but if no such arrangements are made within
36 hours after such default, this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers or the Issuers, except that
the Issuers will continue to be liable for the payment of expenses to the extent
set forth in Sections 8 and 12 and except that the provisions of Sections 9 and
10 shall not terminate and shall remain in effect. As used in this Agreement,
the term "Initial Purchasers" includes, for all purposes of this Agree-
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ment unless the context otherwise requires, any party not listed in Schedule 3
hereto that, pursuant to this Section 7, purchases Securities which a defaulting
Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Issuers or any non-defaulting
Initial Purchaser for damages caused by its default. If other persons are
obligated or agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchasers or the Issuers may postpone the
Closing Date for up to seven full business days in order to effect any changes
that in the opinion of counsel for the Issuers or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other document
or arrangement, and the Issuers agree to promptly prepare any amendment or
supplement to the Offering Memorandum that effects any such changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6 or 7, (b) the Issuers
shall fail to tender the Units for delivery to the Initial Purchasers for any
reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Units for any reason permitted under this Agreement, the
Issuers, jointly and severally, shall reimburse the Initial Purchasers for such
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
as shall have been reasonably incurred by the Initial Purchasers in connection
with this Agreement and the proposed purchase and resale of the Securities. If
this Agreement is terminated pursuant to Section 7 by reason of the default of
one or more of the Initial Purchasers, the Issuers shall not be obligated to
reimburse any defaulting Initial Purchaser on account of such expenses.
9. Indemnification. (a) Each of the Issuers, jointly and severally,
shall indemnify and hold harmless each Initial Purchaser, its affiliates, their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls any Initial Purchaser within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 9(a) and Section 10 as an Initial Purchaser), from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, without limitation, any loss, claim, damage, liability or
action relating to purchases and sales of the Securities), to which that Initial
Purchaser may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or in any information provided by the Issuers pursuant to Section 4(e)
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Initial Purchaser promptly upon demand for
any legal or other expenses reasonably incurred by that Initial Purchaser in
connection with investigating or de-
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fending or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Issuers shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with any Initial Purchasers' Information; and
provided, further, that with respect to any such untrue statement in or omission
from the Preliminary Offering Memorandum, the indemnity agreement contained in
this Section 9(a) shall not inure to the benefit of any such Initial Purchaser
to the extent that the sale to the person asserting any such loss, claim,
damage, liability or action was an initial resale by such Initial Purchaser and
any such loss, claim, damage, liability or action of or with respect to such
Initial Purchaser results from the fact that both (A) to the extent required by
applicable law, a copy of the Offering Memorandum was not sent or given to such
person at or prior to the written confirmation of the sale of such Securities to
such person and (B) the untrue statement in or omission from the Preliminary
Offering Memorandum was corrected in the Offering Memorandum unless, in either
case, such failure to deliver the Offering Memorandum was a result of
non-compliance by the Issuers with Section 4(a).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless each of the Issuers, their respective affiliates,
their officers, directors, employees, representatives and agents, and each
person, if any, who controls the Issuers within the meaning of the Securities
Act or the Exchange Act (collectively referred to for purposes of this Section
9(b) and Section 10 as the Issuers), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Issuers may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Initial Purchasers' Information, and shall
reimburse the Issuers promptly upon demand for any legal or other expenses
reasonably incurred by the Issuers in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying
party in writing of the claim or the commencement of that action;
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provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 9 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and, provided, further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 9. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 9 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that an indemnified party shall have the right to employ its own
counsel in any such action, but the fees, expenses and other charges of such
counsel for the indemnified party will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based upon advice of counsel to the indemnified party)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based upon advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 9(a) and 9(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent, but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
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The obligations of the Issuers and the Initial Purchasers in this
Section 9 and in Section 10 are in addition to any other liability that the
Issuers or the Initial Purchasers, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9
is unavailable or insufficient to hold harmless an indemnified party under
Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Issuers on the one hand and the
Initial Purchasers on the other from the offering of the Units or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuers on
the one hand and the Initial Purchasers on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Issuers on the one hand
and the Initial Purchasers on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Units purchased under this Agreement (before deducting expenses) received
by or on behalf of the Issuers, on the one hand, and the total discounts and
commissions received by the Initial Purchasers with respect to the Units
purchased under this Agreement, on the other, bear to the total gross proceeds
from the sale of the Units under this Agreement. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to any Issuer or information supplied by any Issuer on
the one hand or to any Initial Purchasers' Information on the other, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Issuers
and the Initial Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section 10 were to be determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 10 shall be deemed
to include, for purposes of this Section 10, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 10, no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total discounts and
commissions received by such Initial Purchaser with respect to the Units
purchased by it under this Agreement exceeds the amount of any damages which
such Initial Purchaser has otherwise paid or become liable to pay by reason of
any untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such
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fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
as provided in this Section 10 are several in proportion to their respective
purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, each of the
Issuers and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 9 and 10 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Issuers and
the Initial Purchasers and in Section 4(e) with respect to holders and
prospective purchasers of the Securities. Nothing in this Agreement is intended
or shall be construed to give any person, other than the persons referred to in
this Section 11, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
12. Expenses. The Issuers agree with the Initial Purchasers to pay
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum, the Offering Memorandum and any amendments or supplements
thereto; (c) the costs of reproducing and distributing each of the Transaction
Documents; (d) the costs incident to the preparation, printing and delivery of
the certificates evidencing the Securities, including stamp duties and transfer
taxes, if any, payable upon issuance of the Securities; (e) the fees and
expenses of the Issuers' counsel and independent accountants; (f) the fees and
expenses of qualifying the Securities under the securities laws of the several
jurisdictions as provided in Section 4(h) and of preparing, printing and
distributing Blue Sky Memoranda (including related fees and expenses of counsel
for the Initial Purchasers); (g) any fees charged by rating agencies for rating
the Securities; (h) the fees and expenses of the Trustee, the Collateral Agent,
the Warrant Agent, Unit Agent and any paying agent (including related fees and
expenses of any counsel to such parties); (i) all expenses and application fees
incurred in connection with the application for the inclusion of the Units on
the PORTAL Market and the approval of the Units for book-entry transfer by DTC;
and (j) all other costs and expenses incident to the performance of the
obligations of the Issuers under this Agreement which are not otherwise
specifically provided for in this Section 12; provided, however, that except as
provided in this Section 12 and Section 8, the Initial Purchasers shall pay
their own costs and expenses.
13. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Issuers and the Initial
Purchasers contained in this Agreement or made by or on behalf of the Issuers or
the Initial Purchasers pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Securities and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
of them or any of their respective affiliates, officers, directors, employees,
representatives, agents or controlling persons.
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14. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New
York, New York 10017, Attention: Daniel Tredwell (telecopier no.: (212)
270-0994) with a copy to Cahill Gordon & Reindel, 80 Pine Street, New
York, New York 10005, Attention: Jonathan A. Schaffzin, Esq. (telecopier
no.: (212) 269-5420); or
(b) if to the Issuers, shall be delivered or sent by mail or
telecopy transmission to the address of the Companies set forth in the
Offering Memorandum, Attention: Thomas Tyrell (telecopier no.: (330)
670-3020) with a copy to Simpson Thacher & Bartlett, 425 Lexington Avenue,
New York, New York 10017, Attention: John D. Lobrano, Esq. (telecopier
no.: (212) 455-2502);
provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Issuers shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
16. Initial Purchasers' Information. The parties hereto acknowledge
and agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the paragraph on the front cover page concerning
the method of delivery, the statements in the second and third sentences of the
final paragraph under the heading "Summary -- The Offering" in the Preliminary
Offering Memorandum and the Offering Memorandum, the statements in the third and
fourth sentences in the second paragraph under the heading "Risk Factors --
Factors Relating to the Units -- Your ability to transfer the Securities will be
restricted, and a liquid market for the Securities may not develop" in the
Preliminary Offering Memorandum and the Offering Memorandum, and the statements
in the third paragraph, the statements in the fourth and fifth sentences of the
ninth paragraph and the tenth, eleventh, twelfth and thirteenth paragraphs under
the heading "Plan of Distribution" in the Preliminary Offering Memorandum and
the Offering Memorandum.
17. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
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18. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
19. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
20. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between each of the Issuers and the
several Initial Purchasers in accordance with its terms.
Very truly yours,
REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC
By:_____________________________________________
Name:
Title:
RTI CAPITAL CORP.
By:_____________________________________________
Name:
Title:
REPUBLIC TECHNOLOGIES INTERNATIONAL, INC.
By:_____________________________________________
Name:
Title:
NIMISHILLEN & TUSCARAWAS, LLC,
as a Guarantor
By:_____________________________________________
Name:
Title:
<PAGE>
BLISS & LAUGHLIN, LLC,
as a Guarantor
By:_____________________________________________
Name:
Title:
CANADIAN DRAWN STEEL COMPANY,
INC., as a Guarantor
By:_____________________________________________
Name:
Title:
REPUBLIC TECHNOLOGIES INTERNATIONAL
HOLDINGS, LLC,
as a Guarantor
By:_____________________________________________
Name:
Title:
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<PAGE>
Accepted:
CHASE SECURITIES INC.
By:__________________________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:__________________________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
277 Park Avenue
New York, New York 10172
Attention:
BANCBOSTON ROBERTSON STEPHENS INC.
By:__________________________________________
Authorized Signatory
Address for notices pursuant to Section 9(c):
<PAGE>
MASTER RESTRUCTURING AGREEMENT
AMONG
BAR TECHNOLOGIES INC.,
RES HOLDING CORPORATION,
REPUBLIC ENGINEERED STEELS, INC.,
BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P.,
BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P.,
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P.,
THE VERITAS CAPITAL FUND, L.P. ,
HVR HOLDINGS, L.L.C.,
USX CORPORATION,
KOBE STEEL, LTD.,
KOBE DELAWARE INC.,
USS LORAIN HOLDING COMPANY, INC.,
USX RTI HOLDINGS, INC.,
KOBE/LORAIN INC.,
KOBE RTI HOLDINGS, INC.,
REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC,
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC,
LORAIN TUBULAR COMPANY, LLC,
AND
USS/KOBE STEEL COMPANY
DATED AS OF
AUGUST 13, 1999
<PAGE>
MASTER RESTRUCTURING AGREEMENT
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
SECTION 1
DEFINITIONS.......................................................................................................2
1.1 Certain Definitions.............................................................................2
SECTION 2
ACTIONS PRIOR TO CLOSING.........................................................................................18
2.1 State Lender Consents..........................................................................18
2.2 Labor Agreements...............................................................................19
2.3 [intentionally omitted]........................................................................19
2.4 RTI PBGC Agreement.............................................................................19
2.5 RTI Credit Facility............................................................................19
2.6 RTI High Yield Offering........................................................................19
2.7 Termination of Marketing Joint Venture.........................................................20
2.8 Termination of Certain Agreements; Certain Payables............................................20
SECTION 3
CORPORATE RESTRUCTURING AT CLOSING...............................................................................21
3.1 Spinoff of USS/Kobe Tubular Assets and Liabilities.............................................21
3.2 Formation of RTI Opco, RTI Holdings and N&T, LLC...............................................24
3.3 Merger of BarTech Merger Subsidiary With and Into RES Holding..................................24
3.4 Merger of Nimishillen & Tuscarawas Railway Company.............................................24
3.5 Merger of RESI.................................................................................25
3.6 Conveyance of RTI Opco Interests to RTI Holdings...............................................25
3.7 Liquidation and Merger of Certain BarTech Subsidiaries.........................................25
3.8 Transfer of BarTech Assets and Liabilities to RTI Opco.........................................25
3.9 Contributions to Capital of USS/Kobe; Merger of USS/Kobe Bar Business into
RTI Opco.......................................................................................26
SECTION 4
REFINANCING TRANSACTIONS AT CLOSING..............................................................................27
4.1 Closing of RTI High Yield Offering; Borrowing Under RTI Credit Facility;
Equity Contributions...........................................................................27
4.2 Repayment of RES Holding Credit Facility.......................................................28
4.3 Repayment of BarTech Senior Secured Notes, BarTech Credit Facility and
Refinanced BarTech State and Bethlehem Debt....................................................28
4.4 Repayment of RESI Credit Facility and RESI Bridge Facility.....................................29
4.5 Repayment of USS/Kobe Senior Notes and USS/Kobe Credit Facility................................29
4.6 Issuance of BarTech RTI High Yield Warrants in Connection with RTI High
Yield Offering.................................................................................29
</TABLE>
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<TABLE>
<S> <C>
4.7 No Priority in Debt Payment....................................................................29
SECTION 5
THE CLOSING......................................................................................................29
5.1 Closing........................................................................................29
5.2 Closing Obligations............................................................................30
SECTION 6
REPRESENTATIONS AND WARRANTIES REGARDING USS/KOBE................................................................31
6.1 Organization and Good Standing.................................................................31
6.2 Authority; No Conflict; Consents...............................................................33
6.3 Capitalization.................................................................................34
6.4 Financial Statements...........................................................................34
6.5 [intentionally omitted]........................................................................35
6.6 Title to Properties; Encumbrances..............................................................35
6.7 [intentionally omitted]........................................................................36
6.8 Taxes..........................................................................................36
6.9 No Material Adverse Change.....................................................................37
6.10 Employee Benefits..............................................................................37
6.11 Compliance with Legal Requirements; Governmental Authorizations................................39
6.12 Legal Proceedings; Orders......................................................................39
6.13 Contracts; No Defaults.........................................................................39
6.14 Environmental Matters..........................................................................40
6.15 Labor Relations; Compliance....................................................................41
6.16 Intellectual Property..........................................................................42
6.17 Brokers or Finders.............................................................................43
SECTION 7
REPRESENTATIONS AND WARRANTIES OF
BARTECH AND REGARDING THE BV PARTIES................................................43
7.1 Organization and Good Standing.................................................................43
7.2 Authority; No Conflict; Consents...............................................................44
7.3 Capitalization.................................................................................45
7.4 Financial Statements...........................................................................46
7.5 [intentionally omitted]........................................................................46
7.6 Title to Properties; Encumbrances..............................................................46
7.7 [intentionally omitted]........................................................................47
7.8 Taxes..........................................................................................47
7.9 No Material Adverse Change.....................................................................48
7.10 Employee Benefits..............................................................................48
7.11 Compliance with Legal Requirements; Governmental Authorizations................................49
7.12 Legal Proceedings; Orders......................................................................49
7.13 Contracts; No Defaults.........................................................................50
7.14 Environmental Matters..........................................................................50
7.15 Labor Relations; Compliance....................................................................51
7.16 Intellectual Property..........................................................................52
</TABLE>
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<TABLE>
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7.17 Brokers or Finders.............................................................................53
7.18 BarTech Public Filings.........................................................................53
7.19 Other Matters..................................................................................53
SECTION 8
REPRESENTATIONS AND WARRANTIES OF RES HOLDING....................................................................53
8.1 Organization and Good Standing.................................................................53
8.2 Authority; No Conflict; Consents...............................................................54
8.3 Capitalization.................................................................................55
8.4 Financial Statements...........................................................................56
8.5 [intentionally omitted]........................................................................56
8.6 Title to Properties; Encumbrances..............................................................56
8.7 [intentionally omitted]........................................................................57
8.8 Taxes..........................................................................................57
8.9 No Material Adverse Change.....................................................................58
8.10 Employee Benefits..............................................................................58
8.11 Compliance with Legal Requirements; Governmental Authorizations................................59
8.12 Legal Proceedings; Orders......................................................................60
8.13 Contracts; No Defaults.........................................................................60
8.14 Environmental Matters. ........................................................................61
8.15 Labor Relations; Compliance....................................................................62
8.16 Intellectual Property..........................................................................62
8.17 Brokers or Finders.............................................................................63
8.18 RESI Public Filings............................................................................63
SECTION 9
[intentionally omitted]..........................................................................................63
SECTION 10
COVENANTS........................................................................................................64
10.1 Access and Investigation.......................................................................64
10.2 Operation of the Business of BarTech, RES Holding and USS/Kobe.................................65
10.3 Notification...................................................................................67
10.4 No Negotiation.................................................................................67
10.5 Commercially Reasonable Best Efforts...........................................................68
10.6 Confidentiality................................................................................68
10.7 Tubular Business Excluded......................................................................69
10.8 Use of Names...................................................................................69
10.9 Non-Competition and Non-Solicitation...........................................................70
10.10 Assignment of Rights to RTI Opco...............................................................71
SECTION 11
EMPLOYMENT COVENANTS.............................................................................................72
11.1 USS/Kobe Employee Benefits and Pension Plans...................................................72
11.2 Transfer of BarTech Employees..................................................................79
11.3 Transfer Rights of Certain Employees...........................................................79
</TABLE>
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<TABLE>
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SECTION 12
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY TO CLOSE...................................................80
12.1 No Prohibition; No Opposition..................................................................80
12.2 Consents.......................................................................................81
12.3 Contemplated Transactions......................................................................81
12.4 RTI Financing..................................................................................81
12.5 Labor Agreements and Consents..................................................................81
12.6 RTI PBGC Agreement.............................................................................81
SECTION 13
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE USX/KOBE PARTIES TO
CLOSE............................................................................................................81
13.1 Accuracy of Representations....................................................................81
13.2 Performance of Covenants.......................................................................82
13.3 Equity Contributions...........................................................................82
SECTION 14
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BARTECH TO CLOSE......................................................82
14.1 Accuracy of Representations....................................................................82
14.2 Performance of Covenants.......................................................................83
14.3 Tubular Spinoff................................................................................83
14.4 Equity Contributions...........................................................................83
SECTION 15
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE REPUBLIC PARTIES AND
THE BV PARTIES TO CLOSE..........................................................................................83
15.1 Accuracy of Representations....................................................................83
15.2 Performance of Covenants.......................................................................83
15.3 Tubular Spinoff................................................................................84
15.4 Equity Contributions...........................................................................84
SECTION 16
[intentionally omitted]..........................................................................................84
SECTION 17
TERMINATION......................................................................................................84
17.1 Termination Events.............................................................................84
17.2 Termination Events.............................................................................85
SECTION 18
INDEMNIFICATION; REMEDIES........................................................................................85
18.1 Representations; Survival......................................................................85
18.2 Indemnification With Respect to Breaches by the USX/Kobe Parties...............................86
18.3 Indemnification With Respect to Breaches by the BV Parties, BarTech and the
Republic Parties...............................................................................86
</TABLE>
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<TABLE>
<S> <C>
18.4 [intentionally omitted]........................................................................87
18.5 Indemnification With Respect to USS/Kobe Tubular Liabilities, USS/Kobe Bar
Liabilities and BarTech and Republic Liabilities...............................................87
18.6 Indemnification with respect to Taxes and Unrelated Liabilities of USX Holdings
USX RTI Holdings, Kobe Holdings and Kobe RTI Holdings..........................................88
18.7 Minimum Damage Requirement.....................................................................88
18.8 Procedure for Indemnification - Third Party Claims.............................................89
18.9 Procedure for Indemnification - Other Claims...................................................90
18.10 Exclusive Remedy; Specific Performance.........................................................90
18.11 Payment in RTI Holdings Common Units or RTI Common Stock.......................................90
SECTION 19
GENERAL PROVISIONS...............................................................................................96
19.1 Expenses.......................................................................................96
19.2 Public Announcements...........................................................................97
19.3 Notices........................................................................................97
19.4 Further Assurances.............................................................................99
19.5 Stockholder Consent............................................................................99
19.6 Waiver........................................................................................100
19.7 Entire Agreement and Modification.............................................................100
19.8 Assignments, Successors and No Third Party Rights.............................................100
19.9 Severability..................................................................................101
19.10 Section Headings, Construction................................................................101
19.11 Governing Law.................................................................................101
19.12 Counterparts..................................................................................101
</TABLE>
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EXHIBITS
Exhibit A BarTech Assignment and Assumption Agreement
Exhibit B Bloom Caster Consent and Assumption Agreement
Exhibit C B&L Merger Agreement
Exhibit D Coke Supply Agreement
Exhibit E Continuing USS/Kobe State Debt Participation Agreement
Exhibit F Equityholders Agreement
Exhibit G N&T Merger Agreement
Exhibit H New Kobe-RTI Opco Agreements
Exhibit I Pellet Supply Agreement
Exhibit J RES Holding Assignment and Assumption Agreement
Exhibit K RES Holding Merger Agreement
Exhibit L RESI Merger Agreement
Exhibit M Round Supply Agreement
Exhibit N RTI Holdings LLC Agreement
Exhibit O RTI Opco LLC Agreement
Exhibit P RTI-USX Payables Agreement
Exhibit Q Safe-Harbor Lease Matters Agreement
Exhibit R Transactional and Monitoring Fee Agreement
Exhibit S Transition, Administrative and Utilities Services Agreement
Exhibit T Tubular Assignment and Assumption Agreement
Exhibit U USS/Kobe Merger Agreement
Exhibit V USX Environmental Indemnity Agreement
Exhibit W Sources and Uses
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1
MASTER RESTRUCTURING AGREEMENT
This Master Restructuring Agreement is entered into as of August 13,
1999, by and among Bar Technologies Inc., a Delaware corporation being renamed
"Republic Technologies International, Inc." in connection with the transactions
contemplated hereby ("BarTech"), RES Holding Corporation, a Delaware corporation
("RES Holding"), Republic Engineered Steels, Inc., a Delaware corporation
("RESI" and, together with RES Holding, the "Republic Parties"), Blackstone
Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership
("BCPII"), Blackstone Offshore Capital Partners II L.P., a Cayman Islands
exempted limited partnership ("BOCPII"), Blackstone Family Investment
Partnership II L.P., a Delaware limited partnership ("BFIPII"), The Veritas
Capital Fund, L.P., a Delaware limited partnership ("VCP"), HVR Holdings,
L.L.C., a Delaware limited liability company ("HVR" and, together with BCP II,
BOCP II, BFIP II and Veritas, the "BV Parties"), USX Corporation, a Delaware
corporation ("USX"), Kobe Steel, Ltd., a Japanese corporation ("Kobe"), Kobe
Delaware Inc., a Delaware corporation ("Kobe Delaware"), USS Lorain Holding
Company, Inc., an Ohio corporation ("USX Holdings"), USX RTI Holdings, Inc., a
Delaware corporation ("USX RTI Holdings"), Kobe/Lorain Inc., an Ohio corporation
("Kobe Holdings"), Kobe RTI Holdings, Inc. ("Kobe RTI Holdings"), USS/Kobe Steel
Company, an Ohio general partnership ("USS/Kobe" and, together with USX, Kobe,
Kobe Delaware, USX Holdings, USX RTI Holdings, Kobe Holdings and Kobe RTI
Holdings, the "USX/Kobe Parties"), Republic Technologies International Holdings,
LLC, a Delaware limited liability company, Republic Technologies International,
LLC, a Delaware limited liability company, and Lorain Tubular Company, LLC, a
Delaware limited liability company.
BACKGROUND
BCPII, BOCPII and BFIPII (together, "Blackstone") and VCP, Veritas
Capital, L.L.C., KDJ, L.L.C. and BRW Steel Holdings II, L.P. (together,
"Veritas") collectively hold controlling interests in BarTech and RES Holding,
each of which is engaged in the manufacturing, finishing, processing and
distributing of special bar quality and other products classified as
high-quality steel or alloy bars (the "Bar Business"). USX Holdings and Kobe
Holdings equally hold all the partnership interests in USS/Kobe, which is also
engaged in the Bar Business, as well as in the manufacturing, finishing,
processing and distributing of products classified as high-quality steel or
alloy tubes (the "Tubular Business").
Blackstone, Veritas, USX and Kobe have each determined that it would be
beneficial to each of them respectively to combine all the operating assets of
BarTech and RES Holding and the operating assets of the USS/Kobe Bar Business
(as defined below) into RTI Opco (as defined below). Such combination will
include the refinancing of certain existing indebtedness of BarTech, the
Republic Parties and USS/Kobe, the purchase of additional shares of capital
stock
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of BarTech by Blackstone, VCP, FirstEnergy Services Corp., an Ohio corporation
("FirstEnergy"), Sumitomo Corporation of America, a New York corporation
("Sumitomo"), Triumph Capital Investors II, L.P. and TCI-II Investors, L.P.,
each a Delaware limited partnership (collectively, "Triumph"), First Dominion
Capital, L.L.C., a Delaware limited liability company ("First Dominion"), TCW
Leveraged Income Trust, L.P., TCW Leveraged Income Trust II, L.P., TCW Shared
Opportunity Fund II, L.P., Shared Opportunity Fund III, L.P., each a Delaware
limited partnership, and Shared Opportunity Capital Fund IIB, L.L.C.
(collectively, "TCW"), the making of capital contributions to a subsidiary of
BarTech by Subsidiaries of USX and Kobe, and the purchase of certain warrants
from the Company by Chase Securities Inc., Donaldson Lufkin & Jenrette
Securities Corporation and BancBoston Robertson Stephens Inc., all as described
in this Agreement.
This Agreement sets forth the terms and conditions upon which the
parties hereto agree that such combinations, refinancings and investments will
occur.
SECTION 1
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
1.1 Certain Definitions. As used in this Agreement:
"Affiliate" - with respect to a specified Person, any other Person who,
directly or indirectly controls, is controlled by, or is under common control
with such specified Person; provided, however, that neither USX nor Kobe will be
deemed to control BarTech, RTI Holdings or RTI Opco following the Closing for
purposes of this definition. As used in this definition, the term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.
"Agreement" - this Agreement together with the Disclosure Letter.
"BarTech and Republic Liabilities" - collectively, all of the
liabilities and obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent or otherwise) of BarTech and its Subsidiaries
(including without limitation RTI Holdings and RTI Opco) and of RES Holding and
its Subsidiaries, whether arising before or after the Closing.
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"BarTech Assignment and Assumption Agreement" - the assignment and
assumption agreement to be entered into between BarTech and RTI Opco at or prior
to the Closing in accordance with Section 3.8, substantially in the form
attached hereto as Exhibit A.
"BarTech Credit Facility" - the Credit Agreement, dated as of April 2,
1996, amended and restated as of April 25, 1996, and further amended and
restated as of September 5, 1997, among BarTech, Bliss & Laughlin, the financial
institutions from time to time party thereto, The Chase Manhattan Bank as
Administrative Agent and Collateral Agent, and The Chase Manhattan Bank Delaware
as Fronting Bank.
"BarTech Facilities" - any real property, leaseholds, or other
interests in real property owned, leased or operated by BarTech or any of its
Subsidiaries and any buildings, plants, structures, or fixtures owned, leased or
operated by BarTech or any of its Subsidiaries.
"BarTech Material Adverse Effect" - any material adverse effect on the
business, prospects, properties, assets, financial condition, liabilities or
results of operation of BarTech and its Subsidiaries, taken as a whole, other
than any effects arising out of or resulting from changes affecting the economy
generally or the steel industry generally.
"BarTech Public Filings" - BarTech's most recent Form 10-K filed under
the Exchange Act prior to the date hereof and any BarTech reports filed under
the Exchange Act subsequent thereto and prior to the date hereof.
"BarTech Senior Secured Notes" - BarTech's Senior Secured Notes due
2001, issued in an aggregate principal amount of $91,609,000.
"BarTech's Knowledge" - BarTech will be deemed to have "Knowledge" of a
particular fact or other matter only if any individual named in Section 1.1(a)
of the Disclosure Letter has actual knowledge of such fact or other matter.
"Bliss & Laughlin" - Bliss & Laughlin Steel Company, an Illinois
corporation.
"B&L Merger Agreement" - the merger agreement to be entered into among
BarTech, Bliss & Laughlin and B&L, LLC at or prior to the Closing in accordance
with Section 3.7, substantially in the form attached hereto as Exhibit B.
"Bloom Caster Consent and Assumption Agreement" - the consent and
assumption agreement to be entered into among Batus Retail Services, Inc., RTI
Opco and USS/Kobe at the Closing in accordance with Section 5.2, substantially
in the form attached hereto as Exhibit C.
"Closing Date" - the date and time as of which the Closing takes place.
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"Coke Supply Agreement" - the coke supply agreement to be entered into
between RTI Opco and USX (with respect to its U.S. Steel Group unit) at the
Closing in accordance with Section 5.2, substantially in the form attached
hereto as Exhibit D.
"Common Stock" - shares of Common Stock, par value $.001 per share, of
BarTech.
"Consent" - any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" - all of the transactions contemplated by
this Agreement, including without limitation the transactions occurring under
the other Transaction Documents.
"Continuing BarTech State Debt" - (i) $5,750,000 principal amount of
Section 108 Loans guaranteed by the Commonwealth of Pennsylvania (or
subdivisions thereof), (ii) $10,006,772 principal amount of Economic Development
Set-Aside Loans guaranteed by the Commonwealth of Pennsylvania (or subdivisions
thereof), (iii) $690,000 principal amount of Community Development Block Grant
Loans guaranteed by the Commonwealth of Pennsylvania (or subdivisions thereof),
(iv) $2,500,000 principal amount of Business Infrastructure Development Loans
guaranteed by the Commonwealth of Pennsylvania (or subdivisions thereof) and (v)
$3,600,000 principal amount of Georgia Industrial Revenue Bonds guaranteed by
the State of Georgia (or subdivisions thereof).
"Continuing RESI State Debt" - $73,900,000 principal amount of Solid
Waste Revenue Bonds, 1994 Series and 1996 Series guaranteed by the State of Ohio
(or subdivisions thereof).
"Continuing USS/Kobe State Debt" - (i) $9,000,000 aggregate principal
amount of State of Ohio Variable Rate Demand Environmental Improvement Revenue
Bonds, Series 1984 (United States Steel Corporation Project) issued by the Ohio
Water Development Authority, and (ii) $4,745,000 principal amount of the
$10,160,000 aggregate principal amount of Ohio Air Quality Development
Authority, Variable Rate Environmental Improvement Revenue Bonds
(USX Corporation Project) Refunding Series of 1995.
"Continuing USS/Kobe State Debt Participation Agreement" - the
participation agreement to be entered into among RTI Opco, USX and Kobe at the
Closing in accordance with Section 5.2, substantially in the form attached
hereto as Exhibit E.
"Contract" - any written agreement, contract, collective bargaining
agreement, obligation, promise, or undertaking that is legally binding,
including property leases, if applicable.
"Controlled Group" - a controlled group of organizations within the
meaning of IRC Sections 4.14(b), (c), (m) or (o).
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"Disclosure Letter" - the disclosure letter executed by BarTech, RES
Holding, USX RTI Holdings and Kobe RTI Holdings concurrently with the execution
and delivery of this Agreement.
"Employee Benefit Plan" - as defined in Section 3(3) of ERISA.
"Encumbrance" - any lien, mortgage, easement, servitude, right of way,
charge, pledge, security interest, covenant, condition, restriction, or other
encumbrance.
"Environment" - soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, surface water sediments, ambient
air, natural resources, plant and animal life, and any other environmental
medium.
"Environmental Law" - the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act, the Hazardous Materials Transportation Act, Federal and State underground
storage tank laws and regulations, all as amended, and any other Legal
Requirements relating to the Environment or applicable to the storage, handling,
transportation, release, remediation, removal, or disposal of Hazardous
Materials in each case as they may relate to or affect the subject facilities,
properties or assets or any substances, materials or wastes generated from the
subject facilities, properties or assets.
"Equity Contributions" - collectively, the transactions described in
the first sentence of Section 3.9 and in Sections 4.1(b), 4.1(c) and 4.1(d).
"Equityholders Agreement" - the amended and restated agreement among
the equityholders of BarTech and RTI Holdings to be entered into at the Closing
in accordance with Section 5.2, substantially in the form attached hereto as
Exhibit F.
"ERISA" - the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"Exchange Act" - the Securities Exchange Act of 1934, as amended, or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"54 Code" - the Internal Revenue Code of 1954, as amended and as in
effect immediately after the enactment of the Tax Equity and Fiscal
Responsibility Act of 1982.
"Governmental Authorization" - any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
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"Governmental Body" - any (a) nation, state, county, city, town,
village, district, or other jurisdiction of any nature, (b) federal, state,
local, provincial, municipal, foreign, or other government, (c) governmental or
quasi-governmental authority of any nature or (d) other body exercising any
statutory, administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power.
"Hazardous Materials" - material, substance or waste that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic, or a pollutant or a contaminant, under or pursuant to any
Environmental Law or any other material that could result in liability under or
pursuant to any Environmental Law, including without limitation, petroleum and
petroleum products, polychlorinated biphenyls, and asbestos-containing
materials.
"HSR Act" - Title II of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulation promulgated thereunder.
"Indemnified Person" - each of BarTech, USX RTI Holdings and Kobe RTI
Holdings, as applicable, to the extent such Person is or may be entitled to
indemnification pursuant to Section 18.
"Intellectual Property" - all U.S. and foreign intellectual property,
including without limitation (i)(a) patents, inventions, discoveries, processes,
designs, techniques, developments, technology, and related improvements, whether
or not patented or patentable; (b) copyrights and works of authorship in any
media, including computer hardware, software, systems, databases, documentation
and Internet site content; (c) trademarks, service marks, trade names, brand
names, corporate names, domain names, logos and trade dress; (d) trade secrets,
know-how and show-how, drawings, blueprints and all confidential or proprietary
information; and (ii) all registrations, applications and recordings related
thereto.
"Interim BarTech Balance Sheet" - the most recent balance sheet for
BarTech included within the BarTech Financial Statements.
"Interim RESI Balance Sheet" - the most recent balance sheet for RESI
included within the RESI Financial Statements.
"Interim USS/Kobe Balance Sheet" - the most recent balance sheet for
the USS/Kobe Bar Business (giving effect to the Tubular Spinoff) included within
the USS/Kobe Financial Statements.
"IRC" - the Internal Revenue Code of 1986, as amended, or any successor
law, and regulations issued pursuant to the Internal Revenue Code or any
successor law.
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"IRS" - the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Kobe Technology Transfer Agreement" - the Second Kobe Technology
Transfer Agreement, dated September 1, 1993 and amended as of September 1, 1997,
between Kobe and USS/Kobe.
"Legal Requirement" - any administrative or arbitrator's award or
order, constitution, law, ordinance, principle of common law, permit,
authorization, variance, regulation, rule, statute or requirement of any
Governmental Body, including without limitation all federal, foreign, state and
local laws related to Taxes, ERISA, Hazardous Materials and the Environment,
zoning and land use, occupational safety and health, product quality and safety,
employment and labor matters.
"Lorain Works" - the Lorain works located in Lorain, Ohio.
"Material Consents" - collectively, the consents disclosed in Section
6.2, Section 7.2 and Section 8.2 of the Disclosure Letter, the NewTube Labor
Agreement Ratification and the RTI Labor Agreement Ratification.
"Mergers" - the USX Holdings/Kobe Holdings-RTI Opco Merger, the RES
Holding-BarTech Merger and the RESI-RTI Opco Merger, collectively.
"N&T Merger Agreement" - the merger agreement to be entered into among
RESI, RTI Opco, Nimishillen & Tuscarawas Railway Company and N&T, LLC at or
prior to the Closing in accordance with Section 3.4, substantially in the form
attached hereto as Exhibit G.
"New Kobe-RTI Opco Agreements" - collectively, the New Technology
Transfer Agreement, the New Technology License Agreement and the New Technology
and Trademark License Agreement.
"New Technology License Agreement" - the tire cord license agreement to
be entered into between Kobe and RTI Opco at the Closing pursuant to Section
5.2, substantially in the form attached hereto as part of Exhibit H.
"New Technology Transfer Agreement" - the technology transfer agreement
to be entered into among Kobe Technologies Proprietary, Inc., Kobe and RTI Opco
at the Closing pursuant to Section 5.2, substantially in the form attached
hereto as part of Exhibit H.
"New Technology and Trademark License Agreement" - the UHS trademark
license agreement to be entered into among Kobe and RTI Opco at the Closing
pursuant to Section 5.2, substantially in the form attached hereto as part of
Exhibit H.
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"Order" - any award, decision, injunction, decree, stipulation,
determination, writ, judgment, order, ruling, subpoena, or verdict entered,
issued, made, or rendered by any court, administrative agency, or other
Governmental Body or by any arbitrator.
"Ordinary Course of Business" - an action taken by a Person will be
deemed to have been taken in the Ordinary Course of Business only if such action
is consistent with the past practices of such Person and is taken in the
ordinary course of the day-to-day operations of such Person.
"Organizational Documents" - the constituent and organizational
documents of a Person, as amended to date, and any organizational minutes or
resolutions, including (but not restricted to) (a) with respect to a limited
liability company, its certificate of formation and operating agreement, (b)
with respect to a corporation, its articles or certificate of incorporation and
its bylaws or documents of similar effects and (c) with respect to a general or
limited partnership, its partnership agreement.
"PBGC" - the Pension Benefit Guaranty Corporation.
"Pellet Supply Agreement" - the pellet supply agreement is to be
entered between RTI Opco and USX (with respect to its U.S. Steel Group unit) at
the Closing in accordance with Section 5.2, substantially in the form attached
hereto as Exhibit I.
"Permitted Encumbrances" - (a) liens for Taxes that are not yet due and
payable, or that are being contested in good faith by appropriate proceedings
and as to which adequate reserves have been established in accordance with
generally accepted accounting principles, consistently applied, (b) mechanics',
carriers', workers', repairmen's and similar Encumbrances imposed by Legal
Requirements that have been incurred in the Ordinary Course of Business, (c)
Encumbrances and other title defects, easements and encroachments including with
respect to real property that do not materially impair the value, occupancy, or
continued use of the asset to which they relate, (d) liens on bank deposits
created in the Ordinary Course of Business and (e) zoning, entitlement, building
and other land use Legal Requirements imposed by Governmental Bodies having
jurisdiction over real property that are not violated by the current use and
operation of such real property, except where such violation would not
reasonably be expected to have a USS/Kobe Material Adverse Effect, BarTech
Material Adverse Effect or RES Holding Material Adverse Effect, as applicable.
"Person" - any individual, firm, unincorporated organization,
corporation (including any not-for-profit corporation), general or limited
partnership, limited liability company, cooperative marketing association, joint
venture, estate, trust, association or other entity as well as any syndicate or
group that would be deemed to be a person under Section 13(a)(3) of the Exchange
Act.
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"Proceeding" - any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, any Governmental
Body or arbitrator.
"Refinanced BarTech State and Bethlehem Debt" - (i) $3,442,959
principal amount of Pennsylvania Industrial Development Authority Loans
guaranteed by the Commonwealth of Pennsylvania (or subdivisions thereof), (ii)
$6,490,636 principal amount of Sunny Day Loans guaranteed by the Commonwealth of
Pennsylvania (or subdivisions thereof), (iii) $6,929,529 principal amount of
Marine Midland Loans guaranteed by the State of New York (or subdivisions
thereof), (iv) $428,571 principal amount of Erie County Loans guaranteed by the
State of New York (or subdivisions thereof) and (v) $5,500,000 principal amount
of subordinated loans from Bethlehem Steel Corporation, together with any
Continuing BarTech State Debt for which the requisite State Debt Consents have
not been obtained prior to the Closing.
"Release" - any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment.
"Representative" - with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Republic Parties' Knowledge" - the Republic Parties will be deemed to
have "Knowledge" of a particular fact or other matter only if any individual
named in Section 1.1(b) of the Disclosure Letter has actual knowledge of such
fact or other matter.
"RES Holding Assignment and Assumption Agreement" - the assignment and
assumption agreement to be entered into among RES Holding, RTI Holdings and RTI
Opco at or prior to the Closing in accordance with Section 3.6, substantially in
the form attached hereto as Exhibit J.
"RES Holding Credit Facility" - the Credit Agreement, dated as of
September 8, 1998, among RES Holding, the financial institutions listed therein,
The Chase Manhattan Bank as Administrative Agent and Collateral Agent, and DLJ
Capital Funding, Inc. as Documentation Agent.
"RES Holding Material Adverse Effect" - any material adverse effect on
the business, prospects, properties, assets, financial condition, liabilities or
results of operation of RES Holding and its Subsidiaries, taken as a whole,
other than any effects arising out of or resulting from changes affecting the
economy generally or the steel industry generally.
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"RES Holding Merger Agreement" - the merger agreement to be entered
into among BarTech, BarTech Merger Subsidiary and RES Holding at or prior to the
Closing in accordance with Section 3.3, substantially in the form attached
hereto as Exhibit K.
"RESI Bridge Facility" - the Credit Agreement, dated as of November 6,
1998, among RESI, the Guarantors named therein, the financial institutions
listed therein, The Chase Manhattan Bank as Administrative Agent, Collateral
Agent, Documentation Agent, Syndication Agent and as an Agent, and DLJ Bridge
Finance, Inc. and BankBoston, N.A. as Agents.
"RESI Credit Facility" - the Second Amended and Restated Revolving
Credit Agreement, dated as of April 25, 1997, among RESI, BankBoston, N.A., the
other lending institutions listed on Schedule I thereto and Congress Financial
Corporation (New England), and BankBoston, N.A. as agent for itself and such
other lending institutions.
"RESI Facilities" - any real property, leaseholds, or other interests
in real property owned, leased or operated by RES Holding or any of its
Subsidiaries and any buildings, plants, structures, or fixtures owned, leased or
operated by RES Holding or any of its Subsidiaries.
"RESI Merger Agreement" - the merger agreement to be entered into among
RES Holding, RESI and RTI Opco at or prior to the Closing in accordance with
Section 3.5, substantially in the form attached hereto as Exhibit L.
"RESI Public Filings" - RESI's most recent Form 10-K filed under the
Exchange Act prior to the date hereof and any RESI reports filed under the
Exchange Act subsequent thereto and prior to the date hereof.
"Round Supply Agreement" - the round supply agreement to be entered
into among RTI Opco, NewTube and USX (with respect to its U.S. Steel Group unit)
at the Closing in accordance with Section 5.2, substantially in the form
attached hereto as Exhibit M.
"RTI Holdings LLC Agreement" - the limited liability company agreement
of RTI Holdings to be entered into among RTI Holdings, BarTech, RES Holding, USX
RTI Holdings and Kobe RTI Holdings at the Closing in accordance with Section
5.2, substantially in the form attached hereto as Exhibit N.
"RTI Holdings Series A Preferred Units" - Class A Units of RTI Holdings
(as defined in the RTI Holdings LLC Agreement).
"RTI Holdings Series C Preferred Units" - Class C Units of RTI Holdings
(as defined in the RTI Holdings LLC Agreement).
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"RTI Holdings Common Units" - Class B Units of RTI Holdings (as defined
in the RTI Holdings LLC Agreement).
"RTI Holdings Units" - collectively, the RTI Holdings Common Units, RTI
Holdings Series A Preferred Units and RTI Holdings Series C Preferred Units.
"RTI Material Adverse Effect" - any material adverse effect on the
business, prospects, properties, assets, financial condition, liabilities or
results of operation of RTI Holdings and its Subsidiaries, taken as a whole
after giving effect to the Contemplated Transactions, other than any effects
arising out of or resulting from changes affecting the economy generally or the
steel industry generally.
"RTI Opco LLC Agreement" - the limited liability company agreement of
RTI Opco to be entered into between RTI Holdings and RTI Opco at the Closing in
accordance with Section 5.2, substantially in the form attached hereto as
Exhibit O.
"RTI-USX Payables Agreement" - the agreement regarding certain USS/Kobe
Bar Business Payables to be entered into between RTI Opco and USX at the Closing
in accordance with Section 5.2, substantially in the form attached hereto as
Exhibit P.
"Safe-Harbor Lease Agreements" - collectively, (i) the Safe-Harbor
Leases, (ii) the USS/Kobe Formation Agreement, (iii) the Consent and Assumption
Agreement among Batus Holdings, Inc., Batus Retail Services, Inc., Monessen,
Inc., Sharon Specialty Steel, Inc., Sharon Steel Corporation and USS/Kobe Steel
Company, dated as of June 24, 1993, and (iv) any other documents or agreements
relating to the Safe-Harbor Leases.
"Safe-Harbor Lease Matters Agreement" - the safe-harbor lease matters
agreement to be entered into among RTI Holdings, USX, Kobe Newco, USS/Kobe and
NewTube immediately prior to the Closing in accordance with Section 5.2,
substantially in the form attached hereto as Exhibit Q.
"Safe-Harbor Leases" - collectively, (i) the Safe Harbor Lease between
Anacomp, Inc. and United States Steel Corporation, dated as of May 26, 1983,
(ii) the Safe Harbor Lease between Anacomp, Inc. and United States Steel
Corporation, dated as of June 23, 1983, (iii) the Safe Harbor Lease between
Beatrice Financial Services, Inc. and United States Steel Corporation, dated as
of January 31, 1984, (iv) the Safe Harbor Lease between Stepan Chemical Company
and United States Steel Corporation, dated as of November 21, 1983, (v) the Safe
Harbor Lease between OMC Distributors, Inc. and United States Steel Corporation,
dated as of September 15, 1983, (vi) the Safe Harbor Lease between Flightsafety
International, Inc. and United States Steel Corporation, dated as of August 1,
1983, (vii) the Agreement between Marshall Field & Company and
Wheeling-Pittsburgh Steel Corporation, dated as of September 8, 1983, and (viii)
any other lease to which USS/Kobe was a party (whether by assumption or
otherwise) at any time
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at or prior to the Closing pursuant to which elections have been made under
Section 168(f)(8) of the 54 Code.
"Subscription Agreement" - the subscription agreement, dated as of
August 10, 1999, among BarTech, FirstEnergy, Sumitomo, Triumph, First Dominion
and TCW.
"Subsidiaries" - with respect to any Person, any other Person (i) of
which (or in which) such Person owns, directly or indirectly, 50% or more of the
outstanding capital stock having ordinary voting power or voting interest to
elect the Board of Directors or any equivalent body of such Person or (ii)
otherwise controlled by such Person (irrespective of whether or not at the time
capital stock of any other class or classes of such person will or might have
voting power upon the occurrence of any contingency); provided that none of RES
Holding or its Subsidiaries will be deemed to be Subsidiaries of BarTech for
purposes of representations and warranties made hereunder.
"Suspension Spring License Agreement" - the License and Technical
Assistance Agreement, dated September 21, 1998, between Kobe and USS/Kobe.
"Taxes" - all U.S. federal, state, local or foreign taxes, charges,
fees, duties, levies or other assessments, including without limitation, net or
gross income, gross receipts, net or gross proceeds, ad valorem, real and
personal property (tangible and intangible), sales, use, franchise, user,
transfer, value-added, fuel, excess profits, occupational, employees' income
withholding, unemployment and Social Security, alternative or add-on minimum,
environmental and franchise taxes, including interest, penalties or additions to
tax attributable to or imposed on or with respect to such taxes, which are
imposed by any Governmental Body whether disputed or not.
"Tax Return" - any return (including any information return), report,
statement, schedule, notice, form, or other document or information, including
any amendment thereof, filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax.
"Tire Cord License Agreement" - the License and Technical Assistance
Agreement, dated as of November 10, 1994, between Kobe and USS/Kobe.
"Transactional and Monitoring Fee Agreement" - the transactional and
monitoring fee agreement to be entered into among RTI Opco, Blackstone
Management Partners II L.L.C., Veritas Capital Management, L.L.C., USX, Kobe
Delaware and Kobe Steel USA Holdings, Inc. at the Closing in accordance with
Section 5.2, substantially in the form attached hereto as Exhibit R.
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"Transaction Documents" - this Agreement and, unless otherwise
expressly provided herein, each of the other documents, agreements and
instruments to be entered into pursuant hereto.
"Transition, Administrative and Utilities Services Agreement" - the
transition, administrative and utilities services agreement to be entered into
between RTI Opco and NewTube at the Closing in accordance with Section 5.2,
substantially in the form attached hereto as Exhibit S.
"Tubular Assignment and Assumption Agreement" - the assignment and
assumption agreement to be entered into between USS/Kobe and NewTube at or prior
to the Closing in accordance with Section 3.1, substantially in the form
attached hereto as Exhibit T.
"UHS Trademark License Agreement" - the Trademark License Agreement,
dated October 2, 1998, between Kobe and USS/Kobe.
"USS/Kobe Bar Assets" - all of the facilities, properties and assets of
USS/Kobe (including without limitation the USS/Kobe Bar Business Current
Assets), other than the USS/Kobe Tubular Assets and the USS/Kobe Formation
Agreement.
"USS/Kobe Bar Business" - the Bar Business conducted by USS/Kobe as of
the date hereof, together with any changes to such business prior to the Closing
in compliance with the terms of this Agreement.
"USS/Kobe Bar Liabilities" - all of the liabilities and obligations of
any nature (whether known or unknown and whether absolute, accrued, contingent
or otherwise), whether arising before or after the Closing (including without
limitation the USS/Kobe Bar Business Payables), of USS/Kobe, USX Holdings or
Kobe Holdings, other than the USS/Kobe Tubular Liabilities and the liabilities
and obligations described in Section 18.6.
"USS/Kobe Credit Facility" - the Credit Agreement, dated as of December
29, 1995, amended and restated as of February 26, 1999, as amended, among
USS/Kobe, the financial institutions listed therein, and The Industrial Bank of
Japan, Limited, New York Branch, as agent.
"USS/Kobe Facilities" - any real property, leaseholds, or other
interests in real property owned, leased or operated by USS/Kobe and any
buildings, plants, structures, or fixtures owned, leased or operated by
USS/Kobe.
"USS/Kobe Formation Agreement" - the Composite Conformed Asset
Purchase and Contribution Agreement among Kobe, Kobe Holdings, USX, USX Holdings
and USS/Kobe, dated as of May 31, 1989, as the same has been amended through the
date of this Agreement.
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"USS/Kobe Material Adverse Effect" - any material adverse effect on the
business, prospects, properties, assets, financial condition, liabilities or
results of operation of USX Holdings, Kobe Holdings and USS/Kobe (giving effect
to the Tubular Spinoff), taken as a whole, other than any effects arising out of
or resulting from changes affecting the economy generally or the steel industry
generally.
"USS/Kobe Merger Agreement" - the merger agreement to be entered into
among USX, USX Holdings, USX RTI Holdings, Kobe Newco, Kobe Holdings, Kobe RTI
Holdings, RTI Holdings, RTI Opco and USS/Kobe at or prior to the Closing in
accordance with Section 3.9, substantially in the form attached hereto as
Exhibit U.
"USS/Kobe Senior Notes" - Senior Notes Series A due November 21, 2002,
Series B due November 21, 2005 and Series C due November 21, 2010, issued in an
aggregate principal amount of $115,000,000.
"USS/Kobe Tubular Assets" - collectively, (i) those facilities,
properties and assets of USS/Kobe identified as such in Section 6.6 or 6.13 of
the Disclosure Letter (including without limitation the water treatment plant
relating to the D-2 landfill); provided, however, that the parties agree that
any items of material tangible personal property identified in Section 6.6 of
the Disclosure Letter as being a USS/Kobe Tubular Asset that is in fact
primarily related to the USS/Kobe Bar Business (and was thus so identified as a
USS/Kobe Tubular Asset in error) will be reallocated to become a USS/Kobe Bar
Asset following the Closing if identified by RTI Opco in writing to NewTube
within thirty Business Days following the Closing, subject to NewTube's written
approval with respect to each such item (not to be unreasonably withheld), (ii)
the USS/Kobe Tubular Business Current Assets, (iii) all non-material tangible
personal property not identified in clauses (i) or (ii) of this sentence that is
located on parcel 1, parcel 2, parcel 3 or parcel 4 (as identified in Section
6.6 of the Disclosure Letter) in the Ordinary Course of Business, (iv) all
non-material tangible personal property not identified in clauses (i), (ii) or
(iii) of this sentence that is primarily related to the USS/Kobe Tubular
Business and is identified by NewTube in writing to RTI Opco within thirty
Business Days days following the Closing, subject to RTI Opco's written approval
with respect to each such item (not to be unreasonably withheld), and (v) the
shares of capital stock of USS/Kobe International Sales Company.
"USS/Kobe Tubular Business" - the Tubular Business conducted by
USS/Kobe as of the date hereof, together with any changes to such business after
the date hereof in compliance with the terms of this Agreement.
"USS/Kobe Tubular Liabilities" - all liabilities and obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent or
otherwise) to the extent arising under or relating to the USS/Kobe Tubular
Business or the operation thereof, the USS/Kobe Tubular Assets or the Tubular
Employees (whether arising before or after the Closing, and including without
limitation all such liabilities of USS/Kobe, USX Holdings, Kobe Holdings and
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15
their Affiliates), including without limitation, all liabilities and obligations
relating to (i) termination of any Tubular Employees on or prior to the Closing
Date, (ii) any claim made by any Tubular Employee for severance pay arising
prior to, upon, or following the Closing Date, (iii) any suit or claim of
violation for failure of any USX/Kobe Party to satisfy any of its obligations
under any collective bargaining agreement or other labor agreement with any
labor organization (including without limitation the USWA) in connection with
the Tubular Spinoff, (iv) any suit or claim of violation under WARN or any State
law for any actions taken by the USX/Kobe Parties in connection with, on or
prior to the Closing Date with regard to the Tubular Spinoff or any site of
employment, facility, operating unit or employee of the USS/Kobe Tubular
Business, (v) any violations of Environmental Laws with respect to, or release
or existence of any Hazardous Materials at, any facility or property
constituting a USS/Kobe Tubular Asset, or otherwise relating to the USS/Kobe
Tubular Business (including without limitation those liabilities and obligations
of NewTube described in section 8.6(d) of the Transition, Administrative and
Utilities Services Agreement), (vi) those liabilities and obligations to be
assumed by NewTube or retained by USX in accordance with Section 11.1 hereof,
and (vii) the USS/Kobe Tubular Business Payables and all other obligations and
liabilities of the USS/Kobe Tubular Business set forth on the USS/Kobe Tubular
Business Closing Balance Sheet.
"USWA" - United Steelworkers of America, AFL-CIO.
"USX Environmental Indemnity Agreement" - the environmental indemnity
agreement to be entered into among RTI Opco, NewTube and USX at the Closing in
accordance with Section 5.2, substantially in the form attached hereto as
Exhibit V.
"USX/Kobe Parties' Knowledge" - the USX/Kobe Parties will be deemed to
have "Knowledge" of a particular fact or other matter only if any individual
named in Section 1.1(c) of the Disclosure Letter has actual knowledge of such
fact or other matter.
1.2 Other Definitions. The following terms are defined in the
Sections indicated
Term Section
---- -------
Accrued Liability 11.1(c)(iii)
Aggregate Account Balances 11.1(f)(iii)
APBO 11.1(e)
B&L, LLC 3.7
Bar Business Background
BarTech Introduction
BarTech Asset Contribution 3.8
BarTech Financial Statements 7.4
BarTech Financing Warrants 4.6
BarTech IP 7.16(a)
<PAGE>
16
Term Section
---- -------
BarTech Merger Subsidiary 3.3
BarTech Plans 7.10(a)
BCPII Introduction
BFIPII Introduction
Blackstone Background
Blackstone Equity Contribution 4.1(b)
BOCPII Introduction
BV Parties Introduction
Class D Common Stock 3.3
Closing 5.1
Current Actuary 11.1(d)(i)
Current Record Keeper 11.1(f)(iii)
Damages 18.2
Final Closing Balance Sheets 3.1(d)
First Dominion Background
First Dominion Equity Contribution 4.1(c)
FirstEnergy Background
FirstEnergy Equity Contribution 4.1(c)
First Transfer Amount 11.1(f)(ii)
First Transfer Date 11.1(f)(ii)
HVR Introduction
Infringe 6.16(b)
Initial Transfer Amount 11.1(d)(ii)
Initial Transfer Date 11.1(d)(ii)
Kobe Introduction
Kobe Delaware Introduction
Kobe Equity Contribution 4.1(b)
Kobe Holdings Introduction
Kobe Newco 3.1(a)
Kobe RTI Holdings Introduction
Marked Inventory 10.8(b)
N&T, LLC 3.2
New Affiliate 10.9(a)
NewTube 3.1(a)
NewTube Labor Agreement 2.2(a)
Ratification
NewTube Spinoff Plans 11.1(d)(i)
NewTube Spinoff Savings Plans 11.1(f)(i)
NewTube VEBA 11.1(e)
<PAGE>
17
Term Section
---- -------
Preliminary Closing Balance 3.1(c)
Sheets
Purchased Warrants 4.1(d)
Republic Parties Introduction
RES Holding Introduction
RES Holding Asset Contribution 3.6
RES Holding-BarTech Merger 3.3
RESI Introduction
RESI Financial Statements 8.4
RESI IP 8.16(a)
RESI Plans 8.10(a)
RESI-RTI Merger 3.5
Retained Names and Marks 10.8(a)
RTI Credit Facility 2.5
RTI Debt and Equity Proceeds 4.1(a)
RTI High Yield Bonds 2.6
RTI High Yield Offering 2.6
RTI Holdings 3.2
RTI Labor Agreement 2.2(b)
Ratification
RTI Opco 3.2
RTI PBGC Agreement 2.4
Section 4044 Amount 11.1(d)(i)
Second Transfer Amount 11.1(h)(ii)
Second Transfer Date 11.1(h)(ii)
Sources and Uses 2.5
State Debt Consents 2.1
Sumitomo Background
Sumitomo Equity Contribution 4.1(c)
Terminated USS/Kobe Contracts 2.8(a)
Triumph Background
Triumph Equity Contribution 4.1(c)
True-Up Amount 11.1(d)(ii)
True-Up Date 11.1(d)(ii)
TCW Background
TCW Equity Contribution 4.1(c)
Tubular Business Background
Tubular Employees 11.1(a)
Tubular Non-Union Employees 11.1(a)
Tubular Spinoff 3.1(b)
Tubular Union Employees 11.1(a)
<PAGE>
18
Term Section
---- -------
USS/Kobe Introduction
USS/Kobe Bar Business Closing 3.1(d)
Balance Sheet
USS/Kobe Bar Business Current 3.1(c)
Assets
USS/Kobe Bar Business 2.8(c)
Payables
USS/Kobe Financial Statements 6.4
USS/Kobe IP 6.16(a)
USS/Kobe Pension Plans 11.1(d)(i)
USS/Kobe Plans 6.10(a)
USS/Kobe Tubular Business 3.1(d)
Closing Balance Sheet
USS/Kobe Tubular Business 3.1(c)
Current Assets
USS/Kobe Tubular Business 2.8(c)
Payables
USX Holdings/Kobe Holdings- 3.9
RTI Opco Merger
USS/Kobe Savings Plans 11.1(f)(i)
USS/Kobe VEBA 11.1(e)
USX Equity Contribution 4.1(b)
USX Holdings Introduction
USX/Kobe Parties Introduction
USX RTI Holdings Introduction
Valuation Date 11.1(d)(i)
VCP Introduction
Veritas Background
Veritas Equity Contribution 4.1(b)
Warrant Equity Contribution 4.1(d)
SECTION 2
ACTIONS PRIOR TO CLOSING
2.1 State Lender Consents. Each of BarTech and the Republic Parties
will use commercially reasonable best efforts to obtain as promptly as
practicable all necessary consents so that the Continuing BarTech State Debt and
Continuing RESI State Debt, respectively, may remain outstanding following the
Closing without resulting in a material violation or breach of any provision of,
or give any Person the right to declare a default or exercise any remedy
<PAGE>
19
thereunder, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any of the foregoing (collectively, the "State Debt
Consents").
2.2 Labor Agreements.
(a) The USX/Kobe Parties will use commercially reasonable best
efforts to obtain as promptly as practicable USWA member ratification
of the new labor agreement previously negotiated with the USWA covering
those union employees of USS/Kobe who will be employees of NewTube
following the Closing, such ratification to be in the manner determined
to be appropriate by the USWA (the "NewTube Labor Agreement
Ratification").
(b) BarTech and RES Holding will use commercially reasonable
best efforts to obtain as promptly as practicable USWA member
ratification of the new labor agreement previously negotiated with the
USWA covering those union employees of USS/Kobe who will be employees
of RTI Opco or its Subsidiaries following the Closing, such
ratification to be in the manner determined to be appropriate by the
USWA (the "RTI Labor Agreement Ratification").
2.3 [intentionally omitted]
2.4 RTI PBGC Agreement. BarTech and the Republic Parties, in
consultation with the USX/Kobe Parties, will use commercially reasonable best
efforts as promptly as practicable to reach agreement with the PBGC prior to the
Closing Date with respect to any material objections of the PBGC regarding the
Employee Benefit Plans of RTI Opco and its Subsidiaries and NewTube that will
exist following the Closing pursuant to the terms of this Agreement, with as
little financial detriment to RTI Opco, NewTube and their post-Closing
Affiliates as practicable and with such agreement to be reasonably satisfactory
to BarTech, the Republic Parties and the USX/Kobe Parties (the "RTI PBGC
Agreement").
2.5 RTI Credit Facility. BarTech and the Republic Parties, in
consultation with the USX/Kobe Parties, will use commercially reasonable best
efforts as promptly as practicable to enter into a new revolving bank credit
facility for RTI Opco that, upon the Closing, will be secured by the inventory
and receivables of RTI Opco and its Subsidiaries, provide borrowing capacity in
an amount at least consistent with the "sources and uses" listed on Exhibit W
hereto (the "Sources and Uses"), and otherwise be on terms reasonably
satisfactory in all material respects to BarTech, the Republic Parties and the
USX/Kobe Parties (the "RTI Credit Facility").
2.6 RTI High Yield Offering. BarTech and the Republic Parties, in
consultation with the USX/Kobe Parties, will use commercially reasonable best
efforts to prepare as promptly as practicable an offering memorandum for an
offering by RTI Opco of high yield debt securities (the "RTI High Yield Bonds")
to be issued on the Closing Date in an amount at least consistent
<PAGE>
20
with the Sources and Uses, to be secured by RTI Opco's and its Subsidiaries'
property, plant and equipment and otherwise to be on terms reasonably
satisfactory in all material respects to BarTech, the Republic Parties and the
USX/Kobe Parties (the "RTI High Yield Offering") (provided that BarTech, the
Republic Parties and the USX/Kobe Parties acknowledge that BarTech Financing
Warrants will be issued in connection with the RTI High Yield Offering, as
provided in Sections 4.1 and 4.6).
2.7 Termination of Marketing Joint Venture. BarTech and RESI hereby
terminate the limited liability company agreement of Republic Technologies
International Marketing, LLC effective as of the Closing.
2.8 Termination of Certain Agreements; Certain Payables.
(a) Effective as of the Closing, (i) USS/Kobe and USX hereby
terminate each Contract of USS/Kobe or any of its Subsidiaries that is
with or for the benefit of USX or any Affiliate of USX other than
USS/Kobe (and USX will cause each of its Affiliates to effect such
termination as of the Closing), and (ii) USS/Kobe, Kobe and Kobe
Delaware hereby terminate each Contract of USS/Kobe or any of its
Subsidiaries that is with or for the benefit of Kobe or any Affiliate
of Kobe other than USS/Kobe (and Kobe and Kobe Delaware will cause each
of their Affiliates to effect such termination as of the Closing), in
each case other than any such Contract that is (A) a Transaction
Document, (B) a USS/Kobe Tubular Asset or (C) set forth in Section
2.8(a) of the Disclosure Letter (collectively, the "Terminated USS/Kobe
Contracts").
(b) Effective as of the Closing, each of USX, Kobe and Kobe
Delaware hereby releases in full (and will cause each of its respective
Subsidiaries other than USS/Kobe to release in full) USS/Kobe, RTI Opco
and their post-closing Affiliates from any and all agreements,
obligations and liabilities of any nature or kind (including without
limitation those arising under the Terminated USS/Kobe Contracts and
any Contracts of USS/Kobe that are USS/Kobe Tubular Assets), other than
(i) accrued payables owed to USX, Kobe or any of their respective
Affiliates by the USS/Kobe Bar Business to the extent reflected as such
on the USS/Kobe Bar Business Closing Balance Sheet and (ii) agreements,
obligations and liabilities of RTI Opco, RTI Holdings and BarTech
arising under any of the Transaction Documents (including without
limitation liability for USS/Kobe Bar Liabilities).
(c) Effective as of the Closing, (i) RTI Opco hereby agrees to
pay to USX, Kobe and their respective post-closing Affiliates when due
(subject to the terms of the RTI-USX Payables Agreement) those
liabilities and other obligations of the USS/Kobe Bar Business
reflected as such on the USS/Kobe Bar Business Closing Balance Sheet
(collectively, the "USS/Kobe Bar Business Payables"), and (ii) NewTube
hereby agrees to pay when due (i) to RTI Opco, those accounts
receivable of the USS/Kobe Bar Business reflected on the USS/Kobe Bar
Business Closing Balance Sheet as obligations
<PAGE>
21
of NewTube to the USS/Kobe Bar Business, and (ii) to whomever owed, all
other liabilities and other obligations of the USS/Kobe Tubular
Business reflected as such on the USS/Kobe Tubular Business Closing
Balance Sheet (collectively, the "USS/Kobe Tubular Business Payables").
SECTION 3
CORPORATE RESTRUCTURING AT CLOSING
3.1 Spinoff of USS/Kobe Tubular Assets and Liabilities.
(a) Prior to the date hereof (i) USX has formed USX RTI
Holdings as a new direct wholly owned corporate Subsidiary of USX that
will hold the RTI Holdings Common Units to be acquired by USX pursuant
to the Contemplated Transactions, (ii) Kobe Delaware Inc., a Subsidiary
of Kobe, has formed a new direct wholly owned corporate Subsidiary
("Kobe Newco"), and Kobe Newco has formed Kobe RTI Holdings as a new
direct wholly owned corporate Subsidiary of Kobe Newco that will hold
the RTI Holdings Common Units to be acquired by Kobe pursuant to the
Contemplated Transactions, (iii) Kobe Delaware has contributed all of
the outstanding capital stock of Kobe Holdings to Kobe Newco, and (iv)
USX and Kobe Newco have formed a new joint venture limited liability
company (owned equally directly by USX and Kobe Newco) to hold the
USS/Kobe Tubular Business as of the Closing ("NewTube"). At or prior to
the Closing and prior to completion of the transactions described in
Section 3.9, USS/Kobe and NewTube will enter into the Tubular
Assignment and Assumption Agreement.
(b) Immediately prior to the Closing and in accordance with
the Tubular Assignment and Assumption Agreement, (i) USS/Kobe will
convey the USS/Kobe Tubular Assets to NewTube in exchange for a 99.99%
equity interest in NewTube and NewTube's assumption from USS/Kobe of
the USS/Kobe Tubular Liabilities and (ii) USS/Kobe immediately
thereafter will distribute such 99.99% equity interest in NewTube (A)
49.995% to Kobe Holdings, and Kobe Holdings immediately thereafter will
distribute such equity interests in NewTube to Kobe Newco (which,
together with the .005% equity interest in NewTube received by Kobe
Newco upon the formation of NewTube, will result in Kobe Newco owning
50% of the equity interests in NewTube), and (B) 49.995% percent to USX
Holdings, and USX Holdings immediately thereafter will distribute such
equity interests in NewTube to USX (which, together with the .005%
equity interest in NewTube received by USX upon the formation of
NewTube, will result in USX owning 50% of the equity interests in
NewTube) (collectively, the "Tubular Spinoff").
(c) Pursuant to the Tubular Spinoff, (i) USS/Kobe will retain
(A) all of the cash and cash-equivalents of USS/Kobe (including without
limitation the $878,916 of
<PAGE>
22
cash contributed by USX and Kobe to USS/Kobe and described in Section
3.9(a)(ii)), which will be held as cash or cash-equivalents by USS/Kobe
through the Closing), and such cash and cash-equivalents will be
reflected on the USS/Kobe Bar Business Closing Balance Sheet, and (B)
all of the inventory, receivables and other current assets of USS/Kobe
relating to the USS/Kobe Bar Business, including without limitation
those identified as such on the USS/Kobe Bar Business Closing Balance
Sheet (collectively, the "USS/Kobe Bar Business Current Assets"), and
(ii) NewTube will receive all of the inventory, receivables and other
current assets of USS/Kobe relating to the USS/Kobe Tubular Business to
the extent reflected as such on the USS/Kobe Tubular Business Closing
Balance Sheet.
(d) At the Closing, USS/Kobe will deliver to RTI Opco (i) an
unaudited balance sheet of the USS/Kobe Bar Business as of August 1,
1999 (including the underlying workpapers that show the allocations of
individual accounts receivable, accounts payable and items of inventory
to the USS/Kobe Bar Business), and (ii) an unaudited balance sheet of
the USS/Kobe Tubular Business as of August 1, 1999 (including the
underlying workpapers that show the allocations of individual accounts
receivable, accounts payable and items of inventory to the USS/Kobe
Tubular Business), each giving effect to the Tubular Spinoff as though
it had occurred on such date and prepared in good faith by USS/Kobe in
consultation with RTI Opco in accordance with generally accepted
accounting principles consistently applied (subject to the same
exceptions stated in Section 6.4 with respect to the unaudited balance
sheets included in the USS/Kobe Financial Statements, and provided that
such balance sheets may be presented together as a single document that
shows the allocation of each line item between the USS/Kobe Bar
Business and USS/Kobe Tubular Business) (collectively, the "Preliminary
Closing Balance Sheets"). The Preliminary Closing Balance Sheets are
attached as Schedule 3.1(d) to this Agreement.
(e) Within thirty (30) Business Days following the Closing
Date, NewTube will deliver to RTI Opco (i) an unaudited balance sheet
of the USS/Kobe Bar Business as of immediately following the
consummation of the Tubular Spinoff (including the underlying
workpapers that show the allocations of individual accounts receivable,
accounts payable and items of inventory to the USS/Kobe Bar Business)
(subject to any adjustments as described below in this Section 3.1(e),
the "USS/Kobe Bar Business Closing Balance Sheet"), and (ii) an
unaudited balance sheet of the USS/Kobe Tubular Business as of
immediately following consummation of the Tubular Spinoff (including
the underlying workpapers that show the allocations of individual
accounts receivable, accounts payable and items of inventory to the
USS/Kobe Tubular Business) (subject to any adjustments as described
below in this Section 3.1(e), the "USS/Kobe Tubular Business Closing
Balance Sheet" and, collectively with the USS/Kobe Bar Business Closing
Balance Sheet, the "Final Closing Balance Sheets"), each prepared in
good faith by NewTube based solely upon (A) items appearing in the
respective Preliminary
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23
Closing Balance Sheet delivered at the Closing, (B) any changes to the
balances of particular current assets and current liabilities set forth
in such Preliminary Closing Balance Sheet occurring subsequent to the
date of such Preliminary Closing Balance Sheet in the Ordinary Course
of Business (but in no event will there be any reallocation between the
USS/Kobe Bar Business and the USS/Kobe Tubular Business of current
assets or current liabilities appearing in the Preliminary Closing
Balance Sheets without the written agreement of RTI Opco and NewTube;
provided, however, that the parties agree that (I) current liabilities
consisting of accounts payable appearing in the Preliminary Closing
Balance Sheet relating to the USS/Kobe Bar Business will be reallocated
to the USS/Kobe Tubular Business Closing Balance Sheet to the extent
that they relate to the USS/Kobe Tubular Business and were misallocated
to the Preliminary Closing Balance Sheet relating to the USS/Kobe Bar
Business in error and (II) current assets consisting of inventory
appearing in the Preliminary Closing Balance Sheet relating to the
USS/Kobe Tubular Business will be reallocated to the USS/Kobe Bar
Business Closing Balance Sheet to the extent that they relate to the
USS/Kobe Bar Business and were misallocated to the Preliminary Closing
Balance Sheet relating to the USS/Kobe Tubular Business in error), and
(C) the introduction of new current assets and/or current liabilities
to the extent arising subsequent to the date of a particular
Preliminary Balance Sheet in the Ordinary Course of Business (but in no
event will any new current assets be included in the USS/Kobe Tubular
Business Closing Balance Sheet that did not appear in the Preliminary
Closing Balance Sheet relating to the USS/Kobe Tubular Business, in
each case without the written agreement of RTI Opco; provided, however,
that the parties agree that current assets consisting of inventory
delivered by the USS/Kobe Bar Business to the USS/Kobe Tubular Business
in the Ordinary Course of Business after August 1, 1999 will be
included in the USS/Kobe Tubular Business Closing Balance Sheet to the
extent that an offsetting payable owed by the USS/Kobe Tubular Business
to the USS/Kobe Bar Business is reflected in both of the Final Closing
Balance Sheets in an amount equal to the fair market value of such
inventory), each prepared in accordance with generally accepted
accounting principles consistently applied (subject to the same
exceptions stated in Section 6.4 with respect to the unaudited balance
sheets included in the USS/Kobe Financial Statements). Within thirty
(30) Business Days following its receipt of the Final Closing Balance
Sheets, RTI Opco will notify NewTube in writing if it disagrees with
any component of such balance sheets (setting forth in reasonable
detail each such disagreement and the basis therefore), and if RTI Opco
does not deliver such a notice of disagreement, all parties hereto will
be deemed to have accepted such balance sheets as the Final Closing
Balance Sheets for all purposes hereunder, and such Final Closing
Balance Sheets will be attached as Schedule 3.1(e) to this Agreement.
If RTI Opco delivers to NewTube a notice of disagreement as described
in the preceding sentence, senior executives of RTI Opco and NewTube
promptly will meet in person and will negotiate in good faith to
resolve each item set forth in such notice of disagreement, and if they
are able to resolve such items to the reasonable satisfaction of both
RTI Opco and NewTube, all parties hereto will be deemed to have
accepted such balance sheets
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24
(with such written modifications as RTI Opco and NewTube have agreed in
reaching such resolution) as the Final Closing Balance Sheet for all
purposes hereunder, and such Final Closing Balance Sheets will be
attached as Schedule 3.1(e) to this Agreement. If RTI Opco and NewTube
are unable to resolve each item set forth in RTI Opco's notice of
disagreement within ten (10) Business Days following the delivery
thereof, all remaining items of disagreement promptly shall be resolved
by KPMG Peat Marwick in accordance with the principles set forth in
this Section 3.1 (and RTI Opco and NewTube will bear 71.5% and 28.5% of
the cost of such accountant, respectively), and such accountant's
resolution of each such remaining item of disagreement will be final
and all parties hereto will be deemed to have accepted such balance
sheets (with such written resolutions to items of disagreement as such
accountant shall have reached) as the Final Closing Balance Sheet for
all purposes hereunder, and such Final Closing Balance Sheets will be
attached as Schedule 3.1(e) to this Agreement.
3.2 Formation of RTI Opco, RTI Holdings and N&T, LLC. Prior to the date
hereof, (i) RESI has formed a new wholly owned limited liability company
subsidiary that will hold all the assets and liabilities (directly and through
its Subsidiaries) of each of BarTech, RESI and the USS/Kobe Bar Business
following the Closing (except as otherwise expressly provided in Section 3.8)
("RTI Opco"), (ii) RES Holding has formed a new wholly owned limited liability
company subsidiary that will hold all of the outstanding membership interests in
RTI Opco following the Closing ("RTI Holdings") and (iii) RTI Opco has formed a
new wholly owned limited liability company subsidiary that will hold the assets
and liabilities of Nimishillen & Tuscarawas Railway Company ("N&T, LLC")
following the Closing.
3.3 Merger of BarTech Merger Subsidiary With and Into RES Holding. At
or prior to the Closing, BarTech will form a new special purpose wholly owned
corporate subsidiary that will be merged with and into RES Holding at the
Closing ("BarTech Merger Subsidiary"), and BarTech, BarTech Merger Subsidiary
and RES Holding will enter into the RES Holding Merger Agreement. At the Closing
and in accordance with the RES Holding Merger Agreement, BarTech Merger
Subsidiary will be merged with and into RES Holding, with RES Holding surviving
and the outstanding shares of RES Holding being converted into such number of
shares of Class D Common Stock, par value $.001 per share, of BarTech ("Class D
Common Stock") as is agreed between BarTech and RES Holding (the "RES
Holding-BarTech Merger").
3.4 Merger of Nimishillen & Tuscarawas Railway Company. At or prior to
the Closing, RESI, RTI Opco, Nimishillen & Tuscarawas Railway Company and N&T,
LLC will enter into the N&T Merger Agreement. At the Closing and in accordance
with the N&T Merger Agreement, following completion of the transaction described
in Section 3.3, RESI will cause Nimishillen & Tuscarawas Railway Company to be
merged with and into N&T, LLC, with N&T, LLC surviving and the outstanding
shares of Nimishillen & Tuscarawas Railway Company being converted into
membership interests in RTI Opco.
<PAGE>
25
3.5 Merger of RESI. At or prior to the Closing, RES Holding, RESI and
RTI Opco will enter into the RESI Merger Agreement. At the Closing and in
accordance with the RESI Merger Agreement, following completion of the
transaction described in Section 3.4, RESI will merge with and into RTI Opco,
with RTI Opco surviving and the outstanding shares of RESI being converted into
RTI Holdings Common Units (the "RESI-RTI Merger").
3.6 Conveyance of RTI Opco Interests to RTI Holdings. At or prior to
the Closing, RES Holding, RTI Holdings and RTI Opco will enter into the RES
Holding Assignment and Assumption Agreement. At the Closing and in accordance
with the RES Holding Assignment and Assumption Agreement, following completion
of the transaction described in Section 3.5, (i) RES Holding will contribute to
RTI Holdings all of the outstanding membership interests in RTI Opco and (ii)
RTI Opco will assume all of RES Holding liabilities (including without
limitation any Taxes arising from the Contemplated Transactions) (together, the
"RES Holding Asset Contribution").
3.7 Liquidation and Merger of Certain BarTech Subsidiaries. At or prior
to the Closing, (i) BarTech will cause Bliss & Laughlin Industries Inc. to be
liquidated (which will result in Bliss & Laughlin and Canadian Drawn Steel
Company becoming directly held wholly owned Subsidiaries of BarTech), (ii)
BarTech will form a new wholly owned limited liability company subsidiary that
will hold the assets and liabilities of Bliss & Laughlin ("B&L, LLC") following
the Closing and (iii) BarTech, Bliss & Laughlin and B&L, LLC will enter into the
B&L Merger Agreement. At the Closing and in accordance with the B&L Merger
Agreement, following completion of the transaction described in Section 3.6,
BarTech will cause Bliss & Laughlin to be merged with and into B&L, LLC, with
B&L, LLC surviving and the outstanding shares of Bliss & Laughlin being
converted into membership interests in B&L, LLC.
3.8 Transfer of BarTech Assets and Liabilities to RTI Opco. At or prior
to the Closing, BarTech, RTI Holdings and RTI Opco will enter into the BarTech
Assignment and Assumption Agreement. At the Closing and in accordance with the
BarTech Assignment and Assumption Agreement, following completion of the
transactions described in Section 3.7, BarTech will convey all of its assets
(other than the shares of RES Holding, BarTech's rights arising under any of the
Transaction Documents to which it is a party, and any tax benefit accruing or
arising at or prior to the Closing Date of BarTech, including without limitation
any net operating loss, alternative minimum tax credit and general business
credit carryforward existing as of the Closing Date) to RTI Opco, in
consideration of which (i) BarTech will receive (A) RTI Holdings Common Units
representing, in the aggregate with those RTI Holdings Common Units held by RES
Holding, 70.233151% of the RTI Holdings Common Units to be outstanding upon
completion of the Closing, (B) 1,100 RTI Holdings Series A Preferred Units
(having an aggregate liquidation preference of $5,500,000) and (C) 30,000 RTI
Holdings Series C Preferred Units (having an aggregate liquidation preference of
$30,000,000), and (ii) RTI Opco will assume all of BarTech's liabilities
(including without limitation any Taxes arising from the Contemplated
Transactions) (together, the "BarTech Asset Contribution").
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26
3.9 Contributions to Capital of USS/Kobe; Merger of USS/Kobe Bar
Business into RTI Opco.
(a) Prior to the date hereof, (i) USX and Kobe have
contributed equally to the capital of USS/Kobe an aggregate of $10
million of cash, thereby causing the USS/Kobe Credit Facility not to
exceed $75 million principal amount outstanding (and resulting in RTI
Opco being required to expend $10 million less of RTI Debt and Equity
Proceeds pursuant to Section 4.5 below in connection with the repayment
in full of amounts outstanding under the USS/Kobe Credit Facility at
the Closing), and (ii) USX and Kobe have contributed to the capital of
USS/Kobe an additional aggregate of $878,916 of cash, thereby causing
the cash received by RTI Opco as a result of the USX Holdings/Kobe
Holdings-RTI Opco Merger to be increased by that amount (and resulting
in RTI Opco being required to obtain $878,916 less of Equity
Contributions pursuant to Section 4.1(b) below).
(b) At or prior to the Closing, USX, USX Holdings, USX RTI
Holdings, Kobe Newco, Kobe Holdings, Kobe RTI Holdings, RTI Holdings,
RTI Opco and USS/Kobe will enter into the USS/Kobe Merger Agreement. At
the Closing and in accordance with the USS/Kobe Merger Agreement,
following completion of the transactions described in Sections 3.1 and
3.8, (i) USX Holdings will merge with and into RTI Opco, with RTI Opco
surviving and the outstanding stock of USX Holdings being converted
into RTI Holdings Common Units representing 15.568073% of the RTI
Holdings Common Units to be outstanding upon completion of the Closing,
and (ii) Kobe Holdings will merge with and into RTI Opco, with RTI Opco
surviving and the outstanding stock of Kobe Holdings being converted
into RTI Holdings Common Units representing 14.198775% of the RTI
Holdings Common Units to be outstanding upon completion of the Closing
(which under Ohio law will result in (A) the automatic termination of
the USS/Kobe general partnership, and (B) RTI Opco becoming the
successor of Kobe Holdings and USX Holdings, with all of the assets and
liabilities of USS/Kobe, Kobe Holdings and USX Holdings thereby
becoming assets and liabilities of RTI Opco) (the foregoing steps
(i)-(ii), collectively, the "USX Holdings/Kobe Holdings-RTI Opco
Merger").
(c) Immediately following consummation of the USX
Holdings/Kobe Holdings-RTI Opco Merger, (i) USX will contribute to USX
RTI Holdings all of the RTI Holdings Common Units held directly or
indirectly by USX (and none of its other assets or liabilities) and
(ii) Kobe Newco will contribute to Kobe RTI Holdings all of the RTI
Holdings Common Units held directly or indirectly by Kobe Newco (and
none of its other assets or liabilities). Upon completion of the
transactions contemplated by this Section 3 and Section 4, the sole
holders of RTI Holdings Units will be (i) BarTech and RES Holding
(collectively owning 70.233151% of the outstanding RTI Holdings Common
Units, and with BarTech owning all of the outstanding RTI Holdings
Series A Preferred Units and RTI Holdings Series C Preferred Units),
(ii) USX RTI Holdings (owning
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27
15.568073% of the outstanding RTI Holdings Common Units) and (iii) Kobe
RTI Holdings (owning 14.198775% of the outstanding RTI Holdings Common
Units).
SECTION 4
REFINANCING TRANSACTIONS AT CLOSING
4.1 Closing of RTI High Yield Offering; Borrowing Under RTI Credit
Facility; Equity Contributions.
(a) Concurrently with the Closing, RTI Opco will (i) obtain
the net proceeds of the RTI High Yield Offering and (ii) close the RTI
Credit Facility and borrow an amount under the RTI Credit Facility such
that, when combined with the proceeds of the RTI High Yield Offering
and the Equity Contributions, such combined amount (the "RTI Debt and
Equity Proceeds") will be sufficient to effect the repayments of
existing indebtedness contemplated hereby and the payment or
reimbursement of all fees, transfer taxes or related fees and
out-of-pocket expenses incurred by each of the parties hereto and their
Affiliates in connection with the Contemplated Transactions.
(b) At the Closing and immediately prior to the BarTech Asset
Contribution, (i) BCPII, BOCPII and BFIPII will purchase from BarTech
an aggregate of 894,745 of Class D Common Stock, respectively, for an
aggregate cash purchase price of $50,000,000 (collectively, the
"Blackstone Equity Contribution") and (ii) VCP will purchase from
BarTech 322,108 shares of Class D Common Stock for an aggregate cash
purchase price of $18,000,000 (the "Veritas Equity Contribution"). At
the Closing and immediately following the USX Holdings/Kobe
Holdings-RTI Opco Merger, (i) USX RTI Holdings will make a cash capital
contribution to RTI Holdings in the amount of $14,560,542 (which
contribution will not increase the 15.568073% of the outstanding RTI
Holdings Common Units to be held by USX RTI Holdings upon completion of
the Closing) (the "USX Equity Contribution"), and RTI Holdings will in
turn immediately contribute such cash to the capital of RTI Opco, and
(ii) Kobe RTI Holdings will make a cash capital contribution to RTI
Holdings in the amount of $9,560,542 (which contribution will not
increase the 14.198775% of the outstanding RTI Holdings Common Units to
be held by Kobe RTI Holdings upon completion of the Closing) (the "Kobe
Equity Contribution"), and RTI Holdings will in turn immediately
contribute such cash to the capital of RTI Opco.
(c) At the Closing and immediately prior to the BarTech Asset
Contribution, pursuant to the Subscription Agreement (i) First Energy
will purchase from BarTech 30,000 shares of Class C Convertible
Preferred Stock for an aggregate cash purchase price of $30,000,000
(the "FirstEnergy Equity Contribution"), (ii) Sumitomo will
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28
purchase from BarTech 53,684.7 shares of Class D Common Stock for an
aggregate cash purchase price of $3,000,000 (the "Sumitomo Equity
Contribution"), (iii) Triumph will purchase from BarTech an aggregate
of 87,685 shares of Class D Common Stock for an aggregate cash purchase
price of $4,900,000 (the "Triumph Equity Contribution"), (iv) First
Dominion will purchase from BarTech 35,789.8 shares of Class D Common
Stock for an aggregate cash purchase price of $2,000,000 (the "First
Dominion Equity Contribution") and (v) TCW will purchase from BarTech
an aggregate of 89,474.5 shares of Class D Common Stock for an
aggregate cash purchase price of $5,000,000 (the "TCW Equity
Contribution").
(d) At the Closing and immediately prior to the BarTech Asset
Contribution, pursuant to a subscription agreement, dated as of August
13, 1999, among BarTech, Chase Securities Inc., Donaldson Lufkin &
Jenrette Securities Corporation and BancBoston Robertson Stephens Inc.,
Chase Securities Inc., Donaldson Lufkin & Jenrette Securities
Corporation and BancBoston Robertson Stephens Inc. will purchase from
BarTech an aggregate of 65,892 warrants (the "Purchased Warrants") to
purchase an aggregate of 127,501 shares of Class D Common Stock (with
each such warrant being exercisable for 1.935 shares of Class D Common
Stock at an exercise price of $.01 per warrant) for a purchase price of
$108.13137 per warrant and an aggregate purchase price of $7,125,000
(the "Warrant Equity Contribution").
4.2 Repayment of RES Holding Credit Facility. At the Closing,
concurrent with the consummation of the RES Holding Asset Contribution (and
prior to the BarTech Asset Contribution), BarTech will utilize sufficient
proceeds of the Equity Contributions to repay in full all amounts outstanding
under the RES Holding Credit Facility, and RTI Opco will keep available
sufficient liquidity to pay or reimburse all the fees and expenses of the
Republic Parties that are to be borne by RTI Opco in accordance with Section
19.1(a).
4.3 Repayment of BarTech Senior Secured Notes, BarTech Credit Facility
and Refinanced BarTech State and Bethlehem Debt. At the Closing, concurrent with
the consummation of the BarTech Asset Contribution, (i) RTI Opco will utilize
sufficient RTI Debt and Equity Proceeds to effect a covenant defeasance (or
otherwise cash-collateralize to the extent necessary to permit consummation of
the Contemplated Transactions) as of the Closing with respect to all outstanding
BarTech Senior Secured Notes, including without limitation any penalties,
interest and make-whole premiums, RTI Opco will keep available sufficient
liquidity to pay or reimburse all the fees and expenses of BarTech and the BV
Parties that are to be borne by RTI Opco in accordance with Section 19.1(a), and
BarTech will call for redemption all outstanding BarTech Senior Secured Notes
pursuant to the terms of the indenture and other documents relating thereto and
thereafter redeem such BarTech Senior Secured Notes at the earliest permissible
date following the Closing, (ii) RTI Opco will utilize sufficient RTI Debt and
Equity Proceeds to repay in full all amounts outstanding under the BarTech
Credit Facility, including without limitation any penalties, interest and
make-whole premiums, and (iii) RTI
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29
Opco will utilize sufficient RTI Debt and Equity Proceeds to repay all
outstanding Refinanced BarTech State and Bethlehem Debt, including without
limitation any penalties, interest and make-whole premiums.
4.4 Repayment of RESI Credit Facility and RESI Bridge Facility. At the
Closing, concurrent with the consummation of the RESI-RTI Merger, (i) RTI Opco
will utilize sufficient RTI Debt and Equity Proceeds to repay in full all
amounts outstanding under the RESI Credit Facility, including without limitation
any penalties, interest and make-whole premiums, and (ii) RTI Opco will utilize
sufficient RTI Debt and Equity Proceeds to repay in full all amounts outstanding
under the RESI Bridge Facility, including without limitation any penalties,
interest and make-whole premiums.
4.5 Repayment of USS/Kobe Senior Notes and USS/Kobe Credit Facility. At
the Closing, concurrent with the consummation of the USX Holdings/Kobe
Holdings-RTI Opco Merger, (i) RTI Opco will utilize sufficient RTI Debt and
Equity Proceeds to redeem in full all outstanding USS/Kobe Senior Notes,
including without limitation any penalties, interest and make-whole premiums,
and RTI Opco will keep available sufficient liquidity to pay or reimburse all
the fees and expenses of USX, Kobe and USS/Kobe that are to be borne by RTI Opco
in accordance with Section 19.1(a), and (ii) RTI Opco will utilize sufficient
RTI Debt and Equity Proceeds to repay in full all amounts outstanding under the
USS/Kobe Credit Facility, including without limitation any penalties, interest
and make-whole premiums.
4.6 Issuance of BarTech RTI High Yield Warrants in Connection with RTI
High Yield Offering. At the Closing, BarTech will contribute to RTI Holdings for
delivery to the purchasers of RTI High Yield Bonds 425,000 warrants to purchase
an aggregate of 822,386 shares of Class D Common Stock (with each such warrant
being exercisable for 1.935 shares of Class D Common Stock at an exercise price
of $.01 per warrant (collectively with the Purchased Warrants, the "BarTech
Financing Warrants").
4.7 No Priority in Debt Payment. The order of listing for the repayment
of outstanding debt set forth in Sections 4.2, 4.3, 4.4 and 4.5 is not a
statement of priority of payment, and the retirement of such outstanding debt is
a condition precedent as set forth in Section 12.4.
SECTION 5
THE CLOSING
5.1 Closing. Subject to the satisfaction or waiver of all conditions
precedent set forth in Sections 12, 13, 14, 15 and 16, the closing of the
Contemplated Transactions (the "Closing") will take place at the offices of
Simpson Thacher & Bartlett, New York, New York, at 10:00
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30
a.m. (local time) on the earliest practicable date on which the debt component
of the RTI Debt and Equity Proceeds become available, or at such other time and
place as BarTech, USX RTI Holdings and Kobe RTI Holdings may agree. Subject to
the provisions of Section 17, failure to consummate the Contemplated
Transactions on the date and time and at the place determined pursuant to this
Section 5.1 will not result in the termination of this Agreement nor relieve any
party of any obligation under this Agreement. Prior to or concurrently with the
Closing, the parties hereto will cause the Contemplated Transactions to be
consummated, including without limitation by filing certificates of merger with
respect to the Mergers with the Secretary of State of each state of formation of
Persons party to the Mergers, as appropriate.
5.2 Closing Obligations. At the Closing:
(a) BarTech, RES Holding, USX RTI Holdings, Kobe RTI Holdings
and RTI Holdings will execute and deliver the RTI Holdings LLC
Agreement;
(b) RTI Holdings and RTI Opco will execute and deliver the RTI
Opco LLC Agreement;
(c) RTI Opco and USX (with respect to its U.S. Steel Group
unit) will execute and deliver the Coke Supply Agreement;
(d) RTI Opco and USX (with respect to its U.S. Steel Group
unit) will execute and deliver the Pellet Supply Agreement;
(e) RTI Opco, NewTube and USX (with respect to its U.S. Steel
Group unit) will execute and deliver the Round Supply Agreement;
(f) The parties named therein will execute and deliver the
Equityholders Agreement;
(g) RTI Opco, Blackstone Management Partners II L.L.C.,
Veritas Capital Management, L.L.C., USX, Kobe Delaware and Kobe Steel
USA, Inc. will execute and deliver the Transactional and Monitoring Fee
Agreement;
(h) RTI Opco and NewTube will execute and deliver the
Transition, Administrative and Utilities Services Agreement;
(k) USX, Kobe Newco, RTI Opco and NewTube will execute and
deliver the Safe-Harbor Lease Matters Agreement;
(l) RTI Opco, USX and Kobe will execute and deliver the
Continuing USS/Kobe State Debt Participation Agreement;
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31
(m) RTI Opco, NewTube and USX will execute and deliver the USX
Environmental Indemnity Agreement;
(o) Each of the parties thereto will execute and deliver each
of the New Kobe- RTI Opco Agreements;
(p) RTI Opco, USS/Kobe and Batus Retail Services, Inc. will
enter into the Bloom Caster Consent and Assumption Agreement; and
(q) RTI Opco and USX will enter into the RTI-USX Payables
Agreement.
SECTION 6
REPRESENTATIONS AND WARRANTIES REGARDING USS/KOBE
USX RTI Holdings and Kobe RTI Holdings (i) individually and severally
with respect to the representations and warranties in Section 6.2 regarding
USX/Kobe Parties which are themselves and their respective Affiliates (other
than USS/Kobe and its Subsidiaries), and (ii) severally with respect to all
other representations and warranties contained in this Agreement regarding
USS/Kobe and its Affiliates, represent and warrant to BarTech and RES Holding as
follows (provided, however, that the Disclosure Letter sets forth certain
exceptions to such representations and warranties or discloses certain matters
in response to such representations and warranties, in each case identified by
the applicable Section numbers below, and provided, further, that, for the
avoidance of doubt, the parties hereto acknowledge and agree that neither USX
nor Kobe is itself making any of the representations and warranties contained in
this Section 6):
6.1 Organization and Good Standing.
(a) USS/Kobe is a general partnership duly organized, validly
existing, and in good standing under the laws of Ohio, with full
partnership power and authority to conduct its business as it is now
being conducted. USX Holdings is a corporation duly organized, validly
existing, and in good standing under the laws of Ohio, with full
corporate power and authority to conduct its business as it is now
being conducted. Kobe Holdings is a corporation duly organized, validly
existing, and in good standing under the laws of Ohio, with full
corporate power and authority to conduct its business as it is now
being conducted. Each of USS/Kobe, USX Holdings and Kobe Holdings is
duly qualified to do business as a foreign partnership or corporation,
as applicable, and is in good standing under the laws of each state or
other jurisdiction in which the nature of the activities conducted by
it or the ownership or leasing of its properties requires such
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32
qualification, except where such failure to so qualify or to be in good
standing does not have a USS/Kobe Material Adverse Effect.
(b) Each of USX RTI Holdings and Kobe RTI Holdings is a
corporation duly organized, validly existing, and in good standing
under the laws of Delaware, with full corporate power and authority to
conduct its business as it is now being conducted. Each of USX RTI
Holdings and Kobe RTI Holdings is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
state or other jurisdiction in which the nature of the activities
conducted by it or the ownership or leasing of its properties requires
such qualification, except where such failure to so qualify or to be in
good standing does not have a USS/Kobe Material Adverse Effect.
(c) Each of USS/Kobe, USX Holdings, USX RTI Holdings, Kobe
Holdings and Kobe RTI Holdings has made available to BarTech and RES
Holding complete and correct copies of its Organizational Documents, as
currently in effect. Except for the incurrence of indebtedness set
forth in Section 6.1(d) of the Disclosure Letter, as of the Closing,
each of USX RTI Holdings and Kobe RTI Holdings will have engaged in no
activities and incurred no liabilities prior to the Closing except
those activities and liabilities incidental to its formation or
expressly contemplated by this Agreement.
(d) Except as set forth in Section 6.1(d) of the Disclosure
Letter, USS/Kobe does not own any direct or indirect equity or debt
interest in any other Person and USS/Kobe is not obligated or committed
to acquire any such interest. USS/Kobe International Sales Company is
primarily related to tubular sales. As of the Closing, each of USX RTI
Holdings and Kobe RTI Holdings will own no direct or indirect equity or
debt interest in any other Person, or be obligated or committed to
acquire any such interest (other than pursuant to this Agreement),
other than their respective membership interests in RTI Holdings
acquired in the Contemplated Transactions. As of the Closing, each of
USX Holdings and Kobe Holdings will own no direct or indirect equity or
debt interest in any other Person or other assets, or be obligated or
committed to acquire any such interest (other than pursuant to this
Agreement), other than their respective partnership interests in
USS/Kobe, and, except as set forth in Section 6.1(d) of the Disclosure
Letter, will have engaged in no activities, owned no assets and
incurred no liabilities prior to the Closing except for activities,
assets and liabilities incidental to acting as a general partner of
USS/Kobe which would not, individually or in the aggregate, reasonably
be expected to have a USS/Kobe Material Adverse Effect. As of the
Closing, all of the indebtedness of each of USX Holdings and Kobe
Holdings will have been repaid in full or otherwise eliminated, and
each of USX Holdings and Kobe Holdings will have no liabilities or
obligations with respect thereto.
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6.2 Authority; No Conflict; Consents.
(a) This Agreement and each other Transaction Document to
which it is a party has been duly executed and delivered by, and
constitutes the legal, valid and binding obligation of, each USX/Kobe
Party, enforceable against such entity in accordance with its terms,
except to the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance,
fraudulent transfer, moratorium or other laws relating to or affecting
creditors' rights generally and by general equity principles.
(b) Each of the USX/Kobe Parties has the requisite corporate,
partnership or other applicable right, power, authority and capacity to
execute and deliver this Agreement and each other Transaction Document
to which it is a party and to perform its obligations under this
Agreement and each other Transaction Document to which it is a party.
The execution, delivery and performance of this Agreement and each
other Transaction Document to which it is a party by each USX/Kobe
Party have been duly authorized by all necessary corporate, partnership
or other applicable action, as the case may be, on the part of such
entity and its owners.
(c) Except as disclosed in Section 6.2(c) of the Disclosure
Letter, neither the execution and delivery of this Agreement and each
other Transaction Document to which it is a party nor the consummation
of any of the Contemplated Transactions or other performance of its
obligations hereunder or thereunder will, directly or indirectly:
(i) violate any provision of the Organizational
Documents of any USX/Kobe Party or any of its Subsidiaries, as
applicable;
(ii) result in a violation of, or give any
Governmental Body or other Person the right to exercise any
remedy or obtain any relief under, any Legal Requirement or
any Order to which any USX/Kobe Party or any of its
Subsidiaries, as applicable, is subject;
(iii) result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any USX/Kobe Party
or any of its Subsidiaries;
(iv) result in a violation or breach of any provision
of, or give any Person the right to declare a default,
exercise any remedy under or demand a mandatory prepayment of,
or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any material Contract of any USX/Kobe
Party or any of its Subsidiaries, as applicable; or
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34
(v) result in the imposition or creation of any
Encumbrance upon any of the assets owned or used by any
USX/Kobe Party or any of its Subsidiaries.
(d) No USX/Kobe Party or any of its Affiliates is or will be
required to obtain any Consent from any Person or Governmental Body in
connection with the execution and delivery of this Agreement or any
other Transaction Document to which it is a party or the consummation
of any of the Contemplated Transactions or their performance hereunder
or thereunder, except (i) the Material Consents disclosed in Section
6.2(d) of the Disclosure Letter, which will be obtained by Closing and
(ii) such other Consents as to which the failure to obtain them by
Closing would not, individually or in the aggregate, reasonably be
expected to have a USS/Kobe Material Adverse Effect or a RTI Material
Adverse Effect.
6.3 Capitalization. The authorized and outstanding equity interests of
each of USS/Kobe, USX Holdings and Kobe Holdings (without giving effect to the
Contemplated Transactions) are listed in Section 6.3 of the Disclosure Letter.
All of the outstanding equity interests in USX Holdings are owned of record and
beneficially directly by USX, free and clear of all Encumbrances. As of the
Closing, all of the outstanding equity interests in Kobe Holdings are owned of
record and beneficially directly by Kobe Newco, free and clear of all
Encumbrances. Except as set forth in Section 6.3 of the Disclosure Letter, all
of the outstanding equity interests in Kobe Delaware Inc. are owned of record
and beneficially directly by Kobe, free and clear of all Encumbrances. Except as
set forth in Section 6.3 of the Disclosure Letter with respect to certain
minority stockholder consent rights, no Person other than Kobe has the right
(contractual or otherwise) to designate any of the directors of Kobe Delaware
Inc. or to participate in the control or management of Kobe Delaware Inc. Each
of USX Holdings and Kobe Holdings is the direct record and beneficial owner of
fifty percent of the outstanding equity interests in USS/Kobe, free and clear of
all Encumbrances. USX is the direct record and beneficial owner of all of the
outstanding equity interests in USX RTI Holdings and fifty percent of the
outstanding equity interests in NewTube, in each case free and clear of all
Encumbrances. Kobe Delaware Inc. is the direct record and beneficial owner of
all of the outstanding equity interests in Kobe Newco, and Kobe Newco is the
direct record and beneficial owner of all of the outstanding equity interests in
Kobe RTI Holdings and fifty percent of the outstanding equity interests in
NewTube, in each case free and clear of all Encumbrances. All of the foregoing
equity interests have been duly authorized and validly issued and are fully paid
and nonassessable. Except as set forth in Section 6.3 of the Disclosure Letter,
there are no outstanding options, warrants, convertible securities or other
rights of any kind relating to the issuance, sale, or transfer of any equity
interests in any of the foregoing entities (other than this Agreement and the
other Transaction Documents).
6.4 Financial Statements. Section 6.4(a) of the Disclosure Letter
includes financial statements of the USS/Kobe Bar Business, USX Holdings and
Kobe Holdings (collectively, the "USS/Kobe Financial Statements"). The USS/Kobe
Financial Statements fairly present (i) the
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35
assets and liabilities, financial condition and the results of operations,
changes in stockholders' equity or partners' interest and cash flow of USS/Kobe,
USX Holdings and Kobe Holdings, as applicable, as at the respective dates of and
for the periods referred to in such USS/Kobe Financial Statements, and (ii) the
assets and liabilities, financial condition and the results of operations,
changes in stockholders' equity or partners' interest and cash flow of USS/Kobe,
USX Holdings and Kobe Holdings, as applicable, (A) as at March 31, 1999 and (B)
as at December 31, 1998 and for the twelve month period then ended, in the case
of USS/Kobe in each case giving effect to the Tubular Spinoff as of January 1,
1998. The USS/Kobe Financial Statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, subject in the
case of the unaudited statements to the absence of footnote disclosure and other
presentation items, to changes resulting from normal period-end adjustments for
recurring accruals which are not in the aggregate material, and to the fact that
indebtedness of USS/Kobe has been allocated on a "straight allocation" basis
between the USS/Kobe Bar Business and the USS/Kobe Tubular Business without
regard as to whether such allocation is in accordance with generally accepted
accounting principles. Subject to the limitations provided in the immediately
preceding sentence, the USS/Kobe Financial Statements have been prepared from
the books and records of USS/Kobe, USX Holdings and Kobe Holdings, as
applicable, which accurately and fairly reflect in all material respects the
transactions of, acquisitions and dispositions of assets by, and incurrence of
liabilities by USS/Kobe, USX Holdings and Kobe Holdings, as applicable. After
giving effect to the Tubular Spinoff, none of USS/Kobe, USX Holdings or Kobe
Holdings will have liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent or otherwise) which would be
required under generally accepted accounting principles to be reflected on a
balance sheet, except for (a) liabilities or obligations reflected or reserved
against in the December 31, 1998 balance sheet of the USS/Kobe Bar Business
(giving effect to the Tubular Spinoff) included in the USS/Kobe Financial
Statements, (b) liabilities incurred by USS/Kobe in the Ordinary Course of
Business since December 31, 1998 which in the aggregate do not have a USS/Kobe
Material Adverse Effect and (c) matters disclosed in Section 6.4 of the
Disclosure Letter.
6.5 [intentionally omitted]
6.6 Title to Properties; Encumbrances.
(a) Section 6.6(a) of the Disclosure Letter includes a
complete list (including the street address, where applicable) of each
USS/Kobe Facility (and in each case any such facility included in
"parcel 1", "parcel 2", "parcel 3" or "parcel 4" is a USS/Kobe Tubular
Asset, and all other such facilities are USS/Kobe Bar Assets). Except
as described in Section 6.6(a) of the Disclosure Letter, immediately
following consummation of the Tubular Spinoff, the assets, properties
and rights of USS/Kobe will include all of the material assets,
properties and rights used in connection with the USS/Kobe Bar Business
as of the date hereof (except for any such assets, properties or rights
sold after the date hereof in compliance with the terms of this
Agreement). Section 6.6(a) of the Disclosure Letter includes a complete
list of each item of material tangible
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36
personal property of USS/Kobe (and in each case identifies any such
item that is a USS/Kobe Tubular Asset).
(b) Except as disclosed in Section 6.6(b) of the Disclosure
Letter, USS/Kobe has fee or other good title, as applicable, to all the
properties and assets (whether real, personal, or mixed and whether
tangible or intangible) that it purports to own or reflected as owned
in the books and records of USS/Kobe, including all of the properties
and assets reflected in the Interim USS/Kobe Balance Sheet (except for
personal property sold since the date of the Interim USS/Kobe Balance
Sheet in the Ordinary Course of Business of USS/Kobe), and all of the
properties and assets purchased or otherwise acquired by USS/Kobe since
the date of the Interim USS/Kobe Balance Sheet (except for personal
property acquired and sold since the date of the Interim USS/Kobe
Balance Sheet in the Ordinary Course of Business of USS/Kobe). Except
as described in Section 6.6(b) of the Disclosure Letter and subject to
the Safe-Harbor Leases, all material properties and assets constituting
USS/Kobe Facilities and reflected in the Interim USS/Kobe Balance Sheet
are free and clear of all Encumbrances, except for Permitted
Encumbrances.
6.7 [intentionally omitted]
6.8 Taxes. Except as set forth in Section 6.8 of the Disclosure
Letter:
(a) Each of USS/Kobe, USX Holdings and Kobe Holdings has filed
or caused to be filed on a timely basis all Tax Returns that are or
were required to be filed by it pursuant to applicable Legal
Requirements. Each of USS/Kobe, USX Holdings and Kobe Holdings has
paid, or made provision for the payment of, all Taxes that have become
due and payable as Taxes imposed on USS/Kobe pursuant to those Tax
Returns or otherwise, or pursuant to any assessment received by
USS/Kobe, except such Taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided in the
applicable Interim USS/Kobe Balance Sheet.
(b) All Taxes that USS/Kobe, USX Holdings and Kobe Holdings
are or were required by Legal Requirements to withhold or collect have
been duly withheld or collected and, to the extent required, have been
paid to the proper Governmental Body.
(c) USS/Kobe has been a partnership for tax purposes since its
formation and all Tax Returns of USS/Kobe have been filed as
partnership Tax Returns.
(d) None of USS/Kobe, USX Holdings or Kobe Holdings is liable
for any Taxes of another Person by reason of Treasury Regulation
1.1502-6(a) (or any comparable provision under state, local or foreign
law), as a successor in interest, as a transferee, by contract or
otherwise.
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37
(e) No Proceeding is pending or, to the USX/Kobe Parties'
Knowledge, threatened in regard to any Taxes due from or with respect
to USS/Kobe, USX Holdings or Kobe Holdings or any Tax Return filed by
or with respect to USS/Kobe, USX Holdings or Kobe Holdings.
(f) None of USS/Kobe, USX Holdings or Kobe Holdings is a party
to or bound by (nor will USS/Kobe, prior to the Closing Date, become a
party to or bound by) any tax indemnity, tax sharing or tax allocation
agreement or similar contractual arrangement.
(g) To the USX/Kobe Parties' Knowledge, there are no pending,
threatened or proposed audits in writing, assessments or claims from
any Tax Authority for material Taxes against USS/Kobe, USX Holdings or
Kobe Holdings or any of their assets, operations or activities as of
the date hereof or as of the Closing Date. Except as disclosed in
Section 6.8(g) of the Disclosure Letter, there are no pending claims
for refund of any Taxes for USS/Kobe, USX Holdings or Kobe Holdings
(including refunds of Taxes allocable to USS/Kobe, USX Holdings or Kobe
Holdings or with respect to consolidated, combined, unitary, fiscal
unitary or similar Tax Returns).
(h) There are no outstanding rulings of, or requests for
rulings with, any Tax Authority expressly addressed to USS/Kobe, USX
Holdings or Kobe Holdings (or to an Affiliate of USS/Kobe, USX Holdings
or Kobe Holdings) that are, or if issued would be binding for any
post-Closing period.
(i) The assets listed in Section 6.8(i) of the Disclosure
Letter are subject to the Safe-Harbor Leases, and none of the other
USS/Kobe Bar Assets are subject to leases pursuant to which elections
have been made under Section 168(f)(8) of the 54 Code.
6.9 No Material Adverse Change. Except as set forth in Section 6.9 of
the Disclosure Letter, since December 31, 1998, (i) each of USS/Kobe, USX
Holdings and Kobe Holdings has operated its business only in the Ordinary Course
of Business (other than as expressly provided for in the Transaction Documents),
(ii) to the USX/Kobe Parties' Knowledge, no event or occurrence has occurred
which has had or would reasonably be expected to have, individually or in the
aggregate, a USS/Kobe Material Adverse Effect, and (iii) none of USS/Kobe, USX
Holdings or Kobe Holdings has taken any action nor suffered any event that if
taken or suffered after the date hereof would require BarTech's or RES Holding's
consent under Section 10.2 of this Agreement.
6.10 Employee Benefits.
(a) Except as set forth in Section 6.10(a) of the Disclosure
Letter (the plans disclosed in Section 6.10(a) of the Disclosure Letter
being the "USS/Kobe Plans"), none of USS/Kobe, USX Holdings or Kobe
Holdings sponsors or contributes to any Employee
<PAGE>
38
Benefit Plan, severance, change-in-control or employment plan, program
or agreement or stock option, bonus, or incentive plan or program.
Copies of the written USS/Kobe Plans have been made available to
BarTech and RES Holding.
(b) Except as set forth in Section 6.10(b) of the Disclosure
Letter, each USS/Kobe Plan has been administered and is in compliance
with the terms of such USS/Kobe Plan and all applicable laws, rules and
regulations where the failure to so comply would result in liability
that would have a USS/Kobe Material Adverse Effect.
(c) Except as set forth in Section 6.10(c) of the Disclosure
Letter: (i) each USS/Kobe Plan intended to be qualified within the
meaning of IRC Section 401(a) has received a favorable determination as
to such qualification from the IRS and (ii) to the USX/Kobe Parties'
Knowledge, nothing has occurred since that would adversely affect such
qualification.
(d) Except as would not have a USS/Kobe Material Adverse
Effect or, in the case of the following clause (i), in connection with
the Contemplated Transactions: (i) no "reportable event" (as such term
is used in Section 4043 of ERISA) (other than those events for which
the 30-day notice has been waived pursuant to the regulations) is
pending with respect to any USS/Kobe Plan, and (ii) no "accumulated
funding deficiency" (as such term is used in Section 412 or 4971 of the
IRC) has occurred during the last five years with respect to any
USS/Kobe Plan.
(e) No litigation or administrative or other proceeding
involving any USS/Kobe Plan has occurred or, to the USX/Kobe Parties'
Knowledge, is threatened where an adverse determination would result in
liability that would have a USS/Kobe Material Adverse Effect, other
than any such litigation or administrative or other proceeding that may
be commenced by the PBGC in connection with the Contemplated
Transactions.
(f) Except as set forth in Section 6.10(f) of the Disclosure
Letter, none of USS/Kobe, USX Holdings or Kobe Holdings has contributed
to any "multiemployer plan" (within the meaning of Section 3(37) of
ERISA), and none of USS/Kobe, USX Holdings or Kobe Holdings, nor any
member of their respective Controlled Groups, has incurred any
withdrawal liability which remains unsatisfied in an amount which would
result in liability that would have a USS/Kobe Material Adverse Effect.
(g) No USS/Kobe Plan or multiemployer plan to which USS/Kobe,
USX Holdings or Kobe Holdings contributed has been terminated, where
such termination has resulted in liability under Title IV of ERISA that
would have a USS/Kobe Material Adverse Effect.
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39
(h) Except as would not have a USS/Kobe Material Adverse
Effect, none of USS/Kobe, USX Holdings or Kobe Holdings has incurred
any liability, direct or indirect, as a result of any breach of
fiduciary duty or non-exempt prohibited transaction (within the meaning
of IRC Section 4975 or Section 406 of ERISA) involving any USS/Kobe
Plan or the assets thereof. None of USS/Kobe, USX Holdings or Kobe
Holdings has engaged in any transaction that has resulted or could
result in any material liability of USS/Kobe, USX Holdings or Kobe
Holdings pursuant to Section 4069 or 4212 or ERISA.
6.11 Compliance with Legal Requirements; Governmental Authorizations.
Except as set forth in Section 6.11 of the Disclosure Letter, to the USX/Kobe
Parties' Knowledge, each of USS/Kobe, USX Holdings and Kobe Holdings has
complied and is in compliance with each Legal Requirement that is applicable to
it or to the conduct or operation of its business, except for any failures to
comply which would not, individually or in the aggregate, have a USS/Kobe
Material Adverse Effect. To the USX/Kobe Parties' Knowledge, each of USS/Kobe,
USX Holdings and Kobe Holdings holds all Governmental Authorizations that are
required in connection with the business of USS/Kobe, USX Holdings or Kobe
Holdings, as applicable, and is in compliance with all of the terms and
requirements of each Governmental Authorization applicable to it, except where
the failure to be in compliance would not have a USS/Kobe Material Adverse
Effect.
6.12 Legal Proceedings; Orders. Except as set forth in Section 6.12 of
the Disclosure Letter, to the USX/Kobe Parties' Knowledge there is no Proceeding
(i) pending or threatened against USS/Kobe, USX Holdings, Kobe Holdings or any
of their Affiliates that, individually or in the aggregate, has had or, would
reasonably be expected to have, a USS/Kobe Material Adverse Effect, or (ii) as
of the date of this Agreement, that challenges, or that may have the effect of
preventing or making illegal, any of the Contemplated Transactions. Except as
set forth in Section 6.12 of the Disclosure Letter, to the USX/Kobe Parties'
Knowledge (i) there is no material Order to which USS/Kobe, USX Holdings, Kobe
Holdings or any of their Affiliates is subject that materially prohibits or
restricts USS/Kobe, USX Holdings or Kobe Holdings, and (ii) no agent or employee
of the USS/Kobe Bar Business is subject to any Order that materially prohibits
or restricts such agent or employee, from engaging in or continuing any conduct,
activity, or practice relating to the USS/Kobe Bar Business.
6.13 Contracts; No Defaults.
(a) Except for Permitted Encumbrances, Section 6.13(a) of the
Disclosure Letter contains a complete and accurate list of (and in each
case identifies any such Contract that is a USS/Kobe Tubular Asset):
(i) each material Contract of USS/Kobe and each Contract of USX
Holdings or Kobe Holdings, (ii) any other Contracts of USS/Kobe
containing covenants not to compete, employee non-solicitation or
no-hire covenants, or otherwise materially limiting the freedom of
USS/Kobe to engage in any line of business or to compete with any
Person, (iii) any other Contract of USS/Kobe constituting a
<PAGE>
40
material employment agreement or a collective bargaining or other
agreement with a labor organization or other representative of
USS/Kobe's employees, (iv) any other Contract of USS/Kobe with or for
the benefit of any Affiliate of USS/Kobe (including without limitation
USX or Kobe) or, to the USX/Kobe Parties' Knowledge, any immediate
family member of any officer, director, employee or equityholder of
USS/Kobe or any of its Affiliates or any Affiliate thereof, (v) any
other Contract of USS/Kobe relating to material indebtedness, financing
arrangements or guarantees of indebtedness and (vi) each lease which
USS/Kobe has assumed or to which USS/Kobe was a party at any time at or
prior to the Closing pursuant to which elections have been made under
Section 168(f)(8) of the 54 Code, together with each of the Safe-Harbor
Lease Agreements.
(b) With respect to the Contracts identified in Section
6.13(a) of the Disclosure Letter and except as set forth in Section
6.13(b) of the Disclosure Letter, to the USX/Kobe Parties' Knowledge:
(i) each Contract is in full force and effect and is valid and
enforceable in accordance with its terms, except to the extent that its
enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other laws relating
to or affecting creditors' rights generally and by general equity
principles, (ii) USS/Kobe, USX Holdings or Kobe Holdings, as
applicable, has made available to BarTech and RES Holding a copy of
each such Contract, (iii) USS/Kobe, USX Holdings or Kobe Holdings, as
applicable, is in compliance with all material terms and requirements
of such Contracts, and (iv) USS/Kobe, USX Holdings or Kobe Holdings, as
applicable, has not given to or received from any other Person any
written notice regarding any actual or alleged material violation or
default of any such Contract.
6.14 Environmental Matters. Except as set forth in Section 6.14 of the
Disclosure Letter and except as would not, individually or in the aggregate,
reasonably be expected to have a USS/Kobe Material Adverse Effect:
(a) None of USS/Kobe, USX Holdings or Kobe Holdings has
violated or is in violation of any Environmental Law.
(b) To the USX/Kobe Parties' Knowledge, none of the USS/Kobe
Facilities or any facility formerly owned, leased or operated by
USS/Kobe, USX Holdings or Kobe Holdings contains any Hazardous
Materials in amounts exceeding the levels permitted by applicable
Environmental Law or under circumstances that would reasonably be
expected to result in liability under or relating to Environmental Law.
(c) To the USX/Kobe Parties' Knowledge, none of USS/Kobe, USX
Holdings or Kobe Holdings has disposed of, arranged to be disposed of,
Released, threatened to Release or transported in violation of any
applicable Environmental Law or in a manner that would reasonably be
expected to result in liability under or relating to Environmental
<PAGE>
41
Laws, any Hazardous Materials at, to or from any of the USS/Kobe
Facilities or any facility formerly owned, leased or operated by
USS/Kobe, USX Holdings or Kobe Holdings.
(d) There have been no material environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance
or noncompliance with, or potential liability under or relating to, any
Environmental Law conducted by or on behalf of USS/Kobe, USX Holdings
or Kobe Holdings, or which are in the custody or control of USS/Kobe,
USX Holdings or Kobe Holdings, relating to the facilities, business or
activities of USS/Kobe, USX Holdings or Kobe Holdings or any of the
USS/Kobe Facilities that have not been made available to BarTech and
RES Holding.
(e) None of USS/Kobe, USX Holdings or Kobe Holdings has been
subject to any Proceedings, is subject to any Order or has received any
written notice or other written communication from any Governmental
Body or the current or prior owner or operator of any USS/Kobe
Facilities or any other Person, in each case of or with respect to any
actual or potential violation or failure to comply with any
Environmental Law or of any actual or threatened obligation to
undertake or bear any cost, damage, expense, liability, or obligation
arising from or under any Environmental Law.
(f) None of USS/Kobe, USX Holdings or Kobe Holdings has
contractually assumed any liability or obligation under or relating to
Environmental Laws.
(g) None of USS/Kobe, USX Holdings or Kobe Holdings has
entered into, and is not subject to, any Order or agreement relating to
compliance with Environmental Laws or the investigation or remediation
of Hazardous Materials.
6.15 Labor Relations; Compliance. Neither USX Holdings nor Kobe
Holdings has at any time had any employees. Except as set forth in Section 6.15
of the Disclosure Letter: (i) there is no labor strike, slowdown, work stoppage,
dispute, lockout or other labor controversy in effect or, to the USX/Kobe
Parties' Knowledge, threatened involving the employees of USS/Kobe, and USS/Kobe
has not experienced any such labor controversy within the past three years, (ii)
no grievance is pending or, to the USX/Kobe Parties' Knowledge, threatened
which, if adversely decided, would have a USS/Kobe Material Adverse Effect,
(iii) USS/Kobe has paid in full to all employees of USS/Kobe all currently
accrued and payable wages, salaries, commissions, bonuses and other material
compensation due to such employees in accordance with the payroll practices of
USS/Kobe currently in effect and applicable, (iv) USS/Kobe will not have any
material liability for severance benefits payable to a USS/Kobe employee whose
employment continues after the Closing with RTI Opco or any of its Subsidiaries
or NewTube immediately following the Closing under any USS/Kobe Plan as a result
of or in connection with the Contemplated Transactions and (v) USS/Kobe is not
presently negotiating a collective bargaining agreement or other Contract with
any labor organization or other representative of any of USS/Kobe's employees
(other than as expressly contemplated by this Agreement). Neither
<PAGE>
42
USS/Kobe nor any of its Affiliates is subject to any bargaining obligations with
any labor organization (including without limitation the USWA) under any Legal
Requirement, collective bargaining agreement or otherwise in connection with the
Contemplated Transactions, or is required to obtain any agreements of any labor
organizations to the changes in corporate structure involved in the Contemplated
Transactions, in each case other than any such obligations or requirements which
will have been satisfied upon receipt of the NewTube Labor Agreement
Ratification and the RTI Labor Agreement Ratification.
6.16 Intellectual Property.
(a) To the USX/Kobe Parties' Knowledge, Section 6.16(a) of the
Disclosure Letter contains a complete and accurate list and summary
description of, with respect to all material Intellectual Property
owned, held or used by USS/Kobe ("USS/Kobe IP"), all patents,
registered copyrights, registered trademarks and service marks, and all
pending registrations or applications for the foregoing and all
material unregistered USS/Kobe IP.
(b) Except as disclosed in Section 6.16(b) of the Disclosure
Letter, to the USX/Kobe Parties' Knowledge: (i) USS/Kobe owns or has
the enforceable, legal right to use all the Intellectual Property
necessary to conduct its business in all material respects as currently
conducted and consistent with past practice, free of all Encumbrances,
and (ii) to the USX/Kobe Parties' Knowledge, all of the USS/Kobe IP is
valid, enforceable and unexpired, has not been abandoned, does not
infringe, impair or make unauthorized use of ("Infringe") the
Intellectual Property of any other party (including Affiliates of
USS/Kobe) and is not being Infringed by any other party (including
Affiliates of USS/Kobe).
(c) Except as expressly set forth otherwise in Section 6.16(c)
of the Disclosure Letter or as would not, individually or in the
aggregate, reasonably be expected to have a USS/Kobe Material Adverse
Effect, (i) to the USX/Kobe Parties' Knowledge, there is no actual or
threatened adverse Proceeding of any Person pertaining to, or any
challenge to the scope, validity or enforceability of, any of the
USS/Kobe IP, and (ii) USS/Kobe (A) is not a party to any Proceeding
which involves a claim of infringement or misappropriation by USS/Kobe
of any Intellectual Property of any third party and (B) has not brought
any Proceeding against any third party for infringement or
misappropriation of, or breach of any license or agreement involving,
any of the USS/Kobe IP.
(d) Except as would not, individually or in the aggregate,
reasonably be expected to have a USS/Kobe Material Adverse Effect, to
the USX/Kobe Parties' Knowledge, USS/Kobe is not, nor will it be as a
result of the execution and delivery of this Agreement or the
performance of its obligations hereunder, in breach of any Intellectual
Property license to which it is a party, either as licensor or
licensee, or other agreement relating to any of the USS/Kobe IP.
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43
6.17 Brokers or Finders. Except as provided in the Transactional and
Monitoring Fee Agreement, none of the USX/Kobe Parties, their Affiliates or
their respective agents have incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement or the Contemplated
Transactions.
SECTION 7
REPRESENTATIONS AND WARRANTIES OF
BARTECH AND REGARDING THE BV PARTIES
BarTech represents and warrants with respect to itself and its
Affiliates to each of the USX/Kobe Parties and RES Holding as follows (provided,
however, that the Disclosure Letter sets forth certain exceptions to such
representations and warranties or discloses certain matters in response to such
representations and warranties, in each case identified by the applicable
Section numbers below, and provided, further, that, for the avoidance of doubt,
the parties hereto acknowledge and agree that none of the BV Parties is itself
making any of the representations and warranties contained in this Section 7):
7.1 Organization and Good Standing.
(a) BarTech is a corporation duly organized, validly existing,
and in good standing under the laws of Delaware, with full corporate
power and authority to conduct its business as it is now being
conducted. BarTech is duly qualified to do business as a foreign
corporation in each jurisdiction in which the nature of the activities
conducted by it or the ownership or leasing of its properties requires
such qualification, except where such failure to so qualify or to be in
good standing does not have a BarTech Material Adverse Effect. Each of
the BV Parties is a limited partnership or limited liability company,
as applicable, duly organized, validly existing, and in good standing
under the laws of its jurisdiction of formation, with full partnership
or company, as applicable, power and authority to conduct its business
as it is now being conducted. BarTech is duly qualified to do business
as a foreign corporation in each jurisdiction in which the nature of
the activities conducted by it or the ownership or leasing of its
properties requires such qualification, except where such failure to so
qualify or to be in good standing does not have a BarTech Material
Adverse Effect. Each of the BV Parties is duly qualified to do business
as a foreign limited partnership or limited liability company in each
jurisdiction in which the nature of the activities conducted by it or
the ownership or leasing of its properties requires such qualification,
except where such failure to so qualify or to be in good standing does
not have a BarTech Material Adverse Effect.
<PAGE>
44
(b) Each of BarTech's Subsidiaries is a United States or
foreign corporation or limited liability company duly organized,
validly existing, and in good standing under the laws of its
jurisdiction of organization, with full corporate or limited liability
company power and authority to conduct its business as it is being
conducted. Each of BarTech's Subsidiaries is duly qualified to do
business as a foreign corporation or limited liability company and is
in good standing under the laws of each state or other jurisdiction in
which the nature of the activities conducted by it or the ownership or
leasing of its properties requires such qualification, except where
such failure to so qualify or to be in good standing does not have a
BarTech Material Adverse Effect.
(c) BarTech has made available to USX, Kobe and RES Holding
complete and correct copies of its Organizational Documents and those
of each of its Subsidiaries, as currently in effect.
(d) Section 7.1(d) of the Disclosure Letter contains a
complete and accurate list of all the Subsidiaries of BarTech (without
giving effect to the Contemplated Transactions). Except as listed in
Section 7.1(d) of the Disclosure Letter, BarTech and its Subsidiaries
do not own any material direct or indirect equity or debt interest in
any other Person, and none of them is obligated or committed to acquire
any such interest (other than pursuant to this Agreement).
7.2 Authority; No Conflict; Consents.
(a) This Agreement and each other Transaction Document to
which it is a party has been duly executed and delivered by, and
constitutes the legal, valid and binding obligation of, BarTech and
each of the BV Parties, enforceable against it in accordance with its
terms, except to the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance,
fraudulent transfer, moratorium or other laws relating to or affecting
creditors' rights generally and by general equity principles.
(b) BarTech and each of the BV Parties has the requisite
corporate, partnership, company or other applicable right, power,
authority and capacity to execute and deliver this Agreement and each
other Transaction Document to which it is a party and to perform its
obligations under this Agreement and each other Transaction Document to
which it is a party. The execution, delivery and performance of this
Agreement and each other Transaction Document to which it is a party by
BarTech and each of the BV Parties have been duly authorized by all
necessary corporate, partnership, company or other applicable action,
as the case may be, on the part of such entity and its owners.
(c) Except as disclosed in Section 7.2(c) of the Disclosure
Letter, neither the execution and delivery of this Agreement and each
other Transaction Document to which
<PAGE>
45
it is a party nor the consummation of any of the Contemplated
Transactions or other performance of its obligations hereunder or
thereunder will, directly or indirectly:
(i) violate any provision of the Organizational
Documents of BarTech or any of its Subsidiaries or of any of
the BV Parties;
(ii) result in a violation of, or give any
Governmental Body or other Person the right to exercise any
remedy or obtain any relief under, any Legal Requirement or
any Order to which BarTech or any of its Subsidiaries or any
of the BV Parties is subject;
(iii) result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by BarTech or any of
its Subsidiaries or any of the BV Parties;
(iv) result in a violation or breach of any provision
of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any
material Contract of BarTech or any of its Subsidiaries or any
of the BV Parties; or
(v) result in the imposition or creation of any
Encumbrance upon any of the assets owned or used by BarTech or
any of its Subsidiaries or any of the BV Parties (other than
pursuant to the Transaction Documents).
(d) None of BarTech or its Affiliates or the BV Parties is or
will be required to obtain any Consent from any Person or Governmental
Body in connection with the execution and delivery of this Agreement or
any other Transaction Document to which it is a party or the
consummation of any of the Contemplated Transactions or their
performance hereunder or thereunder, except (i) the Material Consents
disclosed in Section 7.2(d) of the Disclosure Letter, which will be
obtained by Closing, and (ii) such other Consents as to which the
failure to obtain them by Closing would not, individually or in the
aggregate, reasonably be expected to have a BarTech Material Adverse
Effect or a RTI Material Adverse Effect.
7.3 Capitalization. The authorized and outstanding equity interests of
each of BarTech (without giving effect to the Contemplated Transactions) and
BarTech's Subsidiaries are listed in Section 7.3 of the Disclosure Letter. At
the time of consummation of the USX Holdings/Kobe Holdings-RTI Opco Merger,
BarTech will be the record and beneficial owner of all the outstanding equity
interest in RES Holding, free and clear of all Encumbrances. All of the
outstanding equity interests in each of BarTech's Subsidiaries are owned of
record and beneficially directly or indirectly by BarTech. All of the foregoing
equity interests have been duly authorized and validly issued and are fully paid
and nonassessable. Except as set forth in
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46
Section 7.3 of the Disclosure Letter, there are no outstanding options,
warrants, convertible securities or other rights of any kind relating to the
issuance, sale, or transfer of any equity interests in any of the foregoing
entities (other than this Agreement and the other Transaction Documents).
7.4 Financial Statements. Included within the BarTech Public Filings
are certain financial statements of BarTech (collectively, the "BarTech
Financial Statements"). The BarTech Financial Statements fairly present the
assets and liabilities, financial condition and the results of operations,
changes in stockholders' equity and cash flow of BarTech as at the respective
dates of and for the periods referred to in such BarTech Financial Statements.
The BarTech Financial Statements have been prepared in accordance with generally
accepted accounting principles, consistently applied, subject in the case of the
unaudited statements to the absence of footnote disclosure and other
presentation items and to changes resulting from normal period-end adjustments
for recurring accruals which are not in the aggregate material. Subject to the
limitations provided in the immediately preceding sentence, the BarTech
Financial Statements have been prepared from the books and records of BarTech
which accurately and fairly reflect in all material respects the transactions
of, acquisitions and dispositions of assets by, and incurrence of liabilities by
BarTech. BarTech and its Subsidiaries have no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent or
otherwise) which would be required under generally accepted accounting
principles to be reflected on a balance sheet, except for (a) liabilities or
obligations reflected or reserved against in the January 2, 1999 balance sheet
included in the BarTech Financial Statements, (b) liabilities incurred by
BarTech and its Subsidiaries in the Ordinary Course of Business since January 2,
1999 which in the aggregate do not have a BarTech Material Adverse Effect and
(c) matters disclosed in Section 7.4 of the Disclosure Letter or as identified
in the BarTech Public Filings.
7.5 [intentionally omitted]
7.6 Title to Properties; Encumbrances.
(a) Section 7.6(a) of the Disclosure Letter includes a
complete list (including the street address, where applicable) of the
BarTech Facilities.
(b) Except as described in Section 7.6(b) of the Disclosure
Letter or as identified in the BarTech Public Filings, BarTech or one
of its Subsidiaries has fee or other good title, as applicable, to all
the properties and assets (whether real, personal, or mixed and whether
tangible or intangible) that it purports to own or reflected as owned
in the books and records of BarTech including all the properties and
assets reflected in the Interim BarTech Balance Sheet (except for
personal property acquired or sold since the date of the Interim
BarTech Balance Sheet in the Ordinary Course of Business of BarTech)
and all of the properties and assets purchased or otherwise acquired by
BarTech since the date of the Interim BarTech Balance Sheet (except for
personal property acquired and sold since the date of the Interim
BarTech Balance Sheet in the Ordinary
<PAGE>
47
Course of Business of BarTech). Except as described in Section 7.6(b)
of the Disclosure Letter, all material properties and assets
constituting BarTech Facilities and reflected in the Interim BarTech
Balance Sheet are free and clear of all Encumbrances, except for
Permitted Encumbrances.
7.7 [intentionally omitted]
7.8 Taxes. Except as set forth in Section 7.8 of the Disclosure Letter
or as identified in the BarTech Public Filings:
(a) BarTech and each of its Subsidiaries has filed or caused
to be filed on a timely basis all Tax Returns that are or were required
to be filed by it pursuant to applicable Legal Requirements. BarTech
and its Subsidiaries have paid, or made provision for the payment of,
all Taxes that have become due and payable as Taxes imposed on them
pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by BarTech or its Subsidiaries, except such Taxes,
if any, as are being contested in good faith and as to which adequate
reserves have been provided in the applicable Interim BarTech Balance
Sheet.
(b) All Taxes that BarTech and its Subsidiaries are or were
required by Legal Requirements to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to
the proper Governmental Body.
(c) Neither BarTech nor any of its Subsidiaries is liable for
any Taxes of another Person by reason of Treasury Regulation
1.1502-6(a) (or any comparable provision under state, local or foreign
law), as a successor in interest, as a transferee, by contract or
otherwise.
(d) No Proceeding is pending or, to BarTech's Knowledge,
threatened in regard to any Taxes due from or with respect to BarTech
or any of its Subsidiaries or any Tax Return filed by or with respect
to BarTech or any of its Subsidiaries.
(e) BarTech and each of its Subsidiaries is not a party to or
bound by (nor will BarTech and each of its Subsidiaries, prior to the
Closing Date, become a party to or bound by) any tax indemnity, tax
sharing or tax allocation agreement or similar contractual arrangement.
(f) To BarTech's Knowledge, there are no pending, threatened
or proposed audits, assessments or claims from any Tax Authority for
material Taxes against BarTech or any of its Subsidiaries or any of
their assets, operations or activities as of the date hereof or as of
the Closing Date. There are no pending claims for refund of any Taxes
for BarTech or any of its Subsidiaries (including refunds of Taxes
allocable to BarTech or
<PAGE>
48
any of its Subsidiaries or with respect to consolidated, combined,
unitary, fiscal unitary or similar Tax Returns).
(g) There are no outstanding rulings of, or requests for
rulings with, any Tax Authority expressly addressed to BarTech or any
of its Subsidiaries that are, or if issued would be binding for any
post-Closing period.
7.9 No Material Adverse Change. Except as set forth in Section 7.9 of
the Disclosure Letter or as identified in the BarTech Public Filings, since
January 2, 1999, (i) BarTech and each of its Subsidiaries has operated its
business only in the Ordinary Course of Business (other than as expressly
provided for in the Transaction Documents), (ii) to BarTech's Knowledge, no
event or occurrence has occurred which has had or would reasonably be expected
to have, individually or in the aggregate, a BarTech Material Adverse Effect,
and (iii) neither BarTech nor any of its Subsidiaries has taken any action nor
suffered any event that if taken or suffered after the date hereof would require
USX's, Kobe's or RES Holding's consent under Section 10.2 of this Agreement.
7.10 Employee Benefits.
(a) Except as set forth in Section 7.10(a) of the Disclosure
Letter (the plans disclosed in Section 7.10(a) of the Disclosure Letter
being the "BarTech Plans"), BarTech and its Subsidiaries do not sponsor
or contribute to any Employee Benefit Plan, severance,
change-in-control or employment plan, program or agreement or stock
option, bonus, or incentive plan or program. Copies of the written
BarTech Plans have been made available to USS/Kobe and RES Holding.
(b) Each BarTech Plan has been administered and is in
compliance with the terms of such BarTech Plan and all applicable laws,
rules and regulations where the failure to so comply would result in
liability that would have a BarTech Material Adverse Effect.
(c) Except as set forth in Section 7.10(c) of the Disclosure
Letter: (i) each BarTech Plan intended to be qualified within the
meaning of IRC Section 401(a) has received a favorable determination as
to such qualification from the IRS and (ii) to BarTech's Knowledge,
nothing has occurred since that would adversely affect such
qualification.
(d) Except as would not have a BarTech Material Adverse Effect
or, in the case of the following clause (i), in connection with the
Contemplated Transactions: (i) no "reportable event" (as such term is
used in Section 4043 of ERISA) (other than those events for which the
30-day notice has been waived pursuant to the regulations) is pending
with respect to any BarTech Plan, and (ii) no "accumulated funding
deficiency"
<PAGE>
49
(as such term is used in Section 412 or 4971 of the IRC) has occurred
during the last five years with respect to any BarTech Plan.
(e) No litigation or administrative or other proceeding
involving any BarTech Plan has occurred or, to BarTech's Knowledge, is
threatened where an adverse determination would result in liability
that would have a BarTech Material Adverse Effect, other than any such
litigation or administrative or other proceeding that may be commenced
by the PBGC in connection with the Contemplated Transactions.
(f) Except as set forth in Section 7.10(f) of the Disclosure
Letter, neither BarTech nor any of its Subsidiaries have contributed to
any "multiemployer plan" (within the meaning of Section 3(37) of
ERISA), and neither BarTech nor any member of its Controlled Group has
incurred any withdrawal liability which remains unsatisfied in an
amount which would result in liability that would have a BarTech
Material Adverse Effect.
(g) No BarTech Plan or multiemployer plan to which BarTech or
any of its Subsidiaries contributed has been terminated, where such
termination has resulted in liability under Title IV of ERISA that
would have a BarTech Material Adverse Effect.
(h) Except as would not have a BarTech Material Adverse
Effect, none of BarTech or any of its Subsidiaries has incurred any
liability, direct or indirect, as a result of any breach of fiduciary
duty or non-exempt prohibited transaction (within the meaning of IRC
Section 4975 or Section 406 of ERISA) involving any BarTech Plan or the
assets thereof. None of BarTech or any of its Subsidiaries has engaged
in any transaction that has resulted or could result in any material
liability of any of them pursuant to Section 4069 or 4212 of ERISA.
7.11 Compliance with Legal Requirements; Governmental Authorizations.
Except as set forth in Section 7.11 of the Disclosure Letter or as identified in
the BarTech Public Filings, to BarTech's Knowledge, BarTech and each of its
Subsidiaries has complied and is in compliance with each Legal Requirement that
is applicable to it or to the conduct or operation of its business, except for
any failures to comply which would not, individually or in the aggregate, have a
BarTech Material Adverse Effect. To BarTech's Knowledge, BarTech and its
Subsidiaries hold all Governmental Authorizations that are required in
connection with their businesses, and are in compliance with all of the terms
and requirements of each Governmental Authorization applicable to them, except
where the failure to be in compliance would not have a BarTech Material Adverse
Effect.
7.12 Legal Proceedings; Orders. Except as set forth in Section 7.12 of
the Disclosure Letter or as identified in the BarTech Public Filings, to
BarTech's Knowledge there is no Proceeding (i) pending or threatened against
BarTech or any of its Affiliates or any of the BV Parties that, individually or
in the aggregate, has had, or would reasonably be expected to have, a
<PAGE>
50
BarTech Material Adverse Effect, or (ii) as of the date of this Agreement, that
challenges, or that may have the effect of preventing or making illegal, any of
the Contemplated Transactions. Except as set forth in Section 7.12 of the
Disclosure Letter, to BarTech's Knowledge (i) there is no material Order to
which BarTech or any of its Affiliates or any of the BV Parties is subject that
materially prohibits or restricts BarTech or any of its Subsidiaries, and (ii)
no agent or employee of BarTech's and its Subsidiaries' business is subject to
any Order that materially prohibits or restricts such agent or employee, from
engaging in or continuing any conduct, activity, or practice relating to
BarTech's business.
7.13 Contracts; No Defaults.
(a) Except for Permitted Encumbrances, Section 7.13(a) of the
Disclosure Letter contains a complete and accurate list of, or the
BarTech Public Filings include as exhibits thereto: (i) each Contract
of BarTech and its Subsidiaries that is required to be filed as an
exhibit to any of the BarTech Public Filings, (ii) any other Contract
of BarTech or any of its Subsidiaries containing covenants not to
compete, employee non-solicitation or no-hire covenants, or otherwise
materially limiting the freedom of BarTech and its Subsidiaries to
engage in any line of business or to compete with any Person, (iii) any
other Contract of BarTech or any of its Subsidiaries constituting a
material employment agreement or a collective bargaining or other
agreement with a labor organization or other representative of
BarTech's and its Subsidiaries' employees, (iv) any other Contract of
BarTech or any of its Subsidiaries with or for the benefit of any
Affiliate of BarTech (other than with or among its Subsidiaries) or, to
BarTech's Knowledge, any immediate family member of any officer,
director, employee or equityholder of BarTech or any of its Affiliates
or any Affiliate thereof and (v) any other Contract of BarTech or any
of its Subsidiaries relating to material indebtedness, financing
arrangements or guarantees of indebtedness.
(b) With respect to the Contracts identified in Section
7.13(a) of the Disclosure Letter, to BarTech's Knowledge: (i) each
Contract is in full force and effect and is valid and enforceable in
accordance with its terms, except to the extent that its enforceability
may be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other laws relating to or affecting creditors'
rights generally and by general equity principles, (ii) BarTech has
made available to USS/Kobe and RES Holding a copy of each such
Contract, (iii) BarTech and its Subsidiaries are in compliance with all
material terms and requirements of such Contracts, and (iv) BarTech and
its Subsidiaries have not given to or received from any other Person
any written notice regarding any actual or alleged material violation
or default of any such Contract.
7.14 Environmental Matters. Except as set forth in Section 7.14 of the
Disclosure Letter or as identified in the BarTech Public Filings and except as
would not, individually or in the aggregate, reasonably be expected to have a
BarTech Material Adverse Effect:
<PAGE>
51
(a) Neither BarTech nor any of its Subsidiaries has violated
or is in violation of any Environmental Law.
(b) To BarTech's Knowledge, none of the BarTech Facilities or
any facility formerly owned, leased or operated by BarTech or any of
its Subsidiaries contains any Hazardous Materials in amounts exceeding
the levels permitted by applicable Environmental Law or under
circumstances that would reasonably be expected to result in liability
under or relating to Environmental Law.
(c) To BarTech's Knowledge, BarTech and its Subsidiaries have
not disposed of, arranged to be disposed of, Released, threatened to
Release or transported in violation of any applicable Environmental Law
or in a manner that would reasonably be expected to result in liability
under or relating to Environmental Laws, any Hazardous Materials at, to
or from any of the BarTech Facilities or any facility formerly owned,
leased or operated by BarTech or any of its Subsidiaries.
(d) There have been no material environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance
or noncompliance with, or potential liability under or relating to, any
Environmental Law conducted by or on behalf of BarTech, or which are in
the custody or control of BarTech, relating to the facilities, business
or activities of BarTech or any of its Subsidiaries or any of the
BarTech Facilities that have not been made available to USS/Kobe and
RES Holding.
(e) Neither BarTech nor any of its Subsidiaries has been
subject to any Proceedings, is subject to any Order or has received any
written notice or other written communication from any Governmental
Body or the current or prior owner or operator of any BarTech
Facilities or any other Person, in each case of or with respect to any
actual or potential violation or failure to comply with any
Environmental Law or of any actual or threatened obligation to
undertake or bear any cost, damage, expense, liability, or obligation
arising from or under any Environmental Law.
(f) Neither BarTech nor any of its Subsidiaries has
contractually assumed any liability or obligation under or relating to
Environmental Laws.
(g) Neither BarTech nor any of its Subsidiaries has entered
into, or is subject to, any Order or agreement relating to compliance
with Environmental Laws or the investigation or remediation of
Hazardous Materials.
7.15 Labor Relations; Compliance. Except as set forth in Section 7.15
of the Disclosure Letter or as identified in the BarTech Public Filings: (i)
there is no labor strike, slowdown, work stoppage, dispute, lockout or other
labor controversy in effect or, to BarTech's Knowledge, threatened involving the
employees of BarTech or any of its Subsidiaries, and BarTech and its
Subsidiaries have not experienced any such labor controversy within the past
<PAGE>
52
three years, (ii) no grievance is pending or, to BarTech's Knowledge, threatened
which, if adversely decided, would have a BarTech Material Adverse Effect, (iii)
BarTech and each of its Subsidiaries have paid in full to all employees of
BarTech all currently accrued and payable wages, salaries, commissions, bonuses,
and other material compensation due to such employees in accordance with the
payroll practices of BarTech and its Subsidiaries currently in effect and
applicable, (iv) BarTech and its Subsidiaries will not have any material
liability for severance benefits payable immediately following the Closing under
any BarTech Plan as a result of or in connection with the Contemplated
Transactions and (v) BarTech and its Subsidiaries are not presently negotiating
a collective bargaining agreement or other Contract with any labor organization
or other representative of any of their employees (other than as expressly
contemplated by this Agreement). Neither BarTech nor any of its Affiliates is
subject to any bargaining obligations with any labor organization (including
without limitation the USWA) under any Legal Requirement, collective bargaining
agreement or otherwise in connection with the Contemplated Transactions, or is
required to obtain any agreements of any labor organizations to the changes in
corporate structure involved in the Contemplated Transactions, in each case
other than any such obligations or requirements which will have been satisfied
upon receipt of the NewTube Labor Agreement Ratification and the RTI Labor
Agreement Ratification.
7.16 Intellectual Property.
(a) To BarTech's Knowledge, Section 7.16(a) of the Disclosure
Letter contains a complete and accurate list and summary description
of, with respect to all material Intellectual Property owned, held or
used by BarTech and its Subsidiaries ("BarTech IP"), all patents,
registered copyrights, registered trademarks and service marks, and all
pending registrations or applications for the foregoing and all
material unregistered BarTech IP.
(b) Except as disclosed in Section 7.16(b) of the Disclosure
Letter or as identified in the BarTech Public Filings, to BarTech's
Knowledge (i) BarTech or one of its Subsidiaries owns or has the
enforceable, legal right to use all the Intellectual Property necessary
to conduct BarTech's business in all material respects as currently
conducted and consistent with past practice, free of all Encumbrances,
and (ii) to BarTech's Knowledge, all of the BarTech IP is valid,
enforceable and unexpired, has not been abandoned, does not Infringe
the Intellectual Property of any third party and is not being Infringed
by any third party.
(c) Except as expressly set forth otherwise in Section 7.16(c)
of the Disclosure Letter, as identified in the BarTech Public Filings,
or as would not, individually or in the aggregate, reasonably be
expected to have a BarTech Material Adverse Effect, (i) to BarTech's
Knowledge, there is no actual or threatened adverse Proceeding of any
Person pertaining to, or any challenge to the scope, validity or
enforceability of, any of the BarTech IP; and (ii) neither BarTech nor
any of its Subsidiaries (A) is a party to any
<PAGE>
53
Proceeding which involves a claim of infringement or misappropriation
by BarTech or any of its Subsidiaries of any Intellectual Property of
any third party; or (B) has brought any Proceeding against any third
party for infringement or misappropriation of, or breach of any license
or agreement involving, any of the BarTech IP.
(d) Except as would not, individually or in the aggregate,
reasonably be expected to have a BarTech Material Adverse Effect, to
BarTech's Knowledge, neither BarTech nor any of its Subsidiaries is, or
will be as a result of the execution and delivery of this Agreement or
the performance of its obligations hereunder, in breach of any
Intellectual Property license to which it or any of its Subsidiaries is
a party, either as licensor or licensee, or other agreement relating to
any of the BarTech IP.
7.17 Brokers or Finders. Except as provided in the Transactional and
Monitoring Fee Agreement and in the Sources and Uses, none of BarTech, its
Affiliates or their respective agents have incurred any obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement or the Contemplated
Transactions.
7.18 BarTech Public Filings. To BarTech's Knowledge, as of their
respective dates, BarTech's Public Filings complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder applicable to such Commission Documents,
except for any failures to so comply which would not, individually or in the
aggregate, reasonably be expected to have a BarTech Material Adverse Effect.
7.19 Other Matters. As of the Closing Date, neither Blackstone nor any
of its Affiliates (other than the Company and its Subsidiaries) has any
agreement or arrangement to acquire any Class A Preferred Stock or Class C
Convertible Preferred Stock of BarTech.
SECTION 8
REPRESENTATIONS AND WARRANTIES OF RES HOLDING
RES Holding represents and warrants to the USX/Kobe Parties and BarTech
as follows (provided, however, that the Disclosure Letter sets forth certain
exceptions to such representations and warranties or discloses certain matters
in response to such representations and warranties, in each case identified by
the applicable Section numbers below).
8.1 Organization and Good Standing.
(a) RES Holding is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware, with full
corporate power and authority to conduct its business as it is now
being conducted. RES Holding is duly qualified to do business
<PAGE>
54
as a foreign corporation in each jurisdiction in which the nature of
the activities conducted by it or the ownership or leasing of its
properties requires such qualification, except where such failure to so
qualify or to be in good standing does not have a RES Holding Material
Adverse Effect.
(b) Each of RES Holding Subsidiaries is a United States
corporation or limited liability company duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
organization, with full corporate or limited liability company power
and authority to conduct its business as it is being conducted. Each of
RES Holding Subsidiaries is duly qualified to do business as a foreign
corporation or limited liability company and is in good standing under
the laws of each state or other jurisdiction in which the nature of the
activities conducted by it or the ownership or leasing of its
properties requires such qualification, except where such failure to so
qualify or to be in good standing does not have a RES Holding Material
Adverse Effect.
(c) RES Holding has made available to USS/Kobe and BarTech
complete and correct copies of its Organizational Documents and those
of each of its Subsidiaries, as currently in effect.
(d) Section 8.1(d) of the Disclosure Letter contains a
complete and accurate list of all the Subsidiaries of RES Holding
(without giving effect to the Contemplated Transactions). Except as
listed in Section 8.1(d) of the Disclosure Letter, RES Holding and its
Subsidiaries do not own any material direct or indirect equity or debt
interest in any other Person, and none of them is obligated or
committed to acquire any such interest (other than pursuant to this
Agreement).
8.2 Authority; No Conflict; Consents.
(a) This Agreement and each other Transaction Document to
which it is a party has been duly executed and delivered by, and
constitutes the legal, valid and binding obligation of each of the
Republic Parties, enforceable against each of them in accordance with
its terms, except to the extent that its enforceability may be limited
by bankruptcy, insolvency, reorganization, fraudulent conveyance,
fraudulent transfer, moratorium or other laws relating to or affecting
creditors' rights generally and by general equity principles.
(b) Each of the Republic Parties has the requisite corporate,
partnership or other applicable right, power, authority and capacity to
execute and deliver this Agreement and each other Transaction Document
to which it is a party and to perform their respective obligations
under this Agreement and each other such Transaction Document. The
execution, delivery and performance of this Agreement and each other
Transaction Document to which it is a party by each of the Republic
Parties has been duly
<PAGE>
55
authorized by all necessary corporate, partnership or other applicable
action, as the case may be, on the part of such entity and its owners.
(c) Except as disclosed in Section 8.2 of the Disclosure
Letter, neither the execution and delivery of this Agreement and each
other Transaction Document to which it is a party nor the consummation
of any of the Contemplated Transactions or other performance of its
obligations hereunder or thereunder will, directly or indirectly:
(i) violate any provision of the Organizational
Documents of the Republic Parties or any of their
Subsidiaries, as applicable;
(ii) result in a violation of, or give any
Governmental Body or other Person the right to exercise any
remedy or obtain any relief under, any Legal Requirement or
any Order to which any of the Republic Parties or any of their
Subsidiaries, as applicable, is subject;
(iii) result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any of the Republic
Parties or any of their Subsidiaries;
(iv) result in a violation or breach of any provision
of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any
material Contract of any of the Republic Parties or any of
their Subsidiaries, as applicable; or
(v) result in the imposition or creation of any
Encumbrance upon any of the assets owned or used by any of the
Republic Parties or any of their Subsidiaries (other than
pursuant to the Transaction Documents).
(d) None of the Republic Parties or their Affiliates is or
will be required to obtain any Consent from any Person or Governmental
Body in connection with the execution and delivery of this Agreement or
any other Transaction Document to which it is a party or the
consummation of any of the Contemplated Transactions or their
performance hereunder or thereunder, except (i) the Material Consents
disclosed in Section 8.2 of the Disclosure Letter, which will be
obtained by Closing, and (ii) such other Consents as to which the
failure to obtain them by Closing would not, individually or in the
aggregate, reasonably be expected to have a RES Holding Material
Adverse Effect or a RTI Material Adverse Effect.
8.3 Capitalization. The authorized and outstanding equity interests of
each of the Republic Parties (without giving effect to the Contemplated
Transactions) and their Subsidiaries
<PAGE>
56
are listed in Section 8.3 of the Disclosure Letter. At the time of consummation
of the USX Holdings/Kobe Holdings-RTI Opco Merger, BarTech will be the record
and beneficial owner of all the outstanding equity interests in RES Holding,
free and clear of all Encumbrances. All of the outstanding equity interests in
each of RES Holding Subsidiaries are owned of record and beneficially directly
or indirectly by RES Holding. All of the foregoing equity interests have been
duly authorized and validly issued and are fully paid and nonassessable. Except
as set forth in Section 8.3 of the Disclosure Letter, there are no outstanding
options, warrants, convertible securities or other rights of any kind relating
to the issuance, sale, or transfer of any equity interests in any of the
foregoing entities (other than this Agreement and the other Transaction
Documents).
8.4 Financial Statements. Included within the RESI Public Filings are
certain financial statements of RESI (collectively, the "RESI Financial
Statements"). The RESI Financial Statements fairly present the assets and
liabilities, financial condition and the results of operations, changes in
stockholders' equity and cash flow of RESI as at the respective dates of and for
the periods referred to in such RESI Financial Statements. The RESI Financial
Statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, subject in the case of the unaudited
statements to the absence of footnote disclosure and other presentation items
and to changes resulting from normal period-end adjustments for recurring
accruals which are not in the aggregate material. Subject to the limitations
provided in the immediately preceding sentence, the RESI Financial Statements
have been prepared from the books and records of RESI which accurately and
fairly reflect in all material respects the transactions of, acquisitions and
dispositions of assets by, and incurrence of liabilities by RESI. RES Holding
and its Subsidiaries have no liabilities or obligations of any nature (whether
known or unknown and whether absolute, accrued, contingent or otherwise) which
would be required under generally accepted accounting principles to be reflected
on a balance sheet, except for (a) liabilities or obligations reflected or
reserved against in the June 30, 1998 balance sheet included in the RESI
Financial Statements, (b) liabilities incurred by RES Holding and its
Subsidiaries in the Ordinary Course of Business since June 30, 1998 which in the
aggregate do not have a RES Holding Material Adverse Effect and (c) matters
disclosed in Section 8.4 of the Disclosure Letter or as identified in the RESI
Public Filings.
8.5 [intentionally omitted]
8.6 Title to Properties; Encumbrances.
(a) Section 8.6(a) of the Disclosure Letter includes a
complete list (including the street address, where applicable) of the
RESI Facilities.
(b) Except as disclosed in Section 8.6(b) of the Disclosure
Letter or as identified in the RESI Public Filings, RESI or one of its
Subsidiaries has fee or other good title, as applicable, to all the
properties and assets (whether real, personal, or mixed and whether
tangible or intangible) that it purports to own or reflected as owned
<PAGE>
57
in the books and records of RESI including all the properties and
assets reflected in the Interim RESI Balance Sheet (except for personal
property acquired or sold in the Ordinary Course of Business of RESI)
and all of the properties and assets purchased or otherwise acquired by
RESI since the date of the Interim RESI Balance Sheet (except for
personal property acquired and sold since the date of the Interim RESI
Balance Sheet in the Ordinary Course of Business of RESI). Except as
described in Section 8.6(b) of the Disclosure Letter, all material
properties and assets constituting RESI Facilities and reflected in the
Interim RESI Balance Sheet are free and clear of all Encumbrances,
except for Permitted Encumbrances.
8.7 [intentionally omitted]
8.8 Taxes. Except as set forth in Section 8.8 of the Disclosure Letter
or as identified in the RESI Public Filings:
(a) RES Holding and each of its Subsidiaries has filed or
caused to be filed on a timely basis all Tax Returns that are or were
required to be filed by it pursuant to applicable Legal Requirements.
RES Holding and its Subsidiaries have paid, or made provision for the
payment of, all Taxes that have become due and payable as Taxes imposed
on them pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by RES Holding or its Subsidiaries, except such
Taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided in the applicable Interim RESI
Balance Sheet.
(b) All Taxes that RES Holding and its Subsidiaries are or
were required by Legal Requirements to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid
to the proper Governmental Body.
(c) Neither RES Holding nor any of its Subsidiaries is liable
for any Taxes of another Person by reason of Treasury Regulation
1.1502-6(a) (or any comparable provision under state, local or foreign
law), as a successor in interest, as a transferee, by contract or
otherwise.
(d) No Proceeding is pending or, to RES Holding Knowledge,
threatened in regard to any Taxes due from or with respect to RES
Holding or any of its Subsidiaries or any Tax Return filed by or with
respect to RES Holding or any of its Subsidiaries.
(e) RES Holding and each of its Subsidiaries is not a party to
or bound by (nor will RES Holding and each of its Subsidiaries, prior
to the Closing Date, become a party to or bound by) any tax indemnity,
tax sharing or tax allocation agreement or similar contractual
arrangement.
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58
(f) To the Republic Parties' Knowledge, there are no pending,
threatened or proposed audits, assessments or claims from any Tax
Authority for material Taxes against RES Holding or any of its
Subsidiaries or any of their assets, operations or activities as of the
date hereof or as of the Closing Date. There are no pending claims for
refund of any Taxes for RES Holding or any of its Subsidiaries
(including refunds of Taxes allocable to RES Holding or any of its
Subsidiaries or with respect to consolidated, combined, unitary, fiscal
unitary or similar Tax Returns).
(g) There are no outstanding rulings of, or requests for
rulings with, any Tax Authority expressly addressed to RES Holding or
any of its Subsidiaries that are, or if issued would be, binding for
any post-Closing period.
8.9 No Material Adverse Change. Except as set forth in Section 8.9 of
the Disclosure Letter or as set forth in the RESI Public Filings, since December
31, 1998, (i) RES Holding and each of its Subsidiaries has operated its business
only in the Ordinary Course of Business (other than as expressly provided for in
the Transaction Documents), (ii) to the Republic Parties' Knowledge, no event or
occurrence has occurred which has had or would reasonably be expected to have,
individually or in the aggregate, a RES Holding Material Adverse Effect, and
(iii) neither RES Holding nor any of its Subsidiaries has taken any action nor
suffered any event that if taken or suffered after the date hereof would require
USX's, Kobe's or BarTech's consent under Section 10.2 of this Agreement.
8.10 Employee Benefits.
(a) Except as set forth in Section 8.10(a) of the Disclosure
Letter (the plans disclosed in Section 8.10(a) of the Disclosure Letter
being the "RESI Plans"), RES Holding and its Subsidiaries do not
sponsor or contribute to any Employee Benefit Plan, severance,
change-in-control or employment plan, program or agreement or stock
option, bonus, or incentive plan or program. Copies of the written RESI
Plans have been made available to USS/Kobe and BarTech.
(b) Each RESI Plan has been administered and is in compliance
with the terms of such RESI Plan and all applicable laws, rules and
regulations where the failure to so comply would result in liability
that would have a RES Holding Material Adverse Effect.
(c) Except as set forth in Section 8.10(c) of the Disclosure
Letter: (i) each RESI Plan intended to be qualified within the meaning
of IRC Section 401(a) has received a favorable determination as to such
qualification from the IRS and (ii) to the Republic Parties' Knowledge,
nothing has occurred since that would adversely affect such
qualification.
(d) Except as would not have a RES Holding Material Adverse
Effect or, in the case of the following clause (i), in connection with
the Contemplated Transactions: (i)
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no "reportable event" (as such term is used in Section 4043 of ERISA)
(other than those events for which the 30-day notice has been waived
pursuant to the regulations) is pending with respect to any RESI Plan,
and (ii) no "accumulated funding deficiency" (as such term is used in
Section 412 or 4971 of the IRC) has occurred during the last five years
with respect to any RESI Plan.
(e) No litigation or administrative or other proceeding
involving any RESI Plan has occurred or, to the Republic Parties'
Knowledge, is threatened where an adverse determination would result in
liability that would have a RES Holding Material Adverse Effect, other
than any such litigation or administrative or other proceeding that may
be commenced by the PBGC in connection with the Contemplated
Transactions.
(f) Except as set forth in Section 8.10(f) of the Disclosure
Letter, neither RES Holding nor any of its Subsidiaries have
contributed to any "multiemployer plan" (within the meaning of Section
3(37) of ERISA), and neither RES Holding nor any member of its
Controlled Group has incurred any withdrawal liability which remains
unsatisfied in an amount which would result in liability that would
have a RES Holding Material Adverse Effect.
(g) No RESI Plan or multiemployer plan to which RES Holding or
any of its Subsidiaries contributed has been terminated, where such
termination has resulted in liability under Title IV of ERISA that
would have a RES Holding Material Adverse Effect.
(h) Except as would not have a RES Holding Material Adverse
Effect, none of RES Holding or any of its Subsidiaries has incurred any
liability, direct or indirect, as a result of any breach of fiduciary
duty or non-exempt prohibited transaction (within the meaning of IRC
Section 4975 or Section 406 of ERISA) involving any RESI Plan or the
assets thereof. None of RES Holding or any of its Subsidiaries has
engaged in any transaction that has resulted or could result in any
material liability of any of them pursuant to Section 4069 or 4212 of
ERISA.
8.11 Compliance with Legal Requirements; Governmental Authorizations.
Except as set forth in Section 8.11 of the Disclosure Letter or as identified in
the RESI Public Filings, to the Republic Parties' Knowledge, RES Holding and
each of its Subsidiaries has complied and is in compliance with each Legal
Requirement that is applicable to it or to the conduct or operation of its
business, except for any failures to comply which would not, individually or in
the aggregate, have a RES Holding Material Adverse Effect. To the Republic
Parties' Knowledge, RES Holding and its Subsidiaries hold all Governmental
Authorizations that are required in connection with their businesses, and are in
compliance with all of the terms and requirements of each Governmental
Authorization applicable to them, except where the failure to be in compliance
would not have a RES Holding Material Adverse Effect.
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8.12 Legal Proceedings; Orders. Except as set forth in Section 8.12 of
the Disclosure Letter or as identified in the RESI Public Filings, to the
Republic Parties' Knowledge there is no Proceeding (i) pending or threatened
against RES Holding or any of its Subsidiaries that, individually or in the
aggregate, has had, or would reasonably be expected to have, a RES Holding
Material Adverse Effect, or (ii) as of the date of this Agreement, that
challenges, or that may have the effect of preventing or making illegal, any of
the Contemplated Transactions. Except as set forth in Section 8.12 of the
Disclosure Letter, to the Republic Parties' Knowledge (i) there is no material
Order to which RES Holding or any of its Affiliates is subject that materially
prohibits or restricts RES Holding or any of its Subsidiaries, and (ii) no agent
or employee of RES Holding and its Subsidiaries' business is subject to any
Order that materially prohibits or restricts such agent or employee, from
engaging in or continuing any conduct, activity, or practice relating to RES
Holding business.
8.13 Contracts; No Defaults.
(a) Except for Permitted Encumbrances, Section 8.13(a) of the
Disclosure Letter contains a complete and accurate list of, or the RESI
Public Filings include as exhibits thereto: (i) each Contract of RES
Holding and its Subsidiaries that is required to be filed as an exhibit
to any of the RESI Public Filings, (ii) any other Contract of RES
Holding or any of its Subsidiaries containing covenants not to compete,
employee non-solicitation or no-hire covenants, or otherwise materially
limiting the freedom of RES Holding and its Subsidiaries to engage in
any line of business or to compete with any Person, (iii) any other
Contract of RES Holding or any of its Subsidiaries constituting a
material employment agreement or a collective bargaining or other
agreement with a labor organization or other representative of RES
Holding and its Subsidiaries employees, (iv) any other Contract of RES
Holding or any of its Subsidiaries with or for the benefit of any
Affiliate of RES Holding (other than with or among its Subsidiaries)
or, to the Republic Parties' Knowledge, any immediate family member of
any officer, director, employee or equityholder of RES Holding or any
of its Affiliates or any Affiliate thereof and (v) any other Contract
of RES Holding or any of its Subsidiaries relating to material
indebtedness, financing arrangements or guarantees of indebtedness;
(b) With respect to the Contracts identified in Section
8.13(a) of the Disclosure Letter, to the Republic Parties' Knowledge:
(i) each Contract is in full force and effect and is valid and
enforceable in accordance with its terms, except to the extent that its
enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other laws relating
to or affecting creditors' rights generally and by general equity
principles, (ii) RES Holding has made available to USS/Kobe and BarTech
a copy of each such Contract, (iii) RES Holding and its Subsidiaries
are in compliance with all material terms and requirements of such
Contracts, and (iv) RES Holding and its Subsidiaries have not given to
or received from any other Person any written notice regarding any
actual or alleged material violation or default of any such Contract.
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61
8.14 Environmental Matters. Except as set forth in Section 8.14 of the
Disclosure Letter or as identified in the RESI Public Filings and except as
would not, individually or in the aggregate, reasonably be expected to have a
RES Holding Material Adverse Effect:
(a) Neither RES Holding nor any of its Subsidiaries has
violated or is in violation of any Environmental Law.
(b) To the Republic Parties' Knowledge, none of the RESI
Facilities or any facility formerly owned, leased or operated by RES
Holding or any of its Subsidiaries contains any Hazardous Materials in
amounts exceeding the levels permitted by applicable Environmental Law
or under circumstances that would reasonably be expected to result in
liability under or relating to Environmental Law.
(c) To the Republic Parties' Knowledge, RES Holding and its
Subsidiaries have not disposed of, arranged to be disposed of,
Released, threatened to Release or transported in violation of any
applicable Environmental Law or in a manner that would reasonably be
expected to result in liability under or relating to Environmental
Laws, any Hazardous Materials at, to or from any of the RESI Facilities
or any facility formerly owned, leased or operated by RES Holding or
any of its Subsidiaries.
(d) There have been no material environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance
or noncompliance with, or potential liability under or relating to, any
Environmental Law conducted by or on behalf of RES Holding and its
Subsidiaries, or which are in the custody or control of RES Holding and
its Subsidiaries, relating to the facilities, business or activities of
RES Holding and its Subsidiaries or any of the RESI Facilities that
have not been made available to USS/Kobe and BarTech.
(e) Neither RES Holding nor any of its Subsidiaries has been
subject to any Proceedings, is subject to any Order or has received any
written notice or other written communication from any Governmental
Body or the current or prior owner or operator of any RESI Facilities
or any other Person, in each case of or with respect to any actual or
potential violation or failure to comply with any Environmental Law or
of any actual or threatened obligation to undertake or bear any cost,
damage, expense, liability, or obligation arising from or under any
Environmental Law.
(f) RES Holding and its Subsidiaries have not contractually
assumed any liability or obligation under or relating to Environmental
Laws.
(g) Neither RES Holding nor any of its Subsidiaries has
entered into, or is subject to, any Order or agreement relating to
compliance with Environmental Laws or the investigation or remediation
of Hazardous Materials.
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8.15 Labor Relations; Compliance. Except as set forth in Section 8.15
of the Disclosure Letter or as identified in the RESI Public Filings: (i) there
is no labor strike, slowdown, work stoppage, dispute, lockout or other labor
controversy in effect or, to the Republic Parties' Knowledge, threatened
involving the employees of RES Holding or any of its Subsidiaries, and RES
Holding and its Subsidiaries have not experienced any such labor controversy
within the past three years, (ii) no grievance is pending or, to the Republic
Parties' Knowledge, threatened which, if adversely decided, would have a RES
Holding Material Adverse Effect, (iii) RES Holding and its Subsidiaries have
paid in full to all of their employees all currently accrued and payable wages,
salaries, commissions, bonuses and other material compensation due to such
employees in accordance with the payroll practices of RES Holding and its
Subsidiaries currently in effect and applicable law, (iv) RES Holding and its
Subsidiaries will not have any material liability for severance benefits payable
under any RESI Plan as a result of or in connection with the Contemplated
Transactions and (v) RES Holding and its Subsidiaries are not presently
negotiating a collective bargaining agreement or other Contract with any labor
organization or other representative of any of their employees (other than as
expressly contemplated by this Agreement). Neither RES Holding nor any of its
Affiliates is subject to any bargaining obligations with any labor organization
(including without limitation the USWA) under any Legal Requirement, collective
bargaining agreement or otherwise in connection with the Contemplated
Transactions, or is required to obtain any agreements of any labor organizations
to the changes in corporate structure involved in the Contemplated Transactions,
in each case other than any such obligations or requirements which will have
been satisfied upon receipt of the NewTube Labor Agreement Ratification and the
RTI Labor Agreement Ratification.
8.16 Intellectual Property.
(a) To the Republic Parties' Knowledge, Section 8.16(a) of the
Disclosure Letter contains a complete and accurate list and summary
description of, with respect to all material Intellectual Property
owned, held or used by RES Holding and Subsidiaries and, to the extent
applicable to RES Holding, its Affiliates ("RESI IP"), all patents,
registered copyrights, registered trademarks and service marks, and all
pending registrations or applications for the foregoing and all
material unregistered RESI IP.
(b) Except as disclosed in Section 8.16(b) of the Disclosure
Letter or as identified in the RESI Public Filings, to the Republic
Parties' Knowledge (i) RES Holding or one of its Subsidiaries owns or
has the enforceable, legal right to use all the Intellectual Property
necessary to conduct RES Holding business in all material respects as
currently conducted and consistent with past practice, free of all
Encumbrances, and (ii) to the Republic Parties' Knowledge, all of the
RESI IP is valid, enforceable and unexpired, has not been abandoned,
does not Infringe the Intellectual Property of any third party and is
not being Infringed by any third party.
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(c) Except as expressly set forth otherwise in Section 8.16(c)
of the Disclosure Letter, as identified in the RESI Public Filings, or
as would not, individually or in the aggregate, reasonably be expected
to have a RES Holding Material Adverse Effect, (i) to the Republic
Parties's Knowledge, there is no actual or threatened adverse
Proceeding of any Person pertaining to, or any challenge to the scope,
validity or enforceability of, any of the RESI IP, and (ii) neither RES
Holding nor any of its Subsidiaries (A) is a party to any Proceeding
which involves a claim of infringement or misappropriation by RES
Holding or any of its Subsidiaries of any Intellectual Property of any
third party or (B) has brought any Proceeding against any third party
for infringement or misappropriation of, or breach of any license or
agreement involving, any of the RESI IP.
(d) Except as would not, individually or in the aggregate,
reasonably be expected to have a RES Holding Material Adverse Effect,
to the Republic Parties' Knowledge, neither RES Holding nor any of its
Subsidiaries is, or will be as a result of the execution and delivery
of this Agreement or the performance of its obligations hereunder, in
breach of any Intellectual Property license to which it or any of its
Subsidiaries is a party either as licensor or licensee, or other
agreement relating to any of the RESI IP.
8.17 Brokers or Finders. Except as provided in the Transactional and
Monitoring Fee Agreement and in the Sources and Uses, none of the Republic
Parties, their Affiliates or their respective agents have incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement or the Contemplated Transactions.
8.18 RESI Public Filings. To the Republic Parties' Knowledge, as of
their respective dates, RESI's Public Filing, complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder applicable to such Commission Documents,
except for failures to so comply which would not, individually or in the
aggregate, reasonably be expected to have a RES Holding Material Adverse Effect.
SECTION 9
[intentionally omitted]
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SECTION 10
COVENANTS
10.1 Access and Investigation. From the date of this Agreement until
the Closing, upon reasonable advance notice, each of BarTech, RES Holding and
USS/Kobe (only with respect to its Bar Business) will, and will cause each of
their Subsidiaries and relevant Affiliates to:
(a) Afford the other parties hereto and their Representatives
and their lenders and their Representatives reasonable access during
normal business hours to the personnel, properties, contracts, books
and records, and other documents and data of such Person and its
Subsidiaries and relevant Affiliates;
(b) Furnish the other parties hereto and their Representatives
with copies of all such contracts, books and records, and other
existing documents and data as they may reasonably request in
connection with the Transaction Documents and the transactions
contemplated hereby and thereby;
(c) Furnish the other parties hereto and their Representatives
with such additional financial, operating, and other data and
information with respect to such Person and its Subsidiaries and
relevant Affiliates as they may reasonably request; provided, however,
that such investigation shall not unreasonably interfere with any of
the businesses or operations of such Person or any of its Subsidiaries
or relevant Affiliates and will be at the cost of the Person making
such investigation;
(d) Notwithstanding the foregoing, neither BarTech, RES
Holding nor USS/Kobe will be required prior to the Closing Date to
disclose or cause the disclosure to the Representatives of any such
Person (or provide access to any of their or their Subsidiaries' or
relevant Affiliates' properties, contracts, books or records) of any
confidential information relating to pricing and marketing plans, to
the extent that such Person receives the written advice of outside
legal counsel which counsel will be reasonably satisfactory to the
other Persons that disclosure of such information would be inconsistent
with any applicable antitrust or competition law, nor will such Person
be required to permit or cause others to permit the Representatives of
such Person to photocopy or remove from the offices or properties of
any such Person or any of its Subsidiaries or relevant Affiliates any
original or photocopied documents, drawings or other materials that
might reveal any such confidential information;
(e) From the date hereof and following the Closing, each of
the parties hereto agrees to, and will cause its Subsidiaries,
Affiliates and Representatives to treat and hold as confidential (and
not disclose or provide access to any Person) all information
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65
provided to pursuant to this Agreement or other Transaction Documents
as provided in Section 10.6; and
(f) Each of BarTech, the Republic Parties, the BV Parties and
the USX/Kobe Parties acknowledges and agrees that it (i) has made its
own inquiry and investigation into, and based thereon, has formed an
independent judgment concerning the business, the assets and
liabilities of the other parties, (ii) has been furnished with or given
adequate access to such information about the business, the assets and
liabilities of the other parties as it has requested, (iii) has had
independent legal, financial and technical advice relating to the
business and the assets of the other parties and the terms of this
Agreement and the Transaction Documents and (iv) will not assert any
claim against any of the other parties or their Affiliates or any of
their or their Affiliates' respective directors, officers, employees,
agents, stockholders, consultants, investment bankers, accountants or
representatives, or hold any such persons liable, for any inaccuracies,
misstatements or omissions with respect to information (other than the
representations and warranties of the other parties contained in this
Agreement) furnished by the other parties or such persons concerning
the other parties, provided, however, that nothing contained in this
Agreement will preclude the assertion by any party or its Affiliates of
any causes of action that may exist, not based upon breach of contract,
for fraud. Any implied warranty or other rights applicable to any of
the transactions contemplated hereby under the law of any jurisdiction
is hereby expressly and irrevocably waived by each party to the fullest
extent permitted by such legal requirements, and each party agrees that
it will not seek to enforce any such implied warranties or other
rights.
10.2 Operation of the Business of BarTech, RES Holding and USS/Kobe.
Between the date of this Agreement and the Closing Date, each of BarTech, RES
Holding, USS/Kobe, USX Holdings and Kobe Holdings will (except (i) for the
USS/Kobe Tubular Business, USS/Kobe Tubular Assets and the Tubular Spinoff, in
respect of which USS/Kobe, USX Holdings and Kobe Holdings will not be subject to
any of the provisions of this Section 10.2, (ii) to the extent that the others
have otherwise consented in advance in writing, which consent will not be
unreasonably withheld or delayed, or (iii) as expressly provided for elsewhere
in the Transaction Documents or in the Disclosure Letter), and will cause its
Subsidiaries to:
(a) Conduct its business only in the Ordinary Course of
Business and use its commercially reasonable efforts to: preserve
intact its current business, keep available the services of its current
officers, employees, and agents, and maintain good relations and good
will with suppliers, customers, landlords, creditors, employees,
agents, and others having business relationships with it;
(b) Not (i) amend any of its Organizational Documents, (ii)
otherwise alter or modify its authorized or outstanding capital stock,
partnership or other equity interests, or grant of any option or right
to purchase equity interests, (iii) issue any debt or equity security,
or incur any indebtedness other than (A) gross debt for borrowed money
to the
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66
extent it replaces existing outstanding indebtedness or indebtedness
incurred pursuant to clause (B) below, is incurred in the Ordinary
Course of Business and is prepayable at the Closing without premium or
penalty or (B) net debt for borrowed money incurred in the Ordinary
Course of Business pursuant to bank credit facilities existing on the
date hereof, (iv) grant any registration rights, (v) declare, set
aside, make or pay any dividends of cash or other property or make any
cash or other distributions on debt or equity securities, or redeem,
repurchase, retire or otherwise acquire any of its debt or equity
securities, except to the extent otherwise required to do so by the
terms of any debt securities or preferred stock currently outstanding,
(vi) liquidate, dissolve, merge, consolidate, recapitalize or otherwise
reorganize its business, other than liquidations of non-operating
Subsidiaries and mergers with other wholly owned Subsidiaries of such
Person, (vii) create any new Subsidiaries or joint ventures, (viii)
incur or accrue any obligations to any of its direct or indirect
equityholders, partners or Affiliates, other than obligations arising
under Contracts existing on the date hereof, or (ix) repay any advances
from, or make any other payments to, any of its direct or indirect
equityholders, partners or Affiliates, except for (A) payments which
reduce dollar-for-dollar amounts owed to such stockholder, partner or
Affiliate that are reflected on its respective Interim Balance Sheet or
have been incurred in the Ordinary Course of Business pursuant to
obligations arising under Contracts existing on the date hereof and (B)
payments set forth in the Disclosure Letter;
(c) Except to the extent required by an agreement in effect on
the date hereof and disclosed in the applicable section of the
Disclosure Letter or any of the RTI PBGC Agreement, labor agreement
subject to the NewTube Labor Agreement Ratification or labor agreement
subject to the RTI Labor Agreement Ratification, not (i) materially
increase any bonuses, salaries or other compensation of any of its
employees, officers or directors, (ii) enter into any employment,
severance or similar Contract with any of its employees, officers or
directors; adopt, modify or terminate any Employee Benefit Plan or
other benefit or severance policy, plan, agreement, arrangement or
program; or hire any employees other than in the Ordinary Course of
Business or, in the case of USS/Kobe, transfer any employees between
the USS/Kobe Bar Business and USS/Kobe Tubular Business other than in
the Ordinary Course of Business, or (iii) effect a "plant closing" or
"mass layoff", as those terms are defined in the Worker Adjustment and
Retraining Notification Act, affecting in whole or in part any USS/Kobe
Facilities or other site of employment of USS/Kobe, BarTech Facilities
or other site of employment of BarTech or any of its Subsidiaries or
RESI Facilities or other site of employment of RES Holding or any of
its Subsidiaries;
(d) Not (i) enter into, terminate or materially amend any
Contract identified (in the case of existing Contracts), or of the type
identified (in the case of new Contracts), in Section 6.13(a), 7.13(a)
or 8.13(a), as applicable, other than Contracts entered into with
customers and suppliers in the Ordinary Course of Business and, in the
case of USS/Kobe, Contracts which are USS/Kobe Tubular Assets, (ii)
sell (other than sales of
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inventory in the Ordinary Course of Business), lease, mortgage, pledge,
license or otherwise dispose of any of its material assets or
properties, or create or suffer to exist any new Encumbrance on any of
its material assets or properties, other than, in the case of USS/Kobe,
(A) assets or properties which are USS/Kobe Tubular Assets and (B)
mortgages, security interests and liens granted to secure USS/Kobe's
obligations under the USS/Kobe Credit Facility and/or USS/Kobe Senior
Notes (provided that such mortgages, security interests and liens will
be released upon consummation of the refinancing transactions described
in Section 4), (iii) make any loans, advances or capital contributions
to any Person, other than to its Subsidiaries and other than loans or
advances to employees in the Ordinary Course of Business, or (iv)
assume, guarantee, endorse or otherwise become liable for any material
obligations of any Person other than its Subsidiaries;
(e) Not make any material capital expenditures (in the case of
USS/Kobe, solely with respect to the USS/Kobe Bar Assets) other than as
provided in the capital expenditures budgets previously provided to the
other parties hereto, or fail to make any material capital expenditures
so budgeted; and
(f) Not enter into any agreement, arrangement or understanding
to do any of the foregoing.
10.3 Notification. Between the date of this Agreement and the Closing
Date, each of BarTech, the Republic Parties and USS/Kobe (only in respect of the
USS/Kobe Bar Business) promptly will notify the others in writing if it becomes
aware of any fact or condition that would reasonably be expected to cause or
constitute a breach of any of its representations, warranties or covenants so as
to cause the failure of any of the conditions contained herein (or that would
reasonably be expected to cause such a breach if any such representation or
warranty had been made as of the time of discovery of such fact or condition).
10.4 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Section 17, each of BarTech, the Republic Parties (other
than as to any discontinued operations of the Republic Parties), the BV Parties
and the USX/Kobe Parties (other than as to the USS/Kobe Tubular Assets, USS/Kobe
Tubular Business and USS/Kobe Tubular Liabilities) will not, and will cause its
Subsidiaries, Affiliates and Representatives not to, directly or indirectly (a)
solicit, initiate, encourage (including by way of furnishing information) or
take any action knowingly to facilitate the submission of any inquiries,
proposals or offers (whether or not in writing) from any Person relating to,
other than the Contemplated Transactions, (i) any acquisition or purchase of 5%
or more of the assets of BarTech and its Subsidiaries, RES Holding and its
Subsidiaries or USS/Kobe, as applicable, (ii) any direct or indirect acquisition
or purchase of any equity securities of BarTech or any of its Subsidiaries, RES
Holding or any of its Subsidiaries or USS/Kobe, as applicable, (iii) any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving BarTech or any of its Subsidiaries, RES Holding
or any of its Subsidiaries or USS/Kobe, as applicable, or (iv) any
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other transaction the consummation of which would or would reasonably be
expected to impede, interfere with, prevent or materially delay the Contemplated
Transactions or that would or would reasonably be expected to dilute the
benefits to the other parties hereto of the Contemplated Transactions, or agree
to or endorse any such proposal, or (b) enter into or participate in any
discussions or negotiations regarding any of the foregoing, or furnish to any
other Person any information with respect to its business, properties or assets
in connection with the foregoing, or otherwise cooperate in any way with, or
knowingly assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek any of the foregoing.
10.5 Commercially Reasonable Best Efforts. Between the date of this
Agreement and the Closing Date, each of BarTech, the Republic Parties and
USS/Kobe will use commercially reasonable best efforts to cause the conditions
hereunder to the others' obligations to be satisfied. Each of BarTech, the
Republic Parties and USS/Kobe will furnish the others, at the cost and expense
of the party being furnished with such information, with all information that is
required for inclusion in any application or filing to be made by any such
Person or its Subsidiaries or Affiliates to any Governmental Body in connection
with the Contemplated Transactions, and each party hereto will use commercially
reasonable best efforts to assist the others in obtaining any Governmental
Authorizations, or any Consents related thereto, required in connection with the
Contemplated Transactions. USS/Kobe will provide reasonable assistance to
BarTech and the Republic Parties in connection with their efforts to obtain the
RTI Credit Facility and to consummate the RTI High Yield Offering, including
facilitating customary due diligence and arranging for senior officers of
USS/Kobe, as reasonably selected by BarTech and the Republic Parties, to meet
with prospective lenders and investors in customary "road show" presentations or
otherwise, and use commercially reasonable best efforts to cause USS/Kobe's
accountants and attorneys to provide reasonable assistance in such financing,
including providing financial statements, reasonable access to work papers and
other information regarding USS/Kobe and its relevant Affiliates suitable for
inclusion in a registration statement on Form S-1 or Rule 144A offering
memorandum, customary "comfort letters" and legal opinions. Notwithstanding the
foregoing or anything else contained in this Agreement, none of the parties
hereto will have any obligation to comply with any request or requirement
imposed by any Governmental Body in connection with the Contemplated
Transactions if such party, in the exercise of its reasonable discretion,
determines that to do so would be materially adverse to its business or the
business of its Affiliates (including without limitation any request by, or any
requirement of, any Governmental Body to dispose of any assets or operations or
to comply with any restriction on the manner in which it conducts its
operations).
10.6 Confidentiality. Each party hereto will maintain in confidence,
and will cause its Subsidiaries, Affiliates and Representatives to maintain in
confidence, any information furnished to them by or on behalf of any other party
hereto or its Representatives in connection with this Agreement or the
Contemplated Transactions to the extent contemplated by the terms of the
confidentiality agreement, dated as of March 8, 1999, between Blackstone
Management Partners III, L.L.C. and USS/Kobe as if such party hereto were a
party thereto.
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10.7 Tubular Business Excluded. For the avoidance of doubt, none of the
covenants of USS/Kobe in subsections 10.1 to 10.6 will be applicable to the
Tubular Business or the Tubular Assets.
10.8 Use of Names.
(a) Notwithstanding any other provision of this Agreement to
the contrary, no right, title or interest in, nor any right to use, the
names "Kobe," "USS," "USS/Kobe" and "USX," any corporate name of Kobe,
USX or their respective Affiliates, or any logo, trademark, service
mark, trade dress or trade name or any derivation thereof of Kobe, USX
or their respective Affiliates with respect to, or associated with, the
foregoing (collectively, the "Retained Names and Marks") is being
transferred to RTI Opco pursuant to the transactions contemplated
hereunder, and the use of any Retained Names and Marks (except to the
extent any rights thereto were owned by RTI Opco or any of its
Affiliates prior to the date of this Agreement), whether in connection
with the Bar Business or otherwise, by RTI Opco and its Affiliates will
cease as soon as practicable following the Closing Date, but in no
event later than 180 days after the Closing Date. RTI Opco, as soon as
practicable following the Closing Date, will, and will cause its
Affiliates to: (i) remove or obliterate all of the Retained Names and
Marks from all of its signs, purchase orders, invoices, sales orders,
labels, letterheads, shipping documents, and other items and materials,
whether relating to the Bar Business or otherwise, and not to put into
use after the Closing Date any such items and materials not in
existence on the Closing Date that bear any of the Retained Names and
Marks or any name, mark or logo confusingly similar thereto; and (ii)
change the corporate name of each Subsidiary whose corporate name
includes any of the Retained Names and Marks or any name, mark or
logo confusingly similar thereto, to another corporate name that does
not include any of the Retained Names and Marks or any name, mark or
logo confusingly similar thereto.
(b) Notwithstanding the foregoing, RTI Opco and its
Subsidiaries may, until the earlier of 180 days after the Closing Date
and the date on which all of the Marked Inventory is sold, use any
purchase orders, invoices, sales orders, labels, letterheads, or
shipping documents existing on the Closing Date that bear any of the
Retained Names and Marks or any name, mark or logo confusingly similar
thereto, where the removal of any of the Retained Names and Marks or
any such similar name, mark or logo would be impractical, and will not
in any event be prohibited from selling inventories existing as of the
Closing Date which are pre-labeled in a manner such that the removal of
any of the Retained Names and Marks or any name, mark or logo
confusingly similar thereto would be impractical (the "Marked
Inventory"), provided that RTI Opco and its Affiliates will use
commercially reasonable efforts to sell all such inventories as
promptly as practicable, and to cease using any of the Retained Names
and Marks as promptly as practicable. RTI Opco agrees that none of
Kobe, USX and their respective Affiliates will have any responsibility
or liability to RTI Opco or its Affiliates with respect to claims by
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third parties to the extent arising out of, or relating to, any use by
RTI Opco or any of its Affiliates of any Retained Name or Mark after
the Closing Date.
(c) RTI Opco acknowledges Kobe's and USX's respective
ownership of the appropriate Retained Names and Marks and the goodwill
associated therewith and agrees that all goodwill associated with or
arising from the use of the Retained Names and Marks by RTI Opco and
its Affiliates will inure solely to the benefit of Kobe or USX, as
applicable, RTI Opco will knowingly do nothing inconsistent with Kobe's
and USX's respective ownership of the appropriate Retained Names and
Marks nor knowingly take any action that would reasonably be expected
to be detrimental to the goodwill associated with the Retained Names
and Marks. RTI Opco agrees that nothing in this Section 10.8 vests in
it, or will be construed to vest in it, any right, title, claim or
interest in any of the Retained Names and Marks or the goodwill
associated therewith other than the limited right to use granted
herein. RTI Opco will not directly or indirectly knowingly undertake
any action anywhere that would reasonably be expected to infringe or
impair the validity of Kobe's or USX's respective title in the
appropriate Retained Names and Marks. RTI Opco will notify Kobe and USX
promptly if RTI Opco or any of its Affiliates learns of any pending or
threatened litigation involving any of the Retained Names and Marks as
used in connection with this Agreement.
(d) RTI Opco agrees that it and its Affiliates will use the
Retained Names and Marks only as authorized in this Section 10.8 and
will not affix any of the Retained Names and Marks to any products
produced after the Closing Date or use any of the Retained Names and
Marks in connection with any service (other than services reasonably
related to the sale of the Marked Inventory as provided herein). In
using the Retained Names and Marks in connection with the sale of the
Marked Inventory, RTI Opco will use commercially reasonable efforts to
include and cause its Affiliates to include all notices and legends
with respect to the Retained Names and Marks as are required by
applicable federal, state or local trademark laws and as have been
reasonably requested by Kobe or USX.
10.9 Non-Competition and Non-Solicitation.
(a) Until the earlier of (i) the fifth anniversary of the
Closing Date and (ii) such time that USX and its Subsidiaries (in the
case of the covenants of USX in this Section 10.9) or Kobe and its
Subsidiaries (in the case of the covenants of Kobe in this Section
10.9), as applicable, owns less than 5% of the Common Stock on a fully
diluted basis (as calculated for purposes of the Equityholders
Agreement), (A) USX agrees that neither it nor any of its Affiliates
will engage in the United States in the manufacturing, finishing,
processing or distributing of special bar quality or other products
classified as high quality steel or alloy bars and (B) Kobe agrees that
neither it nor any of its Affiliates will engage in the United States
in the manufacturing, finishing or processing of special bar quality or
other products classified as high quality steel or alloy bars;
provided,
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however, that the restrictions contained in this Section 10.9(a) will
not prevent any Person that becomes an Affiliate of USX or Kobe after
the Closing Date (a "New Affiliate") from engaging in such activities,
provided that such New Affiliate (i) had been actively engaged in the
conduct of such high quality bar activities prior to the date on which
it became a New Affiliate, (ii) was acquired as a going concern, (iii)
did not commence the conduct of such high quality bar activities in
contemplation of becoming a New Affiliate and (iv) on average derived
less than 40% of its annual revenues from the conduct of such high
quality steel or alloy bar activities during the five year period
preceding the date on which it became a New Affiliate (based upon an
average of such five years of operation (or such shorter period as it
had been in operation if less than five years)); and provided, further,
that neither any New Affiliate nor its Affiliates will solicit
customers of BarTech or its Subsidiaries, RESI or its Subsidiaries or
the USS/Kobe Bar Business existing as of the Closing Date in connection
with the conduct of such high quality bar activities (except to the
extent that such customers were also high quality bar customers of such
New Affiliate or its Affiliates as of the time it became a New
Affiliate).
(b) Until the second anniversary of the Closing Date, each of
USX, Kobe and BarTech agrees that neither it nor any of its respective
Affiliates will, without the prior written consent of the party that is
the employer or former employer of such employee, directly or
indirectly solicit to hire or employ (or seek to cause to leave the
employ of) any non-union employee (limited, however, to the plant
manager level and above) employed by BarTech or its Subsidiaries, USX
or its Subsidiaries or Kobe or its Subsidiaries at the time of such
solicitation or during the immediately preceding six-month period
(provided that this Section 10.9(b) will not be deemed to apply to (i)
any person who contacts any of the parties on his or her own initiative
and without any direct or indirect solicitation by any of the parties
or their Representatives or (ii) a general solicitation to the public).
10.10 Assignment of Rights to RTI Opco. Effective as of the Closing,
except to the extent otherwise provided in the Transaction Documents or the
Sources and Uses, (i) the BV Parties will be deemed to have assigned or
otherwise transferred to RTI Opco any rights to indemnification, reimbursement
of expenses or other similar rights owned by any of the BV Parties on the date
hereof relating to the acquisition of their respective interests in BarTech, RES
Holding and their Subsidiaries, and (ii) except with respect to the USS/Kobe
Tubular Business, USX and Kobe will be deemed to have assigned or otherwise
transferred to RTI Opco any rights to indemnification, reimbursement of expenses
or other similar rights owned by USX or Kobe on the date hereof relating to the
acquisition of their respective interests in USX Holdings, Kobe Holdings,
USS/Kobe and its Subsidiaries.
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SECTION 11
EMPLOYMENT COVENANTS
11.1 USS/Kobe Employee Benefits and Pension Plans.
(a) Offer of Employment. The parties hereto intend that there
will be continuity of employment for all employees of the USS/Kobe
Tubular Business following the Closing. In connection with the Tubular
Spinoff and with such employment commencing on the Closing Date, the
USX/Kobe Parties will cause to be transferred to NewTube the employment
of (i) all nonunion employees, including those on vacation, leave of
absence, disability or layoff, who were employed by the USS/Kobe
Tubular Business immediately prior to the Tubular Spinoff (the "Tubular
Non-Union Employees"), and (ii) all employees covered by collective
bargaining agreements, including those on vacation, leave of absence,
disability or layoff, who were employed by the USS/Kobe Tubular
Business immediately prior to the Tubular Spinoff (the "Tubular Union
Employees" and, together with the Tubular Non-Union Employees, the
"Tubular Employees"), and will cause NewTube to assume and be bound by
the terms of the labor agreement subject to the NewTube Labor Agreement
Ratification with respect to such Tubular Union Employees. Schedule
11.1(a) sets forth the name of (i) each Tubular Employee as of the
Closing (and identifies each such person as a Tubular Employee) and
(ii) each of the other employees of USS/Kobe as of the Closing (and
identifies each such person as a RTI employee or a "Kobe Tech"
employee). NewTube will be liable for any amounts to which any employee
of the USS/Kobe Tubular Business becomes entitled under any benefit or
severance policy, plan, agreement, arrangement or program which exists
or arises, or may be deemed to exist or arise, under any applicable law
or otherwise, as a result of, or in connection with, the Contemplated
Transactions. Except to the extent otherwise provided in this
Agreement, the parties hereto will use commercially reasonable efforts
to reduce or eliminate any payments or benefits with respect to
employees of USS/Kobe which may exist or arise as a result of, or in
connection with, the Contemplated Transactions.
(b) Tubular Assumed Employee Benefit Liabilities. USX and Kobe
will cause NewTube to assume all of USS/Kobe's medical, dental and life
insurance and other employee benefit liabilities for the Tubular
Employees, including without limitation any workers' compensation,
severance, incentive, employment, change in control or any other
payroll or employee benefit liability for which such employees are
eligible through USS/Kobe's plans or pursuant to a collective
bargaining agreement with USS/Kobe or its Affiliates, whether or not
such amounts are accrued as of the consummation of the Tubular Spinoff,
provided that the assumption of liabilities in respect of the USS/Kobe
Pension Plans is subject to the transfer of assets to the NewTube
Spinoff Plans in accordance with in Section 11.1(d) hereof. On or prior
to the consummation of the Tubular Spinoff, NewTube will establish
employee welfare benefit plans which provide
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substantially similar benefits as the USS/Kobe welfare benefit plans
covering insurance programs for the benefit of the Tubular Employees
participating in the USS/Kobe insurance plans. NewTube will be
responsible to the Tubular Employees for (i) any required continuation
of coverage notification under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and Sections 601 through 608 of
ERISA ("COBRA"), and (ii) issuing any required Certificates of
Creditable Coverage under the Health Insurance Portability and
Accountability Act of 1996, as amended.
(c) Retained Employee Benefit Liabilities. RTI Opco will, as a
matter of law in connection with the USX Holdings/Kobe Holdings-RTI
Opco Merger, become responsible for all of USS/Kobe's medical, dental
and life insurance and other employee benefit liabilities for all
active employees who are not Tubular Employees and for all former or
retired participants eligible under its current plans including without
limitation any workers' compensation, severance, incentive, employment
or any other payroll or employee benefit liability for which such
employees and participants are eligible through USS/Kobe plans or
pursuant to a collective bargaining agreement with USS/Kobe. RTI Opco
will also be responsible for the reimbursement of retiree medical
payments to USX for pre-1989 Lorain Works' retirees and their
dependents and, regardless of the provisions of any pension plans
maintained by RTI Opco or its Affiliates, RTI Opco shall assume the
liability for, and shall perform the obligations of, USS/Kobe described
under Section 10.10 of the USS/Kobe Formation Agreement (as if Section
10.10 of such USS/Kobe Formation Agreement was incorporated herein in
its entirety) with respect to, the pensions payable to any Affected
Employee (as defined below) prior to such employee's 62nd birthday;
provided, that the parties recognize and agree that the election by any
employee to retire under the 30-Year Sole Option at such employee's own
discretion and without any inducements offered by RTI Opco or any of
its Affiliates will not be subject to such Section 10.10; provided,
further, that NewTube will be solely responsible for such obligations
and liabilities with respect to, and in no event will RTI Opco or any
of its Affiliates have any such obligations or liabilities with respect
to, any Tubular Employee following the Tubular Spinoff. Any disputes
between the parties with regard to whether a person has received any
inducements to retire will be subject to arbitration on terms mutually
acceptable to the parties. For purposes of this 11.1(c), the term
"Affected Employee" shall mean an employee of RTI Opco or its
Affiliates who formerly was a USS/Kobe employee and who (i) retires
under Rule-of-65 or 70/80 Pensions, or (ii) agrees to accept an early
retirement buyout package, or (iii) otherwise receives enhanced
retirement benefits including, but not limited to, pensions, medical
benefits, life insurance or severance payments, as an inducement to
retire early. USX will continue to administer claims and make payments
under the USX program of insurance benefits for pre-1989 Lorain Works'
retirees and their beneficiaries, as required under the USS/Kobe
Formation Agreement and Section 11.1(h).
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(d) Plan Asset Transfers. (i) Employees of the USS/Kobe
Tubular Business currently participate solely in the following defined
benefit pension plans: The USS/Kobe Steel Company Union Eligible
Pension Plan and The USS/Kobe Steel Company Salaried Employees Pension
Plan (together, the "USS/Kobe Pension Plans"). As of the Tubular
Spinoff, Tubular Employees will cease to accrue service credit or
benefits under the USS/Kobe Pension Plans. As soon as practicable
following the date that the Tubular Spinoff occurs, NewTube will (A)
establish a defined benefit plan or plans, or (B) with USX's consent,
utilize an existing USX pension plan or plans (the "NewTube Spinoff
Plans") for the benefit of the Tubular Employees participating in the
USS/Kobe Pension Plans. As soon as practicable following the Closing,
RTI Opco will cause Watson Wyatt & Company (the "Current Actuary") to
calculate the Accrued Liability (as defined in clause (iii) below) as
of the Closing Date (the "Valuation Date") of all participants in each
of the USS/Kobe Pension Plans and then to compare, on a plan by plan
basis, the Accrued Liability of all the participants in each USS/Kobe
Pension Plan to the fair market value of the assets in the respective
USS/Kobe Pension Plans as of the Valuation Date. If the Accrued
Liability as of the Valuation Date of all participants in a USS/Kobe
Pension Plan is less than the fair market value of the assets as of the
Valuation Date in such USS/Kobe Pension Plan, then RTI Opco will cause
assets (determined as of the Valuation Date) to be transferred from
such USS/Kobe Pension Plan to a trust or trusts established by NewTube
or USX to hold assets of the corresponding NewTube Spinoff Plan equal
to the product of (x) such fair market value of the assets in such
USS/Kobe Pension Plan multiplied by (y) a fraction the numerator of
which is the Accrued Liability of Tubular Employees under such USS/Kobe
Pension Plan as of the Valuation Date and the denominator of which is
the Accrued Liability of all participants in such USS/Kobe Pension Plan
as of the Valuation Date (such product, the "Proportionate Accrued
Liability Amount"). If the Accrued Liability as of the Valuation Date
of all participants in a USS/Kobe Pension Plan is equal to or greater
than the fair market value as of the Valuation Date of the assets in
such USS/Kobe Pension Plan, then the Current Actuary will determine the
amount of assets allocable to the Accrued Liabilities attributable to
Tubular Employees participating in that plan based on Section 4044 of
ERISA (the "Section 4044 Amount"), and RTI Opco will cause assets equal
in value to the Section 4044 Amount applicable to Tubular Employees
under such USS/Kobe Pension Plan to be transferred from such USS/Kobe
Pension Plan to a trust or trusts established by NewTube or USX to hold
assets of the corresponding NewTube Spinoff Plan. Contingent upon the
transfer of the Transfer Amount (as defined below) to each NewTube
Spinoff Plan, (X) NewTube will assume all liabilities and obligations
of USS/Kobe, RTI Opco and their Affiliates and (Y) such NewTube Spinoff
Plan will assume all liabilities and obligations of the corresponding
USS/Kobe Pension Plan, solely with respect to Tubular Employees under
such USS/Kobe Pension Plan from which that transfer was made and will
become with respect to such Tubular Employees responsible for all acts,
omissions and transactions under or in connection with such USS/Kobe
Pension Plan, whether arising before or after the Closing, other than
to the extent
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resulting from acts or omissions of RTI Opco or its Affiliates after
the Closing. With respect to each New Tube Spinoff Plan, RTI Opco will
continue to administer benefit claims for such Tubular Employees
commencing on the Closing Date until the first of the month following
the Transfer Date.
(ii) All transfers to the NewTube Spinoff Plans pursuant to
paragraph (d)(i) above will be made as soon as practicable after the
Closing Date and in accordance with the provisions of this paragraph
(d)(ii), and no such transfer will be made with respect to a USS/Kobe
Pension Plan until such date as (A) the amount to be transferred has
been finally determined in accordance with Section 11.1(d)(iii), (B)
RTI Opco has been provided evidence reasonably satisfactory to it that
NewTube or USX has established a trust (or trusts) to hold the assets
of the corresponding NewTube Spinoff Plan and (C) RTI Opco has been
provided with (X) an opinion of counsel, which opinion and counsel are
reasonably satisfactory to RTI Opco, to the effect that the terms of
the corresponding NewTube Spinoff Plan satisfy the requirements for
qualification under Sections 401(a) and 411(d)(6) of the IRC or (Y)
other evidence reasonably satisfactory to RTI Opco that the NewTube
Spinoff Plans are qualified under Section 401(a) of the IRC, and that
the trusts holding assets of the NewTube Spinoff Plans satisfy the
requirements of Section 501(a) of the IRC (the actual date of transfer,
the "Transfer Date"). All such transfers will be made in cash and kind,
to the extent practicable in the same proportion as exists under the
corresponding USS/Kobe Pension Plan. On the Transfer Date, RTI Opco
will cause each trust relating to a USS/Kobe Pension Plan to make a
transfer of assets (the "DB Transfer Amount"), equal to the following
amount with respect to the corresponding NewTube Spinoff Plan:
The Proportionate Accrued Liability Amount or the 4044 Amount,
whichever is applicable, minus benefit payments to Tubular Employees
during the period from the Valuation Date to the Transfer Date,
adjusted for Earnings. Earnings will be calculated from the Valuation
Date until the Transfer Date on the amount equal to the DB Transfer
Amount (minus benefit payments to Tubular Employees) using the rate
paid on a 90-day Treasury Bill on the auction date coincident with or
immediately preceding the Closing. Unless the parties agree otherwise,
all transfers will occur on the last business day of a month by 11 A.M.
Eastern Standard Time. Notwithstanding anything contained herein to the
contrary, the transfers contemplated by this paragraph (d)(ii) will be
determined in accordance with Section 414(1) of the IRC and Treasury
Regulation 1.414(1)- 1. The amounts to be transferred pursuant to this
paragraph (d)(ii) will be reduced to the extent necessary to satisfy
Section 414(1) of the IRC, and any regulations promulgated thereunder,
ERISA Section 4044, and any regulations promulgated thereunder.
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(iii) For purposes of this Section 11.1, the term "Accrued
Liability" will mean the present value of the accrued benefit of the
applicable plan participant, determined on a termination basis using
the interest factors specified by the PBGC for an immediate or deferred
annuity as appropriate for such plan participant and the other methods
and assumptions specified in the regulations of the PBGC for the
valuation of accrued benefits upon plan termination, including, but not
limited to, expected retirement ages and expense load assumptions
published by the PBGC, and the 1983 Group Annuity Mortality Table. The
interest factors will be those in effect on the Valuation Date. The
Accrued Liability and Section 4044 Amount will be initially determined
by the Current Actuary, subject to review by the actuary selected by
RTI Opco. If the actuary selected by RTI Opco does not agree with the
determinations of the Current Actuary, the dispute resolution
provisions in this paragraph will govern. The Current Actuary, NewTube
and RTI Opco will each cause to be provided to any actuary designated
by NewTube or RTI Opco (with copies provided to USX's actuary) all
information in its possession or under its control that is reasonably
necessary to review the determination and calculation of the Accrued
Liability, the Section 4044 Amount and any other determination or
calculation, in all respects, and to verify that such determinations
and calculations have been performed in a manner consistent with the
terms of this Agreement. If there are one or more good faith disputes
between the Current Actuary and RTI Opco's actuary as to any actuarial
or other determination or calculation which gives rise to a disputed
amount or amounts not in excess of $50,000 in the aggregate, such
dispute(s) will be resolved by dividing the disputed amount(s) equally.
If such disputed amount or amounts in the aggregate exceed $50,000 and
the Current Actuary and RTI Opco's actuary are not able to resolve a
sufficient number of such dispute(s) to bring the remaining disputed
items to below $50,000 in the aggregate after using their reasonable
best efforts to do so within 30 days, they will select and appoint a
third actuary, who has no professional relationship with either of the
parties hereto or either the Current Actuary or RTI Opco's actuary, to
resolve such dispute(s). The decision of such third party actuary will
be rendered within 30 days and will be conclusive as to any dispute for
which it was appointed. The cost of such third party actuary will be
divided equally between RTI Opco and NewTube. Each party will be
responsible for the cost of its own actuary.
(iv) As soon as practicable after the Tubular Spinoff, NewTube
will take all action necessary to qualify each NewTube Spinoff Plan
under the applicable provisions of the IRC. As soon as practicable
after the Closing Date, to the extent not filed prior thereto, RTI Opco
and NewTube will file Form 5310-A with the IRS with respect to the
proposed transfer of assets described in this Section 11.1(d) and will
make all plan amendments necessary to effectuate such provision.
(e) VEBA. As soon as practicable following the Closing Date,
NewTube will establish a VEBA or, with USX's consent, utilize an
existing USX VEBA for the benefit of Tubular Employees (the "NewTube
VEBA"). As soon as practicable following
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formation of the NewTube VEBA, RTI Opco will cause the trustee of
USS/Kobe Steel Company Union Retiree Trust (the "USS/Kobe VEBA") to
transfer to the NewTube VEBA assets, in cash and kind, to the extent
practicable in the same proportion as exists under the Plan, equal in
value to the product of (i) the value of the assets of the USS/Kobe
VEBA on the Closing Date and (ii) a fraction, calculated as of the
Closing Date, the numerator of which is the retiree medical and retiree
life accumulated post retirement benefit obligations ("APBO") for the
Tubular Union Employees and the denominator of which is the retiree
medical and retiree life APBO for all USS/Kobe employees and retirees
identified as USWA members (including the Tubular Union Employees).
(f) Defined Contribution Plan Asset Transfers. (i) Employees
of the USS/Kobe Tubular Business currently participate solely in the
following defined contribution pension plans: The USS/Kobe Steel
Company Savings Fund Plan For Salaried Employees and the USS/Kobe Steel
Company and USWA Savings Program 401(k) Plan (together, the "USS/Kobe
Savings Plans"). As of the Tubular Spinoff, Tubular Employees will
cease to be eligible to actively participate in the USS/Kobe Savings
Plans. As soon as practicable following the Tubular Spinoff, NewTube
will establish a defined contribution plan or plans (the "NewTube
Spinoff Savings Plans") covering the Tubular Employees. In accordance
with paragraph (ii) below, RTI Opco will cause to be transferred from
each USS/Kobe Savings Plan to the trust established by NewTube to hold
assets of the corresponding NewTube Spinoff Savings Plan assets equal
to the Aggregate Account Balances (as defined in paragraph (iii) below)
of the Tubular Employees under the applicable USS/Kobe Savings Plans.
Contingent upon the transfer of the DC Transfer Amount (as defined in
paragraph (ii) below) to each NewTube Spinoff Savings Plan, NewTube and
the NewTube Spinoff Savings Plans will assume all liabilities and
obligations of USS/Kobe, RTI Opco and their Affiliates and the USS/Kobe
Savings Plans, respectively, with respect to Tubular Employees under
the USS/Kobe Savings Plan from which that transfer was made and will
become with respect to such Tubular Employees responsible for all acts,
omissions and transactions under or in connection with such USS/Kobe
Savings Plan, whether arising before or after the Closing, other than
to the extent resulting from acts or omissions of RTI Opco or its
Affiliates after the Closing.
(ii) All transfers to the NewTube Spinoff Savings Plans
pursuant to paragraph (f)(i) above will be made in accordance with the
provisions of this paragraph (f)(ii), and no such transfer will be made
with respect to a USS/Kobe Savings Plan until such date as RTI Opco has
been provided evidence reasonably satisfactory to it (x) that NewTube
has established a trust (or trusts) to hold the assets of the
corresponding NewTube Spinoff Savings Plans and (y) RTI Opco has been
provided with either (A) an opinion of counsel, which opinion and
counsel are reasonably satisfactory to RTI Opco, to the effect that the
terms of the corresponding New Tube Spinoff Savings Plan satisfy the
requirements for
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qualification under Sections 401(a) and 411(d)(6) of the IRC or (B)
other evidence reasonably satisfactory to RTI Opco that the New Tube
Spinoff Savings Plans are qualified under Section 401(a) of the IRC,
and that the trusts holding assets of the NewTube Spinoff Savings Plans
satisfy the requirements of Section 501(a) of the IRC (the actual date
of transfer, the "Transfer Date"). All such transfers will be made in
cash and in kind, to the extent practicable in the same proportion as
exists under the corresponding USS/Kobe Savings Plan, including the
promissory note and related loan documentation for participant loans
outstanding on the Closing Date. On the Transfer Date, RTI Opco will
cause to be transferred from each USS/Kobe Savings Plan to the trust
established by NewTube to hold assets of the corresponding NewTube
Spinoff Savings Plan assets equal to the sum of (x) the excess of (A)
the Aggregate Account Balances determined as of the last day of the
calendar month ending immediately prior to the Transfer Date (the
"Preceding Month End") over (B) any benefit payments made to Tubular
Employees during the period from the Preceding Month End to the
Transfer Date and (y) interest on such excess amount from the Preceding
Month End to the Transfer Date using the rate paid on a 30-day Treasury
Bill on the auction date coincident with or immediately preceding the
Transfer Date (the "DC Transfer Amount").
(iii) For purposes of this Section 11.1, the term "Aggregate
Account Balances" will mean the sum of the individual account balances
of the Transferred Employees under the applicable USS/Kobe Savings
Plan. The Aggregate Account Balances will be determined by the current
record keeper for the USS/Kobe Savings Plans (the "Current Record
Keeper"). RTI Opco will provide any record keeper designated by NewTube
with all information reasonably necessary to review the determination
and calculation of the Aggregate Account Balances in all material
respects and to verify that such determinations and calculations have
been performed in a manner consistent with the terms of this Agreement.
(g) Nothing in this Section 11 will be construed as creating
an express or an implied contract of employment or a guarantee of
employment with BarTech, the Republic Parties, the USX/Kobe Parties,
RTI Opco, NewTube or any of their respective Affiliates for any period
of time after the Closing Date, nor will anything in this Section 11
confer upon any employee of any of the foregoing Persons any right to
continue in the employ or in the business of any of the foregoing
Persons after the Closing Date, nor (except as expressly provided in
this Section 11) interfere with or restrict in any way the rights of
any of the foregoing Parties, which are hereby expressly reserved, to
terminate the employment of any employee at any time for any reason
whatsoever, or in accordance with the terms of any applicable
collective bargaining agreement or other labor agreement, as the case
may be.
(h) With respect to current and former employees of USS/Kobe
who are not Tubular Employees and for whom RTI Opco is obligated to
provide employee benefits
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under this Agreement, USX will continue to discharge its obligations
and liabilities relating to employee benefits, and RTI Opco will assume
the employee benefit obligations of USS/Kobe, under the USS/Kobe
Formation Agreement as if such Agreement were an agreement between USX
and RTI Opco (and without regard to whether the USS/Kobe Formation
Agreement may have terminated as a result of the consummation of the
Contemplated Transactions).
11.2 Transfer of BarTech Employees. The parties hereto intend that
there will be continuity of employment for all employees of BarTech following
the Closing. In connection with the BarTech Asset Contribution and commencing on
the Closing Date, BarTech will cause to be transferred to RTI Opco the
employment of all employees of BarTech, including those on vacation, leave of
absence, disability or layoff, who were employed by BarTech immediately prior to
the BarTech Asset Contribution and will cause RTI Opco to assume and be bound by
the terms of any collective bargaining agreement that covers such employees.
11.3 Transfer Rights of Certain Employees.
(a) In General. The parties hereto recognize that in
accordance with the provisions of the labor agreement subject to the
NewTube Labor Agreement Ratification and the labor agreement subject to
the RTI Labor Agreement Ratification, certain employees of RTI Opco or
its Subsidiaries and NewTube or its Subsidiaries (the "Covered
Employees") have certain rights to transfer employment between
specified sites of NewTube or its Subsidiaries and RTI Opco or its
Subsidiaries (the "Transfer Sites"), and RTI Opco and NewTube are
required to cause all service of such Covered Employees completed at
any Transfer Site to be recognized for purposes of eligibility and
vesting under their respective Employee Benefit Plans.
(b) Retiree Welfare Benefits. A Covered Employee who, at the
time of his or her last termination of employment from RTI Opco,
NewTube and their respective Subsidiaries, is eligible for retiree
medical and life insurance benefits under the terms of an applicable
Employee Benefit Plan maintained by any such Person, shall be provided
retiree medical and life insurance benefits solely under the Employee
Benefit Plan maintained by the last such Person by whom such Covered
Employee was employed (the "Last Employer"). NewTube and RTI Opco shall
share the cost of providing such retiree medical and life insurance
benefits to such Covered Employees as follows. If the Last Employer is
NewTube or any of its Subsidiaries, RTI Opco shall reimburse NewTube
for RTI Opco's Applicable Portion (as defined below) of such costs and
if the Last Employer is RTI Opco or any of its Subsidiaries, NewTube
shall reimburse RTI Opco for NewTube's Applicable Portion of such
costs, in either such case, on a calendar quarterly basis, in arrears,
promptly upon receipt of reasonably acceptable evidence of such costs
for the applicable calendar quarter. The parties will, in good faith,
institute a mutually agreeable mechanism to determine how such retiree
medical and life insurance costs will be calculated for any such
Covered Employee.
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The term "Applicable Portion" shall mean, with respect to a
Covered Employee, a percentage obtained by dividing (i) such Covered
Employee's years of service and fractions thereof required to be taken
into account by the applicable plan or collective bargaining agreement
for purposes of benefit accrual with NewTube and its Subsidiaries
(including service with USS/Kobe in the Tubular Business completed
prior to the date of the Tubular Spinoff), or RTI Opco and its
Subsidiaries (including service with USS/Kobe in the Bar business
completed prior to the date of the Tubular Spinoff), as the case may
be, by (ii) such Covered Employee's aggregate years of service and
fractions thereof required to be taken into account by the applicable
plan or collective bargaining agreement for purposes of benefit accrual
with RTI Opco, NewTube and their respective Affiliates and predecessors
including without limitation USS/Kobe.
(c) Defined Benefit Plans. RTI Opco and NewTube will each
cause to be recognized for purposes of eligibility and vesting under
their respective defined benefit plans in which a Covered Employee
participates all years of service and fractions thereof completed by
such Covered Employee at any Transfer Site. RTI Opco shall pay to such
Covered Employee the pension payable under any defined benefit plans
maintained by RTI Opco in accordance with the terms of such plans and
NewTube shall pay to such Covered Employee the pension payable under
any defined benefit plans maintained by NewTube and its Affiliates in
accordance with the terms of such plans.
SECTION 12
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
EACH PARTY TO CLOSE
The obligation of each of BarTech, the Republic Parties, the
BV Parties and the USX/Kobe Parties to consummate the Contemplated Transactions
is subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived in whole or in part by BarTech,
RES Holding or USS/Kobe solely with respect to the obligation of BarTech, the
Republic Parties and the BV Parties or the USX/Kobe Parties, respectively, to
consummate the Contemplated Transactions):
12.1 No Prohibition; No Opposition. (i) No Legal Requirement or Order
enjoining or prohibiting consummation of the Contemplated Transactions will have
been promulgated or entered and remain in effect, and (ii) no Proceeding will be
pending or threatened before or by any Governmental Body seeking damages or
other relief in connection with the execution and delivery of this Agreement or
the consummation of the Contemplated Transactions which would, individually or
in the aggregate, have a BarTech, RES Holding, USS/Kobe or RTI Material Adverse
Effect.
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12.2 Consents. Each material Consent required to be obtained to
consummate the Contemplated Transactions (including without limitation the
Material Consents) will have been obtained and will remain in full force and
effect. Without limiting the generality of the foregoing, all filings pursuant
to the HSR Act required to be made in connection with the Contemplated
Transactions will have been made and the required waiting periods under the HSR
Act will have expired or been terminated.
12.3 Contemplated Transactions. Each of the Contemplated Transactions
under Section 3 will have been consummated or will be consummated concurrently
with the Closing.
12.4 RTI Financing. All conditions to the closing of the RTI Credit
Facility and RTI High Yield Offering will have been satisfied (other than any
such conditions which, by their nature, cannot be satisfied until or after the
Closing), and (i) the closing of the RTI Credit Facility will occur
simultaneously with the Closing and (ii) the closing of the RTI High Yield
Offering will occur simultaneously with the Closing or, in the event the RTI
High Yield Offering has previously closed on an escrow basis, the proceeds in
escrow will be released to RTI Opco simultaneously with the Closing (subject in
any event to the specific sequencing of events as set forth in Section 4
hereof).
12.5 Labor Agreements and Consents. Each of the NewTube Labor Agreement
Ratification and RTI Labor Agreement Ratification will have been obtained and
will remain in full force and effect.
12.6 RTI PBGC Agreement. The RTI PBGC Agreement will have been reached
with the PBGC and will remain in full force and effect.
SECTION 13
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE USX/KOBE PARTIES TO CLOSE
The obligation of each of the USX/Kobe Parties to consummate
the Contemplated Transactions is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived in
whole or in part by USS/Kobe):
13.1 Accuracy of Representations. Each of the representations and
warranties of BarTech and the Republic Parties in this Agreement and the other
Transaction Documents will have been accurate in all respects as of the date of
this Agreement and will be accurate in all respects as of the Closing Date as if
made on the Closing Date, except to the extent that any such representation or
warranty is made as of a specified date, in which case such representation and
warranty will be accurate in all respects as of such date (in each case
disregarding for such
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purpose any qualifications set forth therein with respect to "materiality" or
"Material Adverse Effect"), except for such failures to be accurate which,
individually or in the aggregate, would not have an RTI Material Adverse Effect.
13.2 Performance of Covenants.
(a) All of the covenants and obligations that each of BarTech,
the Republic Parties and the BV Parties is required to perform or to
comply with pursuant to this Agreement at or prior to the Closing will
have been duly performed and complied with in all material respects.
(b) Each agreement required to be entered into by BarTech or
any of its Subsidiaries (including without limitation RTI Holdings and
RTI Opco), RES Holding or any of its Subsidiaries or the BV Parties
pursuant to this Agreement or any of the other Transaction Documents
will have been duly executed and delivered and will remain in full
force and effect.
13.3 Equity Contributions. The closing of each of the Blackstone Equity
Contribution, the Veritas Equity Contribution, the First Energy Equity
Contribution, the Sumitomo Equity Contribution, the Triumph Equity Contribution,
the First Dominion Equity Contribution and the TCW Equity Contribution will
occur simultaneously with the Closing.
SECTION 14
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BARTECH TO CLOSE
The obligation of BarTech to consummate the Contemplated
Transactions is subject to the satisfaction, at or prior to the Closing, of each
of the following conditions (any of which may be waived in whole or in part by
BarTech):
14.1 Accuracy of Representations. Each of the representations and
warranties of each of USX RTI Holdings and Kobe RTI Holdings in this Agreement
and the other Transaction Documents will have been accurate in all respects as
of the date of this Agreement and will be accurate in all respects as of the
Closing Date as if made on the Closing Date, except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation and warranty will be accurate in all respects as of such date (in
each case disregarding for such purpose any qualifications set forth therein
with respect to "materiality" or "Material Adverse Effect"), except for such
failures to be accurate which, individually or in the aggregate, would not have
a RTI Material Adverse Effect.
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14.2 Performance of Covenants.
(a) All of the covenants and obligations that each of the
USX/Kobe Parties is required to perform or to comply with pursuant to
this Agreement at or prior to the Closing will have been duly performed
and complied with in all material respects.
(b) Each agreement required to be entered into by USX or any
of its Subsidiaries, Kobe or any of its Subsidiaries or USS/Kobe
pursuant to this Agreement or any of the other Transaction Documents
will have been duly executed and delivered and will remain in full
force and effect.
14.3 Tubular Spinoff. The Tubular Spinoff will have been consummated.
14.4 Equity Contributions. The closing of each of the USX Equity
Contribution, the Kobe Equity Contribution, the First Energy Equity
Contribution, the Sumitomo Equity Contribution, the Triumph Equity Contribution,
the First Dominion Equity Contribution and the TCW Equity Contribution will
occur simultaneously with the Closing.
SECTION 15
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE REPUBLIC PARTIES AND THE BV PARTIES TO CLOSE
The obligation of the Republic Parties and the BV Parties to
consummate the Contemplated Transactions is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived in whole or in part by RES Holding):
15.1 Accuracy of Representations. Each of the representations and
warranties of each of USX RTI Holdings and Kobe RTI Holdings in this Agreement
and the other Transaction Documents will have been accurate in all respects as
of the date of this Agreement and will be accurate in all respects as of the
Closing Date as if made on the Closing Date, except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation and warranty will be accurate in all respects as of such date (in
each case disregarding for such purpose any qualifications set forth therein
with respect to "materiality" or "Material Adverse Effect"), except for such
failures to be accurate which, individually or in the aggregate, would not have
a RTI Material Adverse Effect.
15.2 Performance of Covenants.
(a) All of the covenants and obligations that each of the
USX/Kobe Parties is required to perform or to comply with pursuant to
this Agreement at or prior to the Closing will have been duly performed
and complied with in all material respects.
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(b) Each agreement required to be entered into by USX or any
of its Subsidiaries, Kobe or any of its Subsidiaries or USS/Kobe
pursuant to this Agreement or any of the other Transaction Documents
will have been duly executed and delivered and will remain in full
force and effect.
15.3 Tubular Spinoff. The Tubular Spinoff will have been consummated.
15.4 Equity Contributions. The closing of each of the USX Equity
Contribution, the Kobe Equity Contribution, the First Energy Equity
Contribution, the Sumitomo Equity Contribution, the Triumph Equity Contribution,
the First Dominion Equity Contribution and the TCW Equity Contribution will
occur simultaneously with the Closing.
SECTION 16
[intentionally omitted]
SECTION 17
TERMINATION
17.1 Termination Events. This Agreement may, by notice given prior to
or at the Closing, be terminated:
(a)(i) by USX RTI Holdings or Kobe RTI Holdings if
satisfaction of any condition in Sections 12 or 13 is or becomes
impossible (other than through the failure of any USX/Kobe Party to
comply with its obligations under this Agreement) and USS/Kobe has not
waived such condition, (ii) by BarTech if satisfaction of any condition
in Sections 12 or 14 is or becomes impossible (other than through the
failure of BarTech or any Republic Party to comply with its obligations
under this Agreement) and BarTech has not waived such condition or
(iii) by RES Holding if satisfaction of any condition in Sections 12 or
15 is or becomes impossible (other than through the failure of BarTech
or any Republic Party to comply with its obligations under this
Agreement) and RES Holding has not waived such condition;
(b) by mutual consent of USS/Kobe, BarTech and RES Holding; or
(c) by USS/Kobe if the Closing has not occurred on or before
January 31, 2000, or such later date to which USS/Kobe may agree (other
than through the failure of any USX/Kobe Party to comply with its
obligations under this Agreement), (ii) by BarTech if the Closing has
not occurred on or before January 31, 2000, or such later date
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to which BarTech may agree (other than through the failure of BarTech
or any Republic Party to comply with its obligations under this
Agreement) or (iii) by RES Holding if the Closing has not occurred on
or before January 31, 2000, or such later date to which RES Holding may
agree (other than through the failure of BarTech or any Republic Party
to comply with its obligations under this Agreement).
17.2 Termination Events. This Each of USS/Kobe's, BarTech's and
Republic's right of termination under Section 17.1 is in addition to any other
rights it and its related parties may have under this Agreement or otherwise,
and the exercise of a right of termination will not be an election of remedies.
If this Agreement is terminated pursuant to Section 17.1, all further
obligations of the parties under this Agreement will terminate, except that this
Section 17 and Sections 10.6 (confidentiality) and 19.1 (expenses) will survive;
provided, however, that if this Agreement is terminated because of the willful
breach of this Agreement by a party hereto, the other parties' rights to pursue
all legal remedies will survive such termination unimpaired.
SECTION 18
INDEMNIFICATION; REMEDIES
18.1 Representations; Survival. Except for the express representations
and warranties contained herein and in any certificate delivered pursuant
hereto, none of the parties to this Agreement are making any representation or
warranty whatsoever in connection with the Contemplated Transactions, express or
implied, including but not limited to any implied warranty or representation as
to condition, merchantability or suitability, as to any of their properties or
assets. It is understood that, except as otherwise specified in this Agreement
(including the schedules and exhibits hereto) and except to the extent included
within or incorporated into the Disclosure Letter, any cost estimates,
projections or other predictions, any data, any financial information or any
memoranda or offering materials or presentations provided or addressed to any
party to this Agreement or to any other Person are not and will not be deemed to
be or to include representations or warranties of any party to this Agreement.
All representations and warranties in this Agreement and any certificate
delivered pursuant hereto will terminate (i) twenty four months after the
Closing, in the case of those representations and warranties contained in
Sections 6.8, 6.14, 7.8, 7.14, 8.8 and 8.14 (and related statements in
certificates delivered pursuant hereto), and (ii) twelve months after the
Closing, in the case of all other representations and warranties contained in
this Agreement (and related statements in certificates delivered pursuant
hereto), provided in each case that such termination will not affect any written
claim as to which notification has been provided to the other parties prior to
the date of such termination describing in reasonable detail an alleged breach
of a representation and warranty on the basis of identified facts and
circumstances. All covenants and other obligations contained in this Agreement
and the other Transaction Documents not fully performed prior to
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the Closing will survive the Closing indefinitely until fully performed (unless
an earlier termination date is expressly provided in such covenant).
18.2 Indemnification With Respect to Breaches by the USX/Kobe Parties.
Notwithstanding any investigation by BarTech, its Representatives, the Republic
Parties or their Representatives, from and after the Closing, USX RTI Holdings
and Kobe RTI Holdings hereby agree to indemnify, defend and hold harmless (as
provided herein) BarTech for any loss, liability, claim, damage, expense
(including costs of investigation and defense, reasonable attorneys' fees and
any expenses relating to the valuation, issuance or cancellation of equity in
connection with indemnification obligations) or diminution of value, whether or
not involving a third-party claim (collectively, "Damages") suffered by BarTech,
its Representatives, the Republic Parties' Representatives and their respective
equity owners, controlling persons and Affiliates (with USX RTI Holdings
responsible for all Damages relating to breaches of its individual covenants and
representations and warranties contained in Section 6.2 regarding itself and its
Affiliates (other than USS/Kobe and its Subsidiaries) and for one half of all
other Damages indemnifiable pursuant to this Section 18.2, and Kobe RTI Holdings
responsible for all Damages relating to breaches of its individual covenants and
representations and warranties contained in Section 6.2 regarding itself and its
Affiliates (other than USS/Kobe and its Subsidiaries) and for one half of all
other Damages indemnifiable pursuant to this Section 18.2) arising, directly or
indirectly, from or in connection with:
(a) any breach of any representation or warranty made by USX
RTI Holdings or Kobe RTI Holdings in this Agreement (or any allegation
by a third party that, if true, would constitute such a breach);
provided, however, that neither USX RTI Holdings nor Kobe RTI Holdings
will be obligated to indemnify BarTech under this Section 18.2(a) with
respect to any breach of a representation or warranty to the extent
there was BarTech Knowledge or Republic Parties' Knowledge of such
breach prior to the Closing; and provided, further, that no
indemnification will be made under this Section 18.2(a) to the extent
indemnification in respect of the same Damages is payable under Section
18.6 (and in such event, indemnification in respect of such Damages
will be made under Section 18.6); or
(b) any breach by any USX/Kobe Party of any covenant or
obligation of such Person in this Agreement.
18.3 Indemnification With Respect to Breaches by the BV Parties,
BarTech and the Republic Parties. Notwithstanding any investigation by the
USX/Kobe Parties or their Representatives, from and after the Closing, BarTech
hereby agrees to indemnify, defend and hold harmless (as provided herein) USX
RTI Holdings and Kobe RTI Holdings for any Damages suffered by USX RTI Holdings,
Kobe RTI Holdings and their respective Representatives, equity owners,
controlling persons and Affiliates arising, directly or indirectly, from or in
connection with:
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(a) any breach of any representation or warranty made by
BarTech or any Republic Party in this Agreement (or any allegation by a
third party that, if true, would constitute such a breach); provided,
however, that BarTech will not be obligated to indemnify USX RTI
Holdings or Kobe RTI Holdings under this Section 18.3(a) with respect
to any breach of a representation or warranty to the extent there was
USX/Kobe Parties' Knowledge of such breach prior to the Closing; or
(b) any breach by BarTech, any of the BV Parties or any
Republic Party of any covenant or obligation of such Person in this
Agreement.
18.4 [intentionally omitted]
18.5 Indemnification With Respect to USS/Kobe Tubular Liabilities,
USS/Kobe Bar Liabilities and BarTech and Republic Liabilities.
(a) Notwithstanding any investigation by BarTech, its
Representatives, the Republic Parties or their Representatives, from
and after the Closing, NewTube and, solely to the extent that NewTube
does not meet such obligations in cash, each of USX RTI Holdings (with
respect to one half of any such Damages) and Kobe RTI Holdings (with
respect to one half of any such Damages) (as provided in Section
18.11), hereby agrees to indemnify, defend and hold BarTech and its
Subsidiaries (including without limitation RTI Holdings and RTI Opco)
harmless from any Damages (including without limitation Taxes) to the
extent arising, directly or indirectly, from or in connection with
USS/Kobe Tubular Liabilities.
(b) Notwithstanding any investigation by the USX/Kobe Parties
or their Representatives, from and after the Closing, RTI Opco and,
solely to the extent that RTI Opco does not meet such obligations in
cash, BarTech (as provided in Section 18.11), hereby agrees to
indemnify, defend and hold USX, Kobe and their respective Subsidiaries
(including without limitation NewTube) harmless from any Damages
(including without limitation Taxes) to the extent arising, directly or
indirectly, from or in connection with USS/Kobe Bar Liabilities.
(c) Notwithstanding any investigation by the USX/Kobe Parties,
their Representatives, BarTech, its Representatives, the Republic
Parties or their Representatives, BarTech will cause RTI Opco, from and
after the Closing, to indemnify, defend and hold BarTech and its
Subsidiaries (other than RTI Opco and its Subsidiaries) harmless from,
and to pay to BarTech and its Subsidiaries (other than RTI Opco and its
Subsidiaries) the amount of, any Damages (including without limitation
Taxes) to the extent arising, directly or indirectly, from or in
connection with BarTech and Republic Liabilities.
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18.6 Indemnification with respect to Taxes and Unrelated Liabilities of
USX Holdings, USX RTI Holdings, Kobe Holdings and Kobe RTI Holdings. From and
after the Closing, (a) USX will indemnify, defend and hold harmless BarTech and
its Subsidiaries from, and will pay to BarTech and its Subsidiaries the amount
of, any Damages arising directly or indirectly from or in connection with (i)
any and all Taxes of any Person (other than USX Holdings) by reason of the
liability of USX Holdings pursuant to Treasury Regulation Section 1.1502-6(a)
(or any analogous or similar state, local or foreign law or regulation), as a
transferee or successor, by contract or otherwise, (ii) any Taxes of USX
Holdings arising as a result of the Contemplated Transactions (other than
transfer Taxes, which will be borne by RTI Opco pursuant to Section 19.1) or
(iii) any activities engaged in, assets owned or liabilities incurred by USX
Holdings prior to the Closing other than activities, assets and liabilities
incidental to acting as a general partner of USS/Kobe, and any assets owned
(other than RTI Holdings Units and Common Stock) or liabilities incurred
(including without limitation the indebtedness set forth in Section 6.1(d) of
the Disclosure Letter) by USX RTI Holdings prior to, on or following the Closing
Date, and (b) Kobe will cause Kobe Steel USA Holdings, Inc. to indemnify, defend
and hold harmless BarTech and its Subsidiaries from, and to pay to BarTech and
its Subsidiaries the amount of, any Damages arising directly or indirectly from
or in connection with (i) any and all Taxes of any Person (other than Kobe
Holdings) by reason of the liability of Kobe Holdings pursuant to Treasury
Regulation Section 1.1502-6(a) (or any analogous or similar state, local or
foreign law or regulation), as a transferee or successor, by contract or
otherwise, (ii) any Taxes of Kobe Holdings arising as a result of the
Contemplated Transactions (other than transfer Taxes, which will be borne by RTI
Opco pursuant to Section 19.1) or (iii) any activities engaged in, assets owned
or liabilities incurred by Kobe Holdings prior to the Closing other than
activities, assets and liabilities incidental to acting as a general partner of
USS/Kobe, and any assets owned (other than RTI Holdings Units and Common Stock)
or liabilities incurred (including without limitation the indebtedness set forth
in Section 6.1(d) of the Disclosure Letter) by Kobe RTI Holdings prior to, on or
following the Closing Date.
18.7 Minimum Damage Requirement. USX RTI Holdings will not have
liability under Section 18.2(a) with respect to breaches of the representations
and warranties contained in Section 6.2 unless the aggregate Damages subject to
its indemnification obligations under Section 18.2(a) exceed $5 million, in
which case USX RTI Holdings will only be liable thereunder for Damages in excess
of $5 million. Kobe RTI Holdings will not have liability under Section 18.2(a)
with respect to breaches of the representations and warranties contained in
Section 6.2 unless the aggregate Damages subject to its indemnification
obligations under Section 18.2(a) exceed $5 million, in which case Kobe RTI
Holdings will only be liable thereunder for Damages in excess of $5 million.
Neither USX RTI Holdings nor Kobe RTI Holdings will have liability under Section
18.2(a) with respect to breaches of any representations and warranties other
than those contained in Section 6.2 unless the aggregate Damages subject to
their collective indemnification obligations under Section 18.2(a) exceed $10
million, in which case they will only be liable thereunder for Damages in excess
of $10 million. BarTech will have no liability under Section 18.3(a) unless the
aggregate Damages subject to its indemnification
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obligations under Section 18.3(a) exceed $10 million, in which case BarTech will
only be liable thereunder for Damages in excess of $10 million .
18.8 Procedure for Indemnification - Third Party Claims.
(a) Promptly after receipt by an Indemnified Person of notice
of the commencement of any Proceeding, if such Indemnified Person would
reasonably be expected to be entitled to indemnification under this
Section 18 in connection with such Proceeding (or promptly following
any determination to such effect, if later than the commencement of the
related Proceeding), such Indemnified Person will, if a claim is to be
made against an indemnifying party under such section, give written
notice to the indemnifying party of the commencement of such claim, but
the failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any Indemnified
Person, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the Indemnifying
Person's failure to give such notice.
(b) If notice is given to an indemnifying party pursuant to
Section 18.8(a), the indemnifying party may, if it so elects (unless
(i) the indemnifying party is also a party to such Proceeding and the
Indemnified Person determines in good faith that joint representation
would be inappropriate, or (ii) the indemnifying party fails to provide
reasonable assurance to the Indemnified Person of its financial
capacity to defend such Proceeding and provide indemnification with
respect to such Proceeding), assume the defense of such Proceeding with
counsel reasonably satisfactory to the Indemnified Person and to RTI
Opco, as applicable, and, after written notice from the indemnifying
party to the Indemnified Person and to RTI Opco, as applicable, of its
election to assume the defense of such Proceeding, the indemnifying
party will not, as long as it diligently conducts such defense, be
liable to the Indemnified Person or to RTI Opco, if applicable, under
this Section 18 for any fees of other counsel or any other expenses
with respect to the defense of such Proceeding, in each case
subsequently incurred by the Indemnified Person or RTI Opco, as the
case may be, in connection with the defense of such Proceeding, other
than reasonable costs of investigation. If the indemnifying party
assumes the defense of a Proceeding in accordance with the preceding
sentence, no compromise or settlement of such claims may be effected by
the indemnifying party without the Indemnified Person's and RTI Opco's
consent (which consent will not be unreasonably withheld or delayed)
unless (i) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect
on any other claims that may be made against the Indemnified Person,
and (ii) the sole relief provided is monetary damages that are paid in
full by the indemnifying party. If written notice is given to an
indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within 20 days after the Indemnified
Person's notice is given, give notice to the Indemnified Person and to
RTI Opco, as applicable, of its election to assume the defense of such
Proceeding, the indemnifying party will be bound
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by any determination made in such Proceeding or any compromise or
settlement reasonably effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person or
RTI Opco determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its Affiliates
other than as a result of monetary damages for which (in the case of an
Indemnified Person) it would be entitled to indemnification under this
Agreement, the Indemnified Person or RTI Opco may, by written notice to
the indemnifying party, assume the exclusive right to defend,
compromise, or settle such Proceeding at such Indemnified Person's cost
and expense, but the indemnifying party will not be bound by any
compromise or settlement effected without its consent (which consent
will not be unreasonably withheld or delayed).
18.9 Procedure for Indemnification - Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by written notice to the party from whom indemnification is sought.
18.10 Exclusive Remedy; Specific Performance.
(a) The parties acknowledge and agree that, from and after the
Closing, the indemnification and enforcement rights provided in this
Section 18 will be the sole and exclusive remedy available to the
parties for any claim or cause of action arising out of or in respect
of any breach of this Agreement (but not any of the other Transaction
Documents), other than any claim or cause of action based upon fraud.
(b) The parties acknowledge and agree that, from and after the
Closing, a violation of any of the covenants or agreements contained in
this Agreement which survive the Closing will cause the parties
irreparable injury for which adequate remedy at law is not available.
Accordingly, it is agreed that each party will be entitled to an
injunction, restraining order or other equitable relief to prevent
breaches of such covenants and agreements and to enforce specifically
the terms and provisions thereof in any court of competent
jurisdiction, in addition to any other remedy to which it may be
entitled at law or in equity.
18.11 Payment in RTI Holdings Common Units or RTI Common Stock.
(a) With respect to (i) any Damages subject to indemnification
by (A) USX RTI Holdings and/or Kobe RTI Holdings under Section 18.2, or
(B) NewTube under Section 18.5(a), solely to the extent that NewTube
does not meet such obligations in cash, each of USX and Kobe will
satisfy such indemnification obligations solely (subject to the proviso
contained in Section 18.11(e)) through a reduction in their respective
direct and indirect ownership percentages in RTI Holdings and/or
BarTech, as applicable, or (ii) any Damages subject to indemnification
by (A) BarTech under Section 18.3, or (B) RTI Opco
<PAGE>
91
under Section 18.5(b), solely to the extent that RTI Opco does not meet
such obligations in cash, BarTech will satisfy such indemnification
obligations solely (subject to the proviso contained in Section
18.11(e)) through an increase in the respective ownership percentages
of USX and Kobe in RTI Holdings and/or BarTech, as applicable, in each
case as described in Sections 18.11(b) and 18.11(c) below.
(b) In the event that any indemnification payment described in
Section 18.11(a) is to be made (i) prior to the occurrence of a USX
Exchange Event (as defined in the Equityholders Agreement) (A) by USX
RTI Holdings, USX will satisfy such indemnification obligation solely
through a cancellation of RTI Holdings Common Units held by it and its
Subsidiaries, or (B) to USX RTI Holdings, BarTech will satisfy such
indemnification obligation solely through an issuance to USX RTI
Holdings of additional RTI Holdings Common Units, and/or (ii) prior to
the occurrence of a Kobe Exchange Event (as defined in the
Equityholders Agreement) (A) by Kobe RTI Holdings, Kobe will satisfy
such indemnification obligation solely through a cancellation of RTI
Holdings Common Units held by it and its Subsidiaries, or (B) to Kobe
RTI Holdings, BarTech will satisfy such indemnification obligation
solely through an issuance to Kobe RTI Holdings of additional RTI
Holdings Common Units, in each case in accordance with the following
formula; provided, however, that, in the event calculations are to be
made hereunder with respect to indemnification payments by both USX RTI
Holdings and Kobe RTI Holdings relating to the same indemnifiable
event, all such calculations will be deemed to be made simultaneously
hereunder and each such holder's Old Unit % will be determined as of
prior to any such calculations and New Unit % will be determined as of
following all such calculations:
Held Unit Value - Damages x Old Unit % = New Unit %
-------------------------
Held Unit Value
Where:
Held Unit Value = The fair market value of the RTI Holdings Units
(determined pursuant to Section 18.11(d) below)
held by (i) USX and its Subsidiaries if USX RTI
Holdings is making such indemnification
payment, (ii) Kobe and its Subsidiaries if Kobe
RTI Holdings is making such indemnification
payment or (iii) BarTech and its Subsidiaries
if BarTech is making such indemnification
payment, at the time of such indemnification
payment (i.e., taking into account any
diminution in the value of RTI Holdings Units
resulting from the matter giving rise to the
indemnification claim);
<PAGE>
92
Damages = The Damages to be indemnified by USX RTI
Holdings, Kobe RTI Holdings or BarTech, as
applicable;
Old Unit % = The percentage interest in outstanding RTI
Holdings Units represented by the RTI Holdings
Units held by (i) USX and its Subsidiaries if
USX RTI Holdings is making such indemnification
payment, (ii) Kobe and its Subsidiaries if Kobe
RTI Holdings is making such indemnification
payment or (iii) BarTech and its Subsidiaries
if BarTech is making such indemnification
payment, immediately before giving effect to
such issuance or cancellation of RTI Holdings
Common Units, as applicable; and
New Unit % = The percentage interest in RTI Holdings Units
represented by the RTI Holdings Units held by
(i) USX and its Subsidiaries if USX RTI
Holdings is making such indemnification
payment, (ii) Kobe and its Subsidiaries if Kobe
RTI Holdings is making such indemnification
payment or (iii) BarTech and its Subsidiaries
if BarTech is making such indemnification
payment, immediately after giving effect to
such issuance or cancellation of RTI Holdings
Common Units, as applicable.
(c) In the event that any indemnification payment described in
Section 18.11(a) is to be made (i) following the occurrence of a USX
Exchange Event (as defined in the Equityholders Agreement) (A) by USX
RTI Holdings, USX will satisfy such indemnification obligation solely
through a cancellation of shares of Common Stock held by it and its
Subsidiaries, or (B) to USX RTI Holdings, BarTech will satisfy such
indemnification obligation solely through an issuance to USX RTI
Holdings of additional shares of Common Stock, and/or (ii) prior to the
occurrence of a Kobe Exchange Event (as defined in the Equityholders
Agreement) (A) by Kobe RTI Holdings, Kobe will satisfy such
indemnification obligation solely through a cancellation of shares of
Common Stock held by it and its Subsidiaries, or (B) to Kobe RTI
Holdings, BarTech will satisfy such indemnification obligation solely
through an issuance to Kobe RTI Holdings of additional shares of Common
Stock, in each case in accordance with the following formula; provided,
however, that, in the event calculations are to be made hereunder with
respect to indemnification payments by both USX RTI Holdings and Kobe
RTI Holdings relating to the same indemnifiable event, all such
calculations will be deemed to be made simultaneously hereunder and
each such holder's Old Stock % will be determined as of prior to any
such calculations and New Stock % will be determined as of following
all such calculations:
<PAGE>
93
Held Stock Value - Damages x Old Stock % = New Stock %
--------------------------
Held Stock Value
Where:
Held Stock Value = The fair market value (determined pursuant to
Section 18.11(d) below) of (i) the Common Stock
held by USX and its Subsidiaries if USX RTI
Holdings is making such indemnification
payment, (ii) the Common Stock held by Kobe and
its Subsidiaries if Kobe RTI Holdings is making
such indemnification payment or (iii) all of
the Common Stock then issued and outstanding
other than Common Stock held by the recipient
of such indemnification payment and its
Subsidiaries if BarTech is making such
indemnification payment, at the time of such
indemnification payment (i.e., taking into
account any diminution in the value of Common
Stock resulting from the matter giving rise to
the indemnification claim);
Damages = The Damages to be indemnified by USX RTI
Holdings, Kobe RTI Holdings or BarTech, as
applicable;
Old Stock % = The percentage interest in BarTech on a fully
diluted basis (as calculated for purposes of
the Equityholders Agreement) represented by the
Common Stock held by (i) USX and its
Subsidiaries if USX RTI Holdings is making such
indemnification payment, (ii) Kobe and its
Subsidiaries if Kobe RTI Holdings is making
such indemnification payment or (iii) all
holders of Common Stock then issued and
outstanding other than the recipient of such
indemnification payment and its Subsidiaries if
BarTech is making such indemnification payment,
immediately before giving effect to such
issuance or cancellation of Common Stock, as
applicable; and
New Stock % = The percentage interest in BarTech on a fully
diluted basis (as calculated for purposes of
the Equityholders Agreement) represented by the
Common Stock held by (i) USX and its
Subsidiaries if USX RTI Holdings is making such
indemnification payment, (ii) Kobe and its
Subsidiaries if Kobe RTI Holdings is making
such indemnification payment or (iii) all
holders of Common Stock then issued and
outstanding other than the recipient of such
indemnification payment and its Subsidiaries if
<PAGE>
94
BarTech is making such indemnification payment,
immediately after giving effect to such
issuance or cancellation of Common Stock, as
applicable.
(d) For purposes of determining Held Unit Value under Section
18.11(b) or Held Stock Value under Section 18.11(c), the fair market
value of RTI Holdings Units will be based upon the total equity value
of RTI Holdings (without attributing any control premium to RTI
Holdings Units held by BarTech) and the fair market value of Common
Stock will be based upon the total equity value of BarTech (without
contributing any control premium to Common Stock held by majority
stockholders), as applicable, and in each case will be determined by
the agreement of BarTech, USX RTI Holdings and Kobe RTI Holdings
(provided that any of them will have rights or obligations under this
Section 18.11 only if it is subject to any indemnification obligations
or entitlements under this Agreement with respect to such Damages), or
failing such agreement within 10 days following the commencement of
negotiations with respect thereto, by appraisal as follows:
(i) if BarTech, USX and Kobe can agree on a single
nationally recognized independent investment banking firm (a
"Valuer") to act as appraiser within five days after the end
of such 10-day period, such Valuer will determine the Held
Unit Value of the applicable RTI Holdings Units for purposes
of Section 18.11(b) and/or the Held Stock Value of the
applicable Common Stock for purposes of Section 18.11(c), as
applicable;
(ii) if BarTech, USX RTI Holdings and Kobe RTI
Holdings cannot agree on a single Valuer within five days
after the end of such 10-day period, then within an additional
five-day period, BarTech will select a Valuer and USX RTI
Holdings and Kobe RTI Holdings together will select a second
Valuer (together with the other Valuer, the "Valuers"), each
of which will determine the Held Unit Value of the applicable
RTI Holdings Units and/or the Held Stock Value of the
applicable Common Stock, as applicable. If the valuations of
such two Valuers differ by an amount which is twenty percent
(20%) or less of the higher valuation, the Held Unit Value of
the applicable RTI Holdings Units and/or the Held Stock Value
of the applicable Common Stock, as applicable, will be
calculated by averaging the independent valuations of such two
Valuers; provided, however, that if the difference between
such Valuers' valuations exceeds twenty percent (20%) of the
higher valuation, the two Valuers will select a third Valuer,
which Valuer will make its own independent valuation and will
choose the valuation performed by the first two Valuers which
most closely reflects its own independent valuation, and the
valuation so selected will be deemed to constitute Held Units
Value of the applicable RTI Holdings Units and/or the Held
Stock value of the applicable Common Stock, as applicable; and
further provided that if the two Valuers cannot agree on the
selection of the third Valuer, the selection of
<PAGE>
95
such Valuer will be submitted to final and binding arbitration
in New York, New York pursuant to the commercial arbitration
rules of the American Arbitration Association;
(iii) if a single Valuer is used, BarTech will bear
one half of the costs of such appraisal and USX and Kobe
together will bear one half of such costs; if two appraisers
are used, BarTech will bear the costs of the appraiser it
selects and USX and Kobe will bear the costs of the appraiser
they jointly select; and if the third Valuer is used, BarTech
will bear half of the costs of such Valuer and USX and Kobe
will equally bear one half of such costs; and
(iv) the parties hereto will cooperate in good faith
with the Valuer(s) and provide the Valuer(s) with reasonable
access to information in connection with the determination of
Held Unit Value and/or Held Stock Value, as applicable, and
the appraiser(s) will be instructed to render written
valuation(s) as promptly as practicable (but in any event
within 30 days of selection).
(e) The parties hereto agree to cause RTI Holdings and BarTech
to effect such issuances and cancellations of RTI Holdings Common Units
and/or Common Stock as are required pursuant to this Section 18.11.
Upon (i) the cancellation of all of the RTI Holdings Common Units and
shares of Common Stock owned by USX and its Subsidiaries (including any
shares of Common Stock obtainable upon exercise of options, warrants or
other rights), USX RTI Holdings will have no further indemnification
obligations under Section 18.2 or 18.5(a) (notwithstanding the fact
that Damages otherwise indemnifiable by USX RTI Holdings thereunder may
have exceeded the total fair market value of such canceled RTI Holdings
Units and Common Stock), (ii) the cancellation of all of the RTI
Holdings Common Units and shares of Common Stock owned by Kobe and its
Subsidiaries (including any shares of Common Stock obtainable upon
exercise of options, warrants or other rights), Kobe RTI Holdings will
have no further indemnification obligations under Section 18.2 or
18.5(a) (notwithstanding the fact that Damages otherwise indemnifiable
by Kobe RTI Holdings thereunder may have exceeded the total fair market
value of such canceled RTI Holdings Common Units and Common Stock), or
(iii) the issuance to USX RTI Holdings and/or Kobe RTI Holdings (A) by
RTI Holdings of that number of RTI Holdings Common Units such that the
remaining RTI Holdings Common Units owned by BarTech and its
Subsidiaries are of de minimis value, or (B) by BarTech of that number
of shares of Common Stock such that the remaining shares of Common
Stock owned by Persons other than USX, Kobe and their respective
Subsidiaries are of de minimis value, BarTech will have no further
indemnification obligations under Section 18.3 or 18.5(b)
(notwithstanding the fact that Damages otherwise indemnifiable by
BarTech thereunder may have exceeded the total fair market value of
such issued RTI Holdings Common Units and Common Stock); provided,
however, that, in the event that, prior to the time of satisfaction of
an indemnification obligation of USX RTI Holdings or Kobe RTI Holdings
under Section
<PAGE>
96
18.2 or Section 18.5(a) or of BarTech under Section 18.3 or 18.5(b),
USX and its Subsidiaries, Kobe and its Subsidiaries or BarTech and its
Subsidiaries, as applicable, have sold for value any RTI Holdings Units
in a transaction in which the other owners of RTI Holdings Units did
not all participate on a pro rata basis and in which the transferee did
not expressly assume in writing in a form reasonably acceptable to RTI
Opco all of the indemnification obligations of the transferor relating
to the RTI Holdings Units sold, USX, Kobe or BarTech, as applicable,
will indemnify RTI Opco in cash for the amount of such indemnification
obligation that exceeds the fair market value of the remaining RTI
Holdings Units owned by such party and its Subsidiaries (up to a
maximum of the value previously received by such party and its
Subsidiaries upon such sale of RTI Holdings Units for value).
SECTION 19
GENERAL PROVISIONS
19.1 Expenses.
(a) If this Agreement is not terminated pursuant to Section 17
and the Closing occurs, except to the extent otherwise expressly
provided in this Agreement, RTI Opco will bear all fees, transfer taxes
or related fees and out-of-pocket expenses incurred by the parties
hereto and their Affiliates in connection with the preparation,
execution, and performance of this Agreement and the other Transaction
Documents and the consummation of the Contemplated Transactions (other
than those Taxes described in Section 18.6, and other than any such
expenses relating to the formation of NewTube, which will be USS/Kobe
Tubular Liabilities). The parties will be entitled to reimbursement
from RTI Opco, dollar for dollar, for all fees, transfer taxes or
related fees, and out-of-pocket expenses incurred and paid by them
which are otherwise payable by RTI Opco pursuant to the preceding
sentence.
(b) If this Agreement is terminated pursuant to Section 17,
then:
(i) except as otherwise provided in Section
19.1(b)(ii), each party will bear all of its own fees and
expenses and those of its Affiliates incurred in connection
with the preparation, execution, and performance of this
Agreement and the other Transaction Documents and the
consummation of the Contemplated Transactions; and
(ii) USS/Kobe on the one hand, and BarTech and RES
Holding together on the other hand, each will bear one half of
the aggregate fees and out-of-pocket expenses incurred by the
parties and their Affiliates in connection with filings
<PAGE>
97
made under the HSR Act in connection with the Contemplated
Transactions (including fees and out-of-pocket expenses
incurred in the preparation of such filings), and USS/Kobe or
BarTech and RES Holding, as applicable, promptly will
reimburse each other to the extent necessary to result in such
allocation of such fees and expenses.
19.2 Public Announcements. So long as this Agreement is in effect, no
press releases or other public disclosures or announcements, either written or
oral, regarding this Agreement or the Contemplated Transactions will be made by
a party to this Agreement or its Representatives without the prior written
consent of USS/Kobe, BarTech and RES Holding, except as is otherwise required by
Legal Requirements (and then only after providing the other parties hereto with
advance notice of such disclosure and an opportunity to comment thereon).
19.3 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), or (c) when received
by the addressee, if sent by a nationally recognized overnight delivery service,
in each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
If to BarTech or Blackstone: with a copy to:
----------------------------
Bar Technologies Inc. Simpson Thacher & Bartlett
3770 Embassy Parkway 425 Lexington Avenue
Akron, Ohio 44333-8367 New York, New York 10017
Attention: Thomas N. Tyrrell Attention: Wilson S. Neely
Telecopy: (330) 670-3020 Telecopy: (212) 455-2502
E-mail: [email protected] E-mail: [email protected]
and
The Blackstone Group
345 Park Avenue
New York, New York 10154
Attention: Robert L. Friedman
Telecopy: (212) 583-5704
E-mail: [email protected]
<PAGE>
98
If to any Republic Party: with a copy to:
-------------------------
Republic Engineered Steels, Inc. Simpson Thacher & Bartlett
3770 Embassy Parkway 425 Lexington Avenue
Akron, Ohio 44333-8367 New York, New York 10017
Attention: Thomas N. Tyrrell Attention: Wilson S. Neely
Telecopy: (330) 670-3020 Telecopy: (212) 455-2502
E-mail: [email protected] E-mail: [email protected]
and
The Blackstone Group
345 Park Avenue
New York, New York 10154
Attention: Robert L. Friedman
Telecopy: (212) 583-5704
E-mail: [email protected]
If to Kobe: with a copy to:
-----------
Kobe Steel, Ltd. Cleary, Gottlieb, Steen & Hamilton
10-26 Wakinohamacho 2-Chome One Liberty Plaza
Chuo-Ku, Kobe City, Hyugo 651-0072 New York, New York 10006
Attention: Shinsuke Asai Attention: Jeffrey Lewis
Telecopy: 011-81-78-261-5444 Telecopy: (212) 225-3999
E-mail: [email protected] E-mail: [email protected]
If to USX: with a copy to:
----------
USX Corporation USX Corporation
600 Grant Street 600 Grant Street
Pittsburgh, Pennsylvania 15219-4776 Pittsburgh, Pennsylvania 15219-4776
Attention: A.E. Ferrara, Jr. Attention: R.M. Stanton
Telecopy: (412) 433-1174 Telecopy: (412) 433-2811
E-mail: [email protected] E-mail: [email protected]
<PAGE>
99
If to USS/Kobe: with a copy to:
---------------
USS/Kobe Steel Company Cleary, Gottlieb, Steen & Hamilton
1807 East 28th Street One Liberty Plaza
Lorain, Ohio 44055 New York, New York 10006
Attention: Attention: Jeffrey Lewis
Telecopy: Telecopy: (212) 225-3999
E-mail: E-mail: [email protected]
and
USX Corporation
600 Grant Street
Pittsburgh, Pennsylvania 15219-4776
Attention: R.M. Stanton
Telecopy: (412) 433-2811
E-mail: [email protected]
If to Veritas: with a copy to:
--------------
The Veritas Capital Fund, L.P. Whitman, Breed, Abbott & Morgan
660 Madison Avenue 200 Park Avenue
New York, New York 10021 New York, New York 10166
Attention: Robert B. McKeon Attention: Benjamin Polk
Telecopy: (212) 688-9411 Telecopy: (212) 351-3131
E-mail: [email protected]
19.4 Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
19.5 Stockholder Consent. (a) The parties hereto that are or at the
Closing will become stockholders of BarTech, being the holders of a majority of
the outstanding stock of BarTech entitled to vote thereon, hereby consent to and
approve, without prior notice and without a vote, pursuant to Section 228(a) of
the Delaware General Corporation Law, each of the actions taken or to be taken
by BarTech or any of its Subsidiaries in connection with the consummation of the
Contemplated Transactions which are or may be subject to stockholder approval,
including without limitation each of the actions expressly contemplated by this
Agreement or the Equityholders Agreement to be taken by BarTech or any of its
Subsidiaries
<PAGE>
100
(including without limitation the amendment and restatement of BarTech's
certificate of incorporation in the form attached as an exhibit to the
Equityholders Agreement).
(b) The parties hereto that are stockholders of RES Holding,
being the holders of a majority of the outstanding stock of RES Holding
entitled to vote thereon, hereby consent to and approve, without prior
notice and without a vote, pursuant to Section 228(a) of the Delaware
General Corporation Law, each of the actions taken or to be taken by
RES Holding or any of its Subsidiaries in connection with the
consummation of the Contemplated Transactions which are or may be
subject to stockholder approval, including without limitation each of
the actions expressly contemplated by this Agreement or the
Equityholders Agreement.
19.6 Waiver. The rights and remedies of the parties to this Agreement
and the other Transaction Documents are cumulative and not alternative. Neither
the failure nor any delay by any party in exercising any right, power, or
privilege under this Agreement or the other Transaction Documents will operate
as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
except as otherwise expressly provided in this Agreement or another Transaction
Document, as applicable, (a) no claim or right arising out of this Agreement or
the other Transaction Documents can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless in a writing
signed by the other parties; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
other Transaction Documents.
19.7 Entire Agreement and Modification. This Agreement and the other
Transaction Documents supersede all prior agreements between the parties with
respect to their subject matter (other than the confidentiality agreement, dated
as of March 8, 1999, between Blackstone Management Partners III, L.L.C. and
USS/Kobe) and constitute a complete and exclusive statement of the terms of the
agreement between the parties with respect to their subject matter. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.
19.8 Assignments, Successors and No Third Party Rights. No party may
assign any of its rights under this Agreement without the prior consent of
BarTech, RES Holding and USS/Kobe. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its
<PAGE>
101
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
19.9 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
19.10 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms. This Agreement and each of the other
Transaction Documents has been negotiated by the parties and their respective
legal counsel, and legal or other equitable principles that might require the
construction of this Agreement or any other Transaction Document or any
provision of this Agreement or any other Transaction Document against the party
drafting this Agreement or such other Transaction Document will not apply in any
construction or interpretation of this Agreement or such other Transaction
Document.
19.11 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE
OF NEW YORK.
19.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
<PAGE>
102
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BAR TECHNOLOGIES INC.
By: /s/ John B. George
-----------------------------------------------
Name: John B. George
Title: Vice President of Finance,
Treasurer and Secretary
RES HOLDING CORPORATION
By: /s/ David S. Blitzer
-----------------------------------------------
Name: David S. Blitzer
Title: Secretary
REPUBLIC ENGINEERED STEELS, INC.
By: /s/ John B. George
-----------------------------------------------
Name: John B. George
Title: Vice President of Finance,
Treasurer and Secretary
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
By: Blackstone Management Associates II L.L.C., as
general partner
By: /s/ David A. Stockman
------------------------------------------
Name: David A. Stockman
Title: Member
<PAGE>
103
BLACKSTONE OFFSHORE CAPITAL PARTNERS II
L.P.
By: Blackstone Management Associates II L.L.C., as
general partner
By: /s/ David A. Stockman
-----------------------------------------------
Name: David A. Stockman
Title: Member
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: Blackstone Management Associates II L.L.C., as
general partner
By: /s/ David A. Stockman
-----------------------------------------------
Name: David A. Stockman
Title: Member
THE VERITAS CAPITAL FUND, L.P.
By: Veritas Capital Management, L.L.C., as general
partner
By: /s/ Robert B. McKeon
-----------------------------------------------
Name: Robert B. McKeon
Title: Member
HVR HOLDINGS, L.L.C.
By: /s/ Andrew H. McQuarrie
-----------------------------------------------
Name: Andrew H. McQuarrie
Title: Vice President
<PAGE>
104
USX CORPORATION
By: /s/ A.E. Ferrara, Jr.
-----------------------------------------------
Name: A. E. Ferrara, Jr.
Title: Vice President-Strategic Planning
KOBE STEEL, LTD.
By: /s/ Susumu Okushima
-----------------------------------------------
Name: Susumu Okushima
Title:
KOBE DELAWARE INC.
By: /s/ Nobuyuki Kurosu
-----------------------------------------------
Name: Nobuyuki Kurosu
Title: Secretary
USS LORAIN HOLDING COMPANY, INC.
By: /s/ R. M. Stanton
-----------------------------------------------
Name: R. M. Stanton
Title: Vice President
USX RTI HOLDINGS, INC.
By: /s/ R. M. Stanton
-----------------------------------------------
Name: R. M. Stanton
Title: Vice President
KOBE/LORAIN INC.
By: /s/ Susumu Okushima
-----------------------------------------------
Name: Susumu Okushima
Title: President
<PAGE>
105
KOBE RTI HOLDINGS, INC.
By: /s/ Susumu Okushima
-----------------------------------------------
Name: Susumu Okushima
Title:
USS/KOBE STEEL COMPANY
By: /s/ George F. Babcoke
-----------------------------------------------
Name: George F. Babcoke
Title: President
LORAIN TUBULAR COMPANY, L.L.C.
By: /s/ Gary F. Gajdzik
-----------------------------------------------
Name: Gary F. Gajdzik
Title: President
REPUBLIC TECHNOLOGIES INTERNATIONAL
HOLDINGS, L.L.C.
By: /s/ John B. George
-----------------------------------------------
Name: John B. George
Title: Vice President of Finance,
Treasurer and Secretary
REPUBLIC TECHNOLOGIES INTERNATIONAL,
L.L.C.
By: /s/ John B. George
-----------------------------------------------
Name: John B. George
Title: Vice President of Finance,
Tresurer and Secretary
<PAGE>
EXECUTION COPY
LIMITED LIABILITY COMPANY AGREEMENT
of
Republic Technologies International, LLC
THE UNDERSIGNED is executing this Limited Liability Company
Agreement (the "Agreement") for the purpose of forming, and does hereby form, a
limited liability company (the "Company") pursuant to the provisions of the
Delaware Limited Liability Company Act, 6 Del. C. Sections 18-101 et seq. (the
"Act"), and does hereby certify as follows:
1. Name. The name of the Company shall be Republic
Technologies International, LLC, or such other name as the Members may from time
to time hereafter designate.
2. Definitions. Capitalized terms not otherwise defined herein
shall have the meanings set forth therefor in Section 18-101 of the Act.
3. Purpose. The Company is formed for the purpose of engaging
in any lawful business permitted by the Act or the laws of any jurisdiction in
which the Company may do business. The Company shall have the power to engage in
all activities and transactions which the Members deem necessary or advisable in
connection with the foregoing.
4. Offices.
(a) The principal place of business and office of the Company
shall be located at, and the Company's business shall be conducted from, such
place or places as the Members may designate from time to time.
<PAGE>
2
(b) The registered office of the Company in the State of
Delaware shall be located at Corporation Trust Center, 1209 Orange Street,
County of New Castle, Wilmington, Delaware 19801. The name and address of the
registered agent of the Company for service of process on the Company in the
State of Delaware shall be The Corporation Trust Company, 1209 Orange Street,
Wilmington, County of New Castle, Delaware 19801. The Members may from time to
time change the registered agent or office by an amendment to the certificate of
formation of the Company.
5. Members. The name and business or residence address of each
Member of the Company are as set forth on Schedule A attached hereto. The
business and affairs of the Company shall be managed by the Members. The Members
shall have the power to do any and all acts necessary or convenient to or for
the furtherance of the purposes described herein, including all powers,
statutory or otherwise, possessed by members under the laws of the State of
Delaware. Each Member is hereby designated as an authorized person, within the
meaning of the Act, to execute, deliver and file the certificate of formation of
the Company (and any amendments and/or restatements thereof) and any other
certificates (and any amendments and/or restatements thereof) necessary for the
Company to qualify to do business in a jurisdiction in which the Company may
wish to conduct business. The execution by one Member of any of the foregoing
certificates (and any amendments and/or restatements thereof) shall be
sufficient.
6. Term. The term of the Company shall commence on the date of
filing of the certificate of formation of the Company in accordance with the Act
and shall continue until the Company is dissolved and its affairs are wound up
in accordance with Section 13 of this Agreement and a certificate of
cancellation is filed in accordance with the Act.
<PAGE>
3
7. Management of the Company. Any action to be taken by the
Company shall require the affirmative vote of Members holding a majority of the
Limited Liability Company Interests of the Company (except as otherwise
expressly provided herein). Any action so approved may be taken by any Member or
other Authorized Person on behalf of the Company and any action so taken shall
bind the Company.
8. Capital Contributions. Members shall make capital
contributions to the Company in such amounts and at such times as they shall
mutually agree pro rata in accordance with profit sharing interests as set forth
in Schedule A hereof ("Profit Sharing Interests"), which amounts shall be set
forth in the books and records of the Company.
9. Assignments of Member Interest. A Member may not sell,
assign, pledge or otherwise transfer or encumber any of its Limited Liability
Company Interest in the Company to any person without the written consent of the
other Members, which consent may be granted or withheld in each of their sole
and absolute discretion.
10. Resignation. No Member shall have the right to resign from
the Company except with the consent of all of the Members and upon such terms
and conditions as may be specifically agreed upon between the resigning Member
and the remaining Members. The provisions hereof with respect to distributions
upon resignation are exclusive and no Member shall be entitled to claim any
further or different distribution upon resignation under Section 18-604 of the
Act or otherwise.
11. Allocations and Distributions. Distributions of cash or
other assets of the Company shall be made at such times and in such amounts as
the Members may determine. Distributions shall be made to (and profits and
losses of the Company shall be allocated among) Members pro rata in accordance
with each of their Profit Sharing Interests, or in such other
<PAGE>
4
manner and in such amounts as all of the Members shall agree from time to time
and which shall be reflected in the books and records of the Company.
12. Return of Capital. No Member has the right to receive any
distributions which include a return of all or any part of such Member's capital
contribution, provided that upon the dissolution and winding up of the Company,
the assets of the Company shall be distributed as provided in Section 18-804 of
the Act.
13. Dissolution. The Company shall be dissolved and its
affairs wound up upon the occurrence of an event causing a dissolution of the
Company under Section 18-801 of the Act, except that the Company shall not be
dissolved upon the occurrence of an event that terminates the continued
membership of a Member if (i) at the time of the occurrence of such event there
are at least two Members of the Company, or (ii) within ninety (90) days after
the occurrence of such event, all remaining Members agree in writing to continue
the business of the Company and to the appointment, effective as of the date of
such event, of one or more additional Members.
14. Certificated Profit Sharing Interests. The Company shall,
upon the request of a Member, issue a certificate to such Member, executed by an
officer of the Company authorized by the Members hereto, representing such
Member's Profit Sharing Interest. Any such certificate representing a Member's
Profit Sharing Interest shall be deemed a "Security" as defined in Section
8-102(a)(15) of the Uniform Commercial Code as in effect in the State of
Delaware from time to time.
15. Amendments. This Agreement may be amended only upon the
written consent of all of the Members.
<PAGE>
5
16. Miscellaneous. The Members shall not have any liability
for the debts, obligations or liabilities of the Company except to the extent
provided by the Act. This Agreement shall be governed by, and construed under,
the laws of the State of Delaware, without regard to its conflict of law rules.
17. Officers. The Company, and each Member on behalf of the
Company, acting singly or jointly, may employ and retain persons as may be
necessary or appropriate for the conduct of the Company's business (subject to
the supervision and control of the Members), including employees and agents who
may be designated as officers with titles, including, but not limited to,
"chairman," "chief executive officer," "president," "vice president,"
"treasurer," "secretary," "managing director," "chief financial officer,"
"assistant treasurer" and "assistant secretary" as and to the extent authorized
by the Members.
IN WITNESS WHEREOF, the undersigned has duly executed this
Agreement as of August 13, 1999.
Republic Technologies International Holdings,
LLC, as sole member
By: /s/ John B. George
-------------------------------
Name: John B. George
Title: Vice President of Finance,
Treasurer and Secretary
<PAGE>
6
SCHEDULE A
Name and Address of Members Profit Sharing Interests
- --------------------------- ------------------------
Republic Technologies International Holdings, LLC 100%
c/o Republic Technologies International, Inc.
3770 Embassy Parkway
Akron, Ohio 44333-8367
<PAGE>
CERTIFICATE OF INCORPORATION
of
RTI CAPITAL CORP.
The undersigned, in order to form a corporation for the
purpose hereinafter stated, under and pursuant to the provisions of the
Delaware General Corporation Law, hereby certifies that:
FIRST: The name of the Corporation is RTI Capital Corp.
(hereinafter called the "Corporation").
SECOND: The registered office and registered agent of the
Corporation is The Corporation Trust Company, 1209 Orange Street, Wilmington,
New Castle County, Delaware 19801.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
FOURTH: The total number of shares of stock that the
Corporation is authorized to issue is 1,000 shares of Common Stock, par value
$0.01 each.
FIFTH: The name and address of the incorporator is Joseph A.
DiMondi, 425 Lexington Avenue, New York City, New York 10017.
SIXTH: (1) To the fullest extent permitted by the laws of the
State of Delaware:
(a) The corporation shall indemnify any person (and such
person's heirs, executors or administrators) who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (brought in the right of the
corporation or otherwise), whether civil, criminal, administrative or
investigative, and whether formal or informal, including appeals, by
reason of the fact that such person is or was a director or officer of
the corporation or, while a director or officer of the corporation, is
or was serving at the request of the corporation as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, limited liability company or other
enterprise, for and against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person or such heirs, executors or
administrators in connection with such action, suit or proceeding,
including appeals. Notwithstanding the preceding sentence, the
corporation shall be required to indemnify a person described in such
sentence in connection with any action, suit or proceeding (or part
thereof) commenced by such person only if the commencement of such
action, suit or proceeding (or part thereof) by such person was
authorized by the Board of Directors of the
<PAGE>
corporation. The corporation may indemnify any person (and such
person's heirs, executors or administrators) who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (brought in the right of the
corporation or otherwise), whether civil, criminal, administrative or
investigative, and whether formal or informal, including appeals, by
reason of the fact that such person is or was an employee or agent of
the corporation or is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, limited liability
company or other enterprise, for and against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person or such heirs,
executors or administrators in connection with such action, suit or
proceeding, including appeals.
(b) The corporation shall promptly pay expenses incurred by
any person described in the first sentence of subsection (a) of this
Article Sixth, Section (1) in defending any action, suit or proceeding
in advance of the final disposition of such action, suit or
proceeding, including appeals, upon presentation of appropriate
documentation.
(c) The corporation may purchase and maintain insurance on
behalf of any person described in subsection (a) of this Article
Sixth, Section (1) against any liability asserted against such person,
whether or not the corporation would have the power to indemnify such
person against such liability under the provisions of this Article
Sixth, Section (1) or otherwise.
(d) The provisions of this Article Sixth, Section (1) shall
be applicable to all actions, claims, suits or proceedings made or
commenced after the adoption hereof, whether arising from acts or
omissions to act occurring before or after its adoption. The
provisions of this Article Sixth, Section (1) shall be deemed to be a
contract between the corporation and each director or officer who
serves in such capacity at any time while this Article Sixth, Section
(1) and the relevant provisions of the laws of the State of Delaware
and other applicable law, if any, are in effect, and any repeal or
modification hereof shall not affect any rights or obligations then
existing with respect to any state of facts or any action, suit or
proceeding then or theretofore existing, or any action, suit or
proceeding thereafter brought or threatened based in whole or in part
on any such state of facts. If any provision of this Article Sixth,
Section (1) shall be found to be invalid or limited in application by
reason of any law or regulation, it shall not affect the validity of
the remaining provisions hereof. The rights of indemnification
provided in this Article Sixth, Section (1) shall neither be exclusive
of, nor be deemed in limitation of, any rights to which an officer,
director, employee or agent may otherwise be entitled or permitted by
contract, this Certificate of Incorporation, vote of stockholders or
directors or otherwise, or as a matter of law, both as to actions in
such person's official capacity and actions in any other capacity
while holding such office, it being the policy of the corporation that
indemnification of any person whom the corporation is obligated to
indemnify pursuant to the first sentence of subsection (a)
<PAGE>
of this Article Sixth, Section (1) shall be made to the fullest extent
permitted by law.
(e) For purposes of this Article Sixth, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the
request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent
with respect to an employee benefit plan, its participants, or
beneficiaries.
(2) A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any
amendment, modification or repeal of the foregoing sentence shall not adversely
affect any right or protection of a director of the corporation hereunder in
respect of any act or omission occurring prior to the time of such amendment,
modification or repeal.
SEVENTH: The Board of Directors of the Corporation, acting by
majority vote, may alter, amend or repeal the By-Laws of the Corporation.
<PAGE>
IN WITNESS WHEREOF, the undersigned has signed this
Certificate of Incorporation on August 4, 1999.
/s/ Joseph A. DiMondi
---------------------
Joseph A. DiMondi
Sole Incorporator
<PAGE>
RTI CAPITAL CORP.
BY-LAWS
ARTICLE I
MEETING OF STOCKHOLDERS
Section 1. Place of Meeting and Notice. Meetings of the
stockholders of the Corporation shall be held at such place either within or
without the State of Delaware as the Board of Directors may determine.
Section 2. Annual and Special Meetings. Annual meetings of
stockholders shall be held, at a date, time and place fixed by the Board of
Directors and stated in the notice of meeting, to elect a Board of Directors
and to transact such other business as may properly come before the meeting.
Special meetings of the stockholders may be called by the President or any Vice
President for any purpose and shall be called by the President or Secretary if
directed by the Board of Directors or requested in writing by the holders of
not less than 25% of the capital stock of the Corporation. Each such
stockholder request shall state the purpose of the proposed meeting.
Section 3. Notice. Except as otherwise provided by law, at
least ten and not more than 60 days before each meeting of stockholders,
written notice of the time, date and place of the meeting, and, in the case of
a special meeting, the purpose or purposes for which the meeting is called,
shall be given to each stockholder.
Section 4. Quorum. At any meeting of stockholders, the
holders of record, present in person or by proxy, of a majority of the
Corporation's issued and outstanding capital stock shall constitute a quorum
for the transaction of business, except as otherwise provided by law. In the
absence of a quorum, any officer entitled to preside at or to act as secretary
of the meeting shall have power to adjourn the meeting from time to time until
a quorum is present.
Section 5. Voting. Except as otherwise provided by law, all
matters submitted to a meeting of stockholders shall be decided by vote of the
holders of record of a majority of the Corporation's issued and outstanding
capital stock present in person or by proxy.
<PAGE>
ARTICLE II
DIRECTORS
Section 1. Number, Election and Removal of Directors. The
number of Directors that shall constitute the Board of Directors shall be not
less than one nor more than 15. The first Board of Directors shall consist of
three Directors. Thereafter, within the limits specified above, the number of
Directors shall be determined by the Board of Directors or by the stockholders.
The Directors shall be elected by the stockholders at their annual meeting.
Vacancies and newly created directorships resulting from any increase in the
number of Directors may be filled by a majority of the Directors then in
office, although less than a quorum, or by the sole remaining Director or by
the stockholders. A Director may be removed with or without cause by the
stockholders.
Section 2. Meetings. Regular meetings of the Board of
Directors shall be held at such times and places as may from time to time be
fixed by the Board of Directors or as may be specified in a notice of meeting.
Special meetings of the Board of Directors may be held at any time upon the
call of the President and shall be called by the President or Secretary if
directed by a majority of the Directors. Telegraphic or written notice of each
special meeting of the Board of Directors shall be sent to each Director not
less than two days before such meeting. A meeting of the Board of Directors may
be held without notice immediately after the annual meeting of the
stockholders. Notice need not be given of regular meetings of the Board of
Directors.
Section 3. Quorum. One-third of the total number of Directors
shall constitute a quorum for the transaction of business. If a quorum is not
present at any meeting of the Board of Directors, the Directors present may
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until such a quorum is present. Except as otherwise provided by
law, the Certificate of Incorporation of the Corporation, these By-Laws or any
contract or agreement to which the Corporation is a party, the act of a
majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors.
Section 4. Committees of Directors. The Board of Directors
may, by resolution adopted by a majority of the whole Board, designate one or
more committees, including without limitation an Executive Committee, to have
and exercise such power and authority as the Board of Directors shall specify.
In the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
Director to act at the meeting in place of any such absent or disqualified
member.
<PAGE>
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a President,
one or more Vice Presidents, a Secretary, a Treasurer and such other additional
officers with such titles as the Board of Directors shall determine, all of
whom shall be chosen by and shall serve at the pleasure of the Board of
Directors. Such officers shall have the usual powers and shall perform all the
usual duties incident to their respective offices. All officers shall be
subject to the supervision and direction of the Board of Directors. The
authority, duties or responsibilities of any officer of the Corporation may be
suspended by the President with or without cause. Any officer elected or
appointed by the Board of Directors may be removed by the Board of Directors
with or without cause.
ARTICLE IV
INDEMNIFICATION
To the fullest extent permitted by the Delaware General
Corporation Law, the Corporation shall indemnify any current or former Director
or officer of the Corporation and may, at the discretion of the Board of
Directors, indemnify any current or former employee or agent of the Corporation
against all expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding brought by or in the right of the
Corporation or otherwise, to which he was or is a party or is threatened to be
made a party by reason of his current or former position with the Corporation
or by reason of the fact that he is or was serving, at the request of the
Corporation, as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise.
ARTICLE V
GENERAL PROVISIONS
Section 1. Notices. Whenever any statute, the Certificate of
Incorporation or these By-Laws require notice to be given to any Director or
stockholder, such notice may be given in writing by mail, addressed to such
Director or stockholder at his address as it appears on the records of the
Corporation, with postage thereon prepaid. Such notice shall be deemed to have
been given when it is deposited in the United States mail. Notice to Directors
may also be given by telegram.
Section 2. Fiscal Year. The fiscal year of the Corporation
shall be fixed by the Board of Directors.
<PAGE>
EXECUTION COPY
REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of August 13, 1999
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions....................................................................1
SECTION 1.1 Definitions.......................................................1
SECTION 1.2 Terms Generally...................................................7
ARTICLE II
General Provisions.............................................................7
SECTION 2.1 Formation.........................................................7
SECTION 2.2 Members...........................................................8
SECTION 2.3 Name..............................................................8
SECTION 2.4 Term..............................................................8
SECTION 2.5 Purpose; Powers...................................................8
SECTION 2.6 Place of Business.................................................8
ARTICLE III
Management and Operation of the Company........................................9
SECTION 3.1 Management........................................................9
SECTION 3.2 Certain Duties and Obligations....................................9
ARTICLE IV
Other Activities Permitted....................................................10
ARTICLE V
Capital Contributions;
Distributions.................................................................10
SECTION 5.1 Capital Contributions............................................10
SECTION 5.2 Redemption; Conversion...........................................11
SECTION 5.3 Distributions....................................................11
ARTICLE VI
Books and Reports; Tax Matters; Capital Accounts; Allocations.................14
i
<PAGE>
Page
----
SECTION 6.1 General Accounting Matters.......................................15
SECTION 6.2 Certain Tax Matters..............................................16
SECTION 6.3 Capital Accounts.................................................17
SECTION 6.4 Allocations......................................................18
SECTION 6.5 Withholding......................................................20
SECTION 6.6 Distributions by Republic Technologies International, LLC........20
ARTICLE VII
Dissolution...................................................................21
SECTION 7.1 Dissolution......................................................21
SECTION 7.2 Winding-up.......................................................21
SECTION 7.3 Final Distribution...............................................21
SECTION 7.4 Distribution Upon Dissolution....................................22
ARTICLE VIII
Transfer of Members' Interests................................................22
SECTION 8.1 Restrictions on Transfer of Company Interests....................22
SECTION 8.2 Other Transfer Provisions........................................22
ARTICLE IX
Miscellaneous.................................................................23
SECTION 9.1 Equitable Relief.................................................23
SECTION 9.2 Officers.........................................................23
SECTION 9.3 Governing Law....................................................23
SECTION 9.4 Successors and Assigns...........................................23
SECTION 9.5 Access; Confidentiality..........................................24
SECTION 9.6 Notices..........................................................24
SECTION 9.7 Counterparts.....................................................24
SECTION 9.8 Entire Agreement.................................................24
SECTION 9.9 Amendments.......................................................24
SECTION 9.10 Section Titles..................................................24
Schedule A -- Members of the Company
Schedule B -- Safe Harbor Leases
Schedule C -- Income, Gain, Loss, or Deduction Relating to Safe Harbor Leases
Schedule D -- Amended and Restated Certificate of Incorporation of Bar
Technologies Inc.
ii
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC
This Limited Liability Company Agreement (the "Agreement") of
Republic Technologies Holdings, LLC (the "Company") is entered into as of August
13, 1999, by and among the members (the "Members") listed on Schedule A hereto
and such other persons as shall hereinafter become members as hereinafter
provided.
Preliminary Statement
The Company was formed on August 4, 1999, pursuant to the
provisions of the LLC Act (as defined below).
Agreement
Accordingly, in consideration of the mutual promises and
agreements herein made and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1 Definitions. Unless the context otherwise
requires, the following terms have the following meanings for purposes of this
Agreement:
"Agreement" means this Limited Liability Company Agreement, as
it may be amended, supplemented, modified or restated from time to
time.
"Available Cash" means at any point in time all cash and cash
equivalents on hand of the Company from any source (including, without
limitation, any proceeds from borrowing in excess of any loan
repayment) less cash reasonably reserved or reasonably anticipated to
be required for debts and expenses, interest and scheduled principal
payments on any indebtedness, capital expenditures, taxes or the
activities of the Company, with the amount of such reserves to be
determined by the Manager (acting reasonably and in good faith).
"Capital Account" has the meaning set forth in Section 6.3.
"Capital Contribution" means any capital contribution made by
a Member pursuant to Section 5.1.
<PAGE>
2
"Carrying Value" means, with respect to any Company Asset, the
asset's adjusted basis for federal income tax purposes, except that the
Carrying Values of all Company Assets shall be adjusted to equal their
respective fair market values, in accordance with the rules set forth
in Regulation section 1.704-1(b)(2)(iv)(f), except as otherwise
provided herein, as of: (a) the date of the acquisition of any
additional Interest by any new or existing Member in exchange for more
than a de minimis Capital Contribution; (b) the date of the
distribution of more than a de minimis amount of Company Assets to a
Member; or (c) the liquidation of the Company within the meaning of
Regulation Section 1.704-1(b)(2)(ii)(g) exclusive of a deemed
liquidation under Code Section 708(b)(1)(B); provided, however, that
adjustments pursuant to clauses (a), (b) and (c) above shall be made
only if the Members reasonably determine that such adjustments are
necessary or appropriate to reflect the relative economic interests of
the Members. The Carrying Value of any Company Asset distributed to any
Member shall be adjusted immediately prior to such distribution to
equal its fair market value and depreciation shall be calculated by
reference to Carrying Value, instead of tax basis once Carrying Value
differs from tax basis. The Carrying Value of any asset contributed (or
deemed contributed under Regulation section 1.704-1(b)(1)(iv)) by a
Member to the Company will be the fair market value of the asset at the
date of its contribution thereto.
"Certificate" means the Amended and Restated Certificate of
Incorporation of RTI, attached hereto as Schedule D, as the same may be
amended from time to time.
"Class A Member" means a Member in its capacity as a holder of
Class A Units.
"Class A Preferred Return" means the amount that would be
required to be distributed with respect to the Class A Units to achieve
an annual cumulative return of $350 per Class A Unit.
"Class A Stated Value" means $5,000 per Class A Unit plus
cumulative dividends declared but not paid from September 26, 1994 on
the Series A Preferred.
"Class A Units" means Units with the rights and obligations
provided herein for Class A Units.
"Class B Member" means a Member in its capacity as a holder of
Class B Units.
"Class B Units" means Units with the rights and obligations
provided herein for Class B Units.
"Class C Member" means a Member in its capacity as a holder of
Class C Units.
<PAGE>
3
"Class C Preferred Return" means the amount that would be
required to be distributed with respect to the Class C Units to achieve
an annual rate of return cumulative from the date of issuance of 5% of
the Class C Stated Value per Class C Unit.
"Class C Stated Value" means $1,000 per Class C Unit.
"Class C Units" means Units with the rights and obligations
provided herein for Class C Units.
"Class D Common" means the Class D Common Stock of RTI.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute. Any reference herein to a
particular provision of the Code means, where appropriate, the
corresponding provision in any successor statute.
"Company" has the meaning set forth in the caption to this
Agreement.
"Company Assets" means all right, title and interest of the
Company in and to all or any portion of the assets of the Company and
any property (real or personal) or estate acquired in exchange therefor
or in connection therewith.
"Depreciation" means, for each Fiscal Period or portion
thereof, an amount equal to the depreciation, amortization or other
cost recovery deduction allowable for federal income tax purposes with
respect to an asset for such Fiscal Period; provided, however, that if
the Carrying Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such Fiscal Period,
Depreciation shall be computed in the manner described in Regulation
section 1.704-3(d)(2).
"Equityholder" has the meaning assigned to such term in the
Equityholders Agreement.
"Equityholders Agreement" means the Equityholders Agreement
dated as of April 2, 1996, as amended and restated as of September 9,
1997 and further amended and restated as of August 13, 1999, among
Blackstone Capital Partners II Merchant Banking Fund L.P., Blackstone
Offshore Capital Partners II L.P., Blackstone Family Investment
Partnership II L.P., BRW Steel Holdings, L.P., BRW Steel Offshore
Holdings, L.P., BRW Steel Holdings II, L.P., Veritas Capital, L.L.C.,
The Veritas Capital Fund, L.P., KDJ, L.L.C., HVR Holdings, L.L.C., USX
RTI Holdings, Inc., USX Corporation, Kobe RTI Holdings, Inc., Kobe
Steel, Ltd., FirstEnergy Services Corp., Sumitomo Corporation of
America, Triumph Capital Investors II, L.P., TCI-II Investors, L.P.,
First Dominion Capital L.L.C., TCW Leveraged Income Trust, L.P., TCW
Leveraged Income Trust II,
<PAGE>
4
L.P., TCW Shared Opportunity Fund II, L.P., Shared Opportunity Fund
IIB, L.L.C., Shared Opportunity Fund III, L.P., RTI, RES Holding
Corporation, the Company and the other equityholders named therein.
"Fiscal Period" means each fiscal quarter or such other period
as may be established by the Manager.
"Fiscal Year" means the calendar year ending on December 31 of
each year.
"Initial Public Offering" means the initial primary sale by
RTI of shares of its common stock to the public pursuant to an
effective registration statement (other than a registration statement
on Form S-4 or S-8 or any similar or successor form) filed under the
Securities Act of 1933, as amended, other than the USWA Offering (as
defined in the Equityholders Agreement).
"Interests" means a Member's share of the profits and losses
of the Company and a Member's right to receive distributions of Company
Assets. Interests shall be expressed as a number of Units.
"Kobe RTI Holdings" means Kobe RTI Holdings, Inc. a Delaware
corporation.
"LLC Act" means the Delaware Limited Liability Company Act, 6
Del. C. 18- 101, et seq., as it may be amended from time to time, and
any successor to such statute.
"Manager" means RTI or any Member appointed as successor
thereto by RTI.
"Member" has the meaning ascribed to such term in the caption
to this Agreement and includes the Class A Members, the Class B Members
and the Class C Members.
"Member Nonrecourse Debt" has the meaning ascribed to the term
"partner nonrecourse debt" in Regulation section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" has the meaning
ascribed to the term "partner nonrecourse debt minimum gain" in
Regulation section 1.704-2(i)(2).
"Member Nonrecourse Deductions" means any item of company
loss, deduction, or expenditure under section 705(a)(2)(B) of the Code
that is attributable to a Member Nonrecourse Debt, as determined
pursuant to Regulation section 1.704-2(i)(2).
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5
"Minimum Gain" has the meaning set forth in Regulation section
1.704-2(d)(1) and means the amount determined by (i) computing for each
nonrecourse liability of the Company any gain the Company would realize
if it disposed of the property subject to that liability for no
consideration other than full satisfaction of the liability and (ii)
aggregating the separately computed gains. If, pursuant to Regulation
section 1.704- 1(b)(2)(iv)(d) or 1.704-1(b)(2)(iv)(f), Company Assets
are properly reflected on the books of the Company at a book value that
differs from the adjusted tax basis of such property, the calculation
of Minimum Gain pursuant to the preceding sentence shall be made by
reference to such book value. For purposes hereof, a liability of the
Company is a nonrecourse liability to the extent that no Member or
related person bears the economic risk of loss for that liability
within the meaning of Regulation section 1.752-2.
"MRA" means the Master Restructuring Agreement dated as of
August 13, 1999, by and among RTI, RES Holding Corporation, Republic
Engineered Steels, Inc., the Company, Republic Technologies
International, LLC, Blackstone Capital Partners II Merchant Banking
Fund L.P., Blackstone Offshore Capital Partners II L.P., Blackstone
Family Investment Partnership II L.P., The Veritas Capital Fund, L.P.,
HVR Holdings, L.L.C., USX Corporation, Kobe Steel, Ltd., USS Lorain
Holding Company, Inc., Kobe/Lorain Inc., USX RTI Holdings, Inc., Kobe
Delaware Inc., Kobe RTI Holdings, Inc., Lorain Tubular Company, LLC and
USS/Kobe Steel Company.
"Net Income (Loss)" for any Fiscal Period means the taxable
income or loss of the Company for such period as determined in
accordance with the accounting method used by the Company for federal
income tax purposes with the following adjustments: (i) all items of
income, gain, loss or deduction allocated pursuant to paragraphs
6.4(b)-(e) shall not be taken into account in computing such taxable
income or loss; (ii) any income of the Company that is exempt from
federal income taxation and not otherwise taken into account in
computing Net Income (Loss) shall be added to such taxable income or
loss; (iii) in lieu of the depreciation, amortization, or other cost
recovery, deduction taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for such
taxable years; (iv) upon an adjustment to the Carrying Value of any
asset, pursuant to the definition of Carrying Value, the amount of the
adjustment shall be included as gain or loss in computing such taxable
income or loss; (v) gain or loss resulting from any disposition of any
asset with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Carrying
Value of such asset notwithstanding that the adjusted tax basis of such
asset differs from its Carrying Value; and (vi) except for items in (i)
above, any expenditures of the Company not deductible in computing
taxable income or loss, not properly capitalizable and not otherwise
taken into account in computing Net Income (Loss) pursuant to this
definition shall be treated as deductible items.
"Non-RTI Member" means Kobe RTI Holdings and USX RTI Holdings.
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6
"Nonrecourse Deductions" has the meaning ascribed to such term
in Regulation section 1.704-2(b)(1).
"Preferred Return" means, collectively, the Class A Preferred
Return and the Class C Preferred Return.
"Regulation" means the regulations promulgated under the Code,
as amended from time to time. Any reference herein to any particular
provision of a Regulation means, where appropriate, the corresponding
provision in any successor Regulation.
"Reimbursed Amount" has the meaning ascribed to such term in
Section 5.3.
"RTI" means Republic Technologies International, Inc., a
Delaware corporation formerly known as Bar Technologies Inc.
"RTI Members" means RTI and RES Holding Corporation, a
Delaware corporation.
"RTI Unit Adjustments Event" has the meaning ascribed to such
term in Section 4.2 of the Equityholders Agreement.
"Safe Harbor Lease Matters Agreement" means the Safe Harbor
Lease Matters Agreement dated as of August 13, 1999, by and among
Kobe/Lorain Holding, Inc., USX Corporation, USS/Kobe Steel Company,
Lorain Tubular Company, LLC and the Company.
"Safe Harbor Lease Property" means the property that is
subject to the Safe Harbor Leases.
"Safe Harbor Leases" means the leases listed in Schedule B,
attached to this Agreement.
"Series A Preferred" means the Series A Preferred Stock of RTI
provided for in the Certificate.
"Series C Preferred" means the Convertible Preferred Stock
with Cumulative Dividends, Series C of RTI provided for in the
Certificate.
"Stated Value" means, collectively, the Class A Stated Value
and the Class C Stated Value.
<PAGE>
7
"Targeted Capital Account Balance" means, with respect to any
Class B Member, the balance necessary to produce the result that each
Class B Member's respective Capital Account balance will bear the same
proportion to one another as each Class B Member's then respective
number of Class B Units bear to one another.
"Tax" means any and all taxes (including net income, gross
income, franchise, value added , ad valorem, gross receipts, leasing,
excise, fuel excess profits, sales, use, property (personal or real,
tangible or intangible, stamp taxes), licenses, imposts, duties,
charges, assessments, or withholdings, of any nature whatsoever,
general or special, ordinary or extraordinary, now existing or
hereafter created or adopted, together, with any and all penalties,
fines additions to tax and interest thereon.
"Tax Matters Member" has the meaning ascribed to such term in
Section 6.2.
"Transfer" has the meaning ascribed to such term in Section
8.1.
"Transferee" has the meaning ascribed to such term in Section
8.1.
"Unit" means a fractional share of a membership interest in
the Company (including, collectively, the Class A Units, Class B Units
and Class C Units). The number of each class of Units outstanding and
the holders thereof are set forth on Schedule A, as such Schedule may
be amended from time to time pursuant to Section 2.2.
"USX RTI Holdings" means USX RTI Holdings, Inc., a Delaware
corporation.
SECTION 1.2 Terms Generally. The definitions in Section 1.1
shall apply equally to both 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 term "person" includes individuals,
partnerships, joint ventures, limited liability companies, corporations, trusts,
governments (or agencies or political subdivisions thereof) and other
associations and entities. Unless the context requires otherwise, the words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation".
ARTICLE II
General Provisions
SECTION 2.1 Formation. The Company was formed under the
provisions of the LLC Act. The Manager is hereby designated as an authorized
person, within the meaning of the LLC Act, to execute, deliver and file the
certificate of formation of the Company and any
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8
amendments and/or restatements thereof and any other certificates necessary for
the Company to qualify to do business in a jurisdiction in which the Company may
wish to conduct business.
SECTION 2.2 Members. Schedule A hereto contains the name,
address, and number of Units owned by each Member as of the date of this
Agreement. Schedule A shall be revised by the Manager from time to time to
reflect (a) the admission or resignation of a Member, (b) the transfer or
assignment of interests in the Company in accordance with the terms of this
Agreement and the Equityholders Agreement, (c) such revisions as are required in
the event of a RTI Unit Adjustment Event, in accordance with section 4.2 of the
Equityholders Agreement, or an indemnification adjustment in accordance with
Section 18 of the MRA, (d) such revisions as are required with respect to the
Class A Units and the Class C Units and (e) other modifications to or changes in
the information set forth therein.
SECTION 2.3 Name. The Company shall conduct its activities
under the name of Republic Technologies International Holdings, LLC. The Manager
shall have the power at any time to change the name of the Company; provided,
that the Company will continue to be a limited liability company and its name
shall always contain the words "Limited Liability Company" or the letters "LLC".
Prompt notice shall be given to each Member of any such change.
SECTION 2.4 Term. The term of the Company shall commence on
the date of filing the certificate of formation of the Company in accordance
with the LLC Act and shall continue in perpetuity, unless sooner dissolved,
wound up and terminated in accordance with Section 7.1.
SECTION 2.5 Purpose; Powers. The Company is formed for the
purpose of engaging in any lawful business permitted by the LLC Act or the laws
of any jurisdiction in which the Company may do business. The Company shall have
the power to engage in all activities and transactions which the Manager deems
necessary or advisable in connection with the foregoing.
SECTION 2.6 Place of Business. The principal place of business
and office of the Company shall be located at, and the Company's business shall
be conducted from, such place or places as the Manager may designate from time
to time. The registered office of the Company in the State of Delaware shall be
located at Corporation Trust Center, 1209 Orange Street, County of New Castle,
Wilmington, Delaware 19801. The name and address of the registered agent of the
Company for service of process on the Company in the State of Delaware shall be
The Corporation Trust Company, 1209 Orange Street, Wilmington, County of New
Castle, Delaware 19801. The Manager may from time to time change the registered
agent or office by an amendment to the certificate of formation of the Company.
<PAGE>
9
ARTICLE III
Management and Operation of the Company
SECTION 3.1 Management. (a) Except as otherwise expressly
provided herein, the management, control and operation of the Company and the
formulation and execution of business and investment policy shall be vested
exclusively in the Manager (subject to the Manager's obligations under Section
2.2. of the Equityholders Agreement), and the Manager shall exercise all powers
necessary and convenient for the purposes of the Company on behalf and in the
name of the Company.
(b) Each Member agrees that, except as otherwise expressly
provided herein or in the Equityholders Agreement and to the fullest extent
permitted by applicable law, any decision of the Manager regarding action of or
relating to the Company shall bind each Member and the Company and shall have
the same legal effect as the approval of each Member of such action.
(c) Except as provided in Section 10.9(b) of the MRA, the
Manager has the power and authority to hire agents for the Company and to
compensate the agents, notwithstanding the fact that the agents may be owned, in
whole or in part, by Members of the Company, subject to Section 2.2(b) of the
Equityholders Agreement.
SECTION 3.2 Certain Duties and Obligations. (a) No Member
shall take any action so as to cause the Company to be classified for federal
income tax purposes as an association taxable as a corporation and not as a
partnership.
(b) No Member shall take, or cause to be taken, any action
that would result in any Member having any personal liability for the
obligations of the Company.
(c) No Member shall be liable, responsible or accountable in
damages or otherwise to the Company or to any Member for (i) any act performed
within the scope of the authority conferred on such Member by this Agreement
except for the gross negligence or willful misconduct of such Member in carrying
out the obligations of such Member hereunder, (ii) such Member's failure or
refusal to perform any act, except those expressly required by or pursuant to
the terms of this Agreement, (iii) such Member's performance of, or failure to
perform, any act on the reasonable reliance on advice of legal counsel to the
Company or (iv) the negligence, dishonesty or bad faith of any agent, consultant
or broker of the Company selected, engaged or retained in good faith. In any
threatened, pending or completed action, suit or proceeding, each Member shall
be fully protected and indemnified and held harmless by the Company against all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
proceedings, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, reasonable attorneys' fees, costs of
investigation, fines, judgments and amounts paid in
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10
settlement, actually incurred by any such Member in connection with such action,
suit or proceeding) by virtue of its status as a Member or with respect to any
action or omission taken or suffered in good faith (including any action taken
by the Tax Matters Member with respect to the tax liability of the Company
whether in accordance with this Agreement or otherwise), other than liabilities
and losses resulting from the gross negligence or willful misconduct of such
Member; provided, however, that any such Member shall not be so indemnified for
any acts determined to be in contravention of this Agreement or in breach of its
fiduciary duties. The indemnification provided by this paragraph shall be
recoverable only out of the assets of the Company, and no Member shall have any
personal liability on account thereof.
(d) No Member shall take any action, or permit any person that
is treated as being related to that Member under Section 752 of the Code and the
Regulations thereunder to take any action (including, but not limited to,
guaranteeing or purchasing a Company liability), that would cause a shift in the
Member's allocable share of the Company's liabilities under Section 752 of the
Code and the Regulations thereunder.
ARTICLE IV
Other Activities Permitted
Except as expressly provided hereunder, this Agreement shall
not be construed in any manner to preclude any Member from engaging in any
activity whatsoever permitted by applicable law (whether or not such activity
might compete, or constitute a conflict of interest, with the Company).
ARTICLE V
Capital Contributions;
Distributions
SECTION 5.1 Capital Contributions. (a) The initial Members
have made initial capital contributions to the Company, the amounts of which are
set forth on the books and records of the Company.
(b) The Members shall make further Capital Contributions to
the Company in such amounts and at such times as are agreed upon by all Members;
provided, however, that in the event of a RTI Unit Adjustment Event, Schedule A
hereto shall be revised by the Manager to reflect: (i) Capital Contributions;
(ii) changes in the number of Units held by each Member; (iii) changes in the
total number of Units outstanding; and (iv) such other revisions necessary in
accordance with section 4.2 of the Equityholders Agreement, in each case,
without any further action on the part of the Members. All Capital Contributions
shall be set forth in the books and records of the Company.
<PAGE>
11
(c) In the event dividends are paid by RTI to the holders of
Series C Preferred in additional shares of Series C Preferred, Schedule A shall
be revised by the Manager to increase the number of Class C Units (or fractional
Class C Units) held by the Class C Member by the number of Class C Units with an
aggregate Stated Value upon issuance equal to the aggregate amount of the
dividends being made to the holders of the Series C Preferred.
(d) No Member shall have any obligation to restore any
negative balance in the Member's Capital Account upon liquidation of the
Company. No Member shall be entitled to withdraw all or any part of its Capital
Account except as expressly provided in this Agreement and the Equityholders
Agreement. No interest shall be payable by the Company on the Capital Account of
any Member except with respect to the Preferred Return or as otherwise provided
herein. In no event shall any Member be entitled to demand any property from the
Company other than cash, except for additional Class C Units issuable pursuant
to Section 5.1(c).
SECTION 5.2 Redemption; Conversion.
(a) In the event shares of Series A Preferred or Series C
Preferred are redeemed (in whole or in part) by RTI, the same number of Class A
Units or Class C Units, as the case may be, will be mandatorily redeemed at the
applicable Stated Value plus the applicable undistributed Preferred Return.
(b) In the event a final distribution is made by RTI to the
holders of Series A Preferred or Series C Preferred upon the dissolution,
liquidation or winding up of RTI, all of the Class A Units or the Class C Units,
as the case may be, will be mandatorily redeemed at the applicable Stated Value
plus the applicable undistributed Preferred Return.
(c) In the event shares of Series C Preferred are converted
(in whole or in part) into Class D Common, the same number of Class C Units as
the shares of Series C Preferred so converted will be canceled (and a
corresponding RTI Unit Adjustment Event will occur under Section 4.2 of the
Equityholders Agreement).
SECTION 5.3 Distributions. (a) Distributions (i) except as
otherwise provided in Section 5.3(c) below with respect to the Class B Units
shall be made in such amounts and at such times, in cash or in kind, as the
Manager shall determine from time to time, (ii) with respect to the Class A
Units shall be made in cash in such amounts and at such times as any cash
distributions shall be made by RTI with respect to the Series A Preferred and
(iii) with respect to the Class C Units shall be made in cash in such amounts
and at such times as any cash distributions shall be made by RTI with respect to
the Series C Preferred; provided, however, that if there is insufficient
Available Cash to make all such cash distributions, cash distributions shall
first be made under clause (iii), second under clause (ii), third as Tax
Distributions under Section 5.3(c) in the following order (A) on the Class C
Units, (B) on the Class A Units and (C) on the Class B Units, and third under
clause (i).
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12
(b) Except as provided in Section 5.3(c), each distribution
with respect to a class of Units shall be made to the Members pro rata in
accordance with their number of such class of Units.
(c) Subject to the provisions of the outstanding indebtedness
of the Company or its Subsidiaries, Available Cash shall be distributed in the
following manner:
(i) To each Member on or before the fifth business day prior
to the date a tax payment (estimated or otherwise) is due for a RTI
Member (the "Payment Date"), in respect of the federal (including
alternative minimum), state, or local income, franchise, capital stock
or similar tax liability of such Member as computed in Section
5.3(c)(ii) ( a "Tax Distribution").
(ii) The Tax Distributions payable to the RTI Members (the
"RTI Tax Distribution") shall be made in an amount equal to the sum of
the actual separate tax payments for each RTI Member made, or to be
made, on the relevant Payment Date in respect of taxable income,
assets, property or capital of the Company (including actual tax
payments attributable to the Preferred Return), provided that the
amount of the RTI Tax Distribution may be increased (but not to exceed
in any event the RTI Distribution Amount, as defined in Section
5.3(c)(iii)) to the extent that the amount of such increase is actually
paid to the Non-RTI Members in respect of a Shortfall (as defined in
Section 5.3(c)(v)) in accordance with Section 5.3(vi).
(iii) The RTI Distribution Amount, shall equal the following
(caluculated separately for each RTI Member): the product of (1) the
highest combined marginal corporate federal, state, and local income
tax rates (including to the extent applicable, if any, alternative
minimum tax) applicable to the taxable income of the Company allocated
to an RTI Member (including any income attributable to the Preferred
Return) and in effect at the time of the distribution, times (2) the
remainder, if any, of (A) the product of (i) the number of fiscal
quarters during such taxable year which have elapsed on or before such
Payment Date, times (ii) 25% of (a) the cumulative taxable income to be
allocated to such RTI Member pursuant to this Agreement for such
taxable year less (b) the cumulative taxable loss that has been
allocated to such RTI Member to the extent such loss has not previously
reduced taxable income pursuant to this provision, as estimated by the
Manager in good faith as of the applicable Payment Date, minus (B) the
sum of the cumulative distributions made to the RTI Member pursuant to
Section 5.3(c) to the extent such distributions have not previously
reduced distributions pursuant to this Section 5.3(c)(iii).
(iv) The Tax Distributions payable to the Non-RTI Members (the
"Non-RTI Tax Distributions") shall be equal to (i) the lesser of (A)
the sum of the RTI Distribution Amount applicable to each RTI Member,
or (B) the sum of the actual tax payments made, or to be made, by each
RTI Member on the relevant Payment Date as set forth in Section
5.3(c)(ii), multiplied by (ii) a fraction, the numerator of which shall
equal the number of Class B Units held
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13
by the Non-RTI Members, and the denominator of which shall equal the
number of Class B Units held by the RTI Members. All Tax Distributions
payable to Non-RTI Members pursuant to this Section 5.3(c)(iv) shall be
distributed to them in proportion with each Non-RTI Member's respective
number of Units. For the avoidance of doubt, a Non-RTI Tax Distribution
shall not be reduced to take account of amounts paid to a Non-RTI
Member pursuant to Section 5.3(c)(vi).
(v) If, as a result of a restriction under the terms of the
indebtedness of the Company or its Subsidiaries, or a lack of Available
Cash, the Company is unable to make Tax Distributions to the Members in
accordance with Section 5.3(c)(ii) and (iv), the Tax Distributions
shall be made first to the RTI Members up to the amount of the RTI Tax
Distribution. If in accordnace with this Section 5.3(c)(v), the
distribution actually paid to a Non-RTI Member is less than the amount
of the Tax Distribution payable to the Non-RTI Member under Section
5.3(c)(iv), then the difference shall be considered a "Shortfall" and
shall be subject to Section 5.3(c)(vi).
(vi) Any Shortfall, shall be treated as a joint and several
obligation of the RTI Members to the non-RTI Member suffering such
Shortfall and shall be evidenced by a promissory note(s) payable at any
time without penalty, and accruing at the rate of 12.68% per annum,
accruing from and after the date on which such Shortfall is created.
Such notes shall be assignable to an affiliate of the applicable
Non-RTI Member upon an exchange of such Member's entire equity interest
in the Company for an equity interest in RTI. No distributions will be
made on the common equity of RTI with respect to distributions from the
Company prior to repayment of the recourse amount of the promissory
note(s) (such recourse amount determined below). The amount of the
Shortfall not in excess of (i) the amount of the RTI Tax Distributions
giving rise to such Shortfall, multiplied by (ii) a fraction, the
numerator of which is the number of Class B Units held by the Non-RTI
Member suffering such Shortfall and the denominator of which is the
number of all outstanding Class B Units, shall be evidenced by a
promissory note(s) that is full recourse (the "Recourse Note") to the
RTI Members and to the extent such Shortfall is in excess of the
principal amount of the Recourse Note (the "Excess Shortfall"), a
second promissory note(s) (the "NonRecourse Note" and, together with
the Recourse Note, the "promissory notes") shall evidence obligations
of the RTI Members with respect to the Excess Shortfall and which
NonRecourse Note shall be payable only in accordance with this Section
5.3(vi) and Section 7.3(f). For the avoidance of doubt, recourse with
respect to the Non-Recourse Note will be limited to distributions that
would otherwise be made to the RCI Members in respect of their Class B
Units. Subject to Available Cash and provided, there are no
restrictions under the terms of the indebtedness of the Company or its
Subsidiaries that would prevent the Company from making distributions
to an RTI Member to satisfy the recourse amount of the promissory
note(s), such note(s) shall become due and payable, on the earlier of
(i) 20 years from the date of issuance, (ii) an Initial Public Offering
or (iii) 30 days after such Non-RTI Member disposes of an equity
interest in the Company or in RTI if such Member has converted its
interest in the Company into an equity interest in RTI, so that such
Non-RTI Member no longer has a right to designate directors as provided
for in Section 2.1 of the Equityholders Agreement, provided, that such
disposition(s) is to a person
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14
other than an affiliate or another Non-RTI Member. Payments of accrued and
unpaid interest on outstanding promissory notes and mandatory prepayments of
principal thereof shall be made out of and to the extent of (i) distributions to
which such RTI Member would otherwise be entitled (other than a Preferred Return
distribution or tax distributions with respect to the Preferred Returns), and
(ii) RTI Tax Distributions (other than a Preferred Return distribution or tax
distributions with respect to the Preferred Returns) increased to an amount not
to exceed the RTI Distribution Amount for the relevant Member as provided in
Section 5.3(c)(ii), to the extent such RTI Tax Distributions are in excess of
the separate tax payments by the RTI Members made, or to be made, on the
relevant Payment Dates in respect of taxable income, assets, property or capital
of the Company, unless the Members agree to settle the outstanding amounts
through some other payment. Any amounts payable out of distributions as provided
for in the preceding sentence shall be applied pro rata between the Recourse and
NonRecourse Notes (based on the relative principal amounts outstanding) and the
amount applicable to each such promissory note(s) shall be applied first, to pay
accrued and unpaid interest on such promissory note(s), and second, as a payment
on the unpaid principal amount of such promissory note(s). Notwithstanding
anything herein to the contrary, a RTI Tax Distribution based on (A) the
alternative minimum tax that gives rise to a Shortfall, will not be subject to
this Section 5.3(c)(vi) to the extent of 45% of (i) the amount of the
alternative minimum tax credits resulting from such RTI Tax Distribution
multiplied by (ii) the percentage of the Units of the Company held by the
Non-RTI Member suffering such Shortfall or (B) the Class A Units and the Class C
Units will not be subject to this Section 5.3(c)(vi).
(d) Upon notice from the Manager, the Tax Distributions made to all
Members in respect of a given taxable year shall be adjusted so as to eliminate
any differences between the amount of such Tax Distributions that would have
been made based on actual taxable income reported on the RTI Members' tax
returns for such taxable year (or, of applicable, the amount of taxable income
of the Company allocated to the Members as a result of a final adjustment by a
taxing authority). The Manager shall provide notice to the Members of the
adjustments as soon as practicable after the end of each taxable year of the
Company. Such adjustments shall be effected by adjusting distributions made to
all Members in the next succeeding taxable year and, thereafter, as necessary
until the differences are eliminated.
(e) For purposes of this Agreement, amounts distributed to the Members
pursuant to Section 5.3(c) shall be deemed to be advance distributions of
amounts to be distributed pursuant to Section 5.3(b).
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15
ARTICLE VI
Books and Reports; Tax Matters; Capital Accounts; Allocations
SECTION 6.1 General Accounting Matters. (a) Allocations of Net
Income (Loss) pursuant to Section 6.4 shall be made by or under the direction of
the Manager at the end of each Fiscal Period.
(b) Each Member shall be supplied with the Company information
necessary to enable such Member to prepare in a timely manner its federal, state
and local income tax returns and such other financial or other statements and
reports that are approved by the Manager, provided, that each Member will
receive a good faith estimate of taxable income of the Company allocated to such
Member for each taxable year, no later than July 15th (August 15th for the first
taxable year of the Company) of the calendar year following the calendar year in
which the Company's applicable taxable year ends . As reasonably practicable
after the filing of the Company's income tax return, each Member will be
provided a copy of the Tax Return as filed.
(c) The Manager shall keep or cause to be kept books and
records pertaining to the Company's business showing all of its assets and
liabilities, receipts and disbursements, realized profits and losses, Members'
Capital Accounts and all transactions entered into by the Company. Such books
and records of the Company shall be kept at the office of the Company and the
Members and their representatives shall at all reasonable times have free access
thereto for the purpose of inspecting or copying the same. The Company's books
of account shall be kept on an accrual basis or as otherwise provided by the
Manager and otherwise in accordance with generally accepted accounting
principles, except that for income tax purposes such books shall be kept in
accordance with applicable tax accounting principles.
(d) Unless otherwise provided in this Agreement, all
determinations, valuations and other matters of judgment required to be made for
accounting and tax purposes under this Agreement shall be made by or under the
direction of the Manager and in accordance with this Agreement, and shall be
conclusive and binding on all Members, former Members, their successors or legal
representatives and any other person except for computational errors or fraud,
and to the fullest extent permitted by law no such person shall have the right
to an accounting or an appraisal of the assets of the Company or any successor
thereto except for computational errors or fraud.
(e) If the Manager determines it necessary, the books of the
Company shall be examined, certified and audited annually as of the end of a
Fiscal Year, by a recognized firm of independent certified public accountants.
For each Fiscal Year of the Company the Manager has so approved an audit, such
accountants shall determine and prepare full financial statements, including,
without limitation, a balance sheet, an income statement and a statement of
changes in financial position of the Company. The Tax Matters Member shall
promptly upon receipt of any such financial statements transmit copies thereof
to each Member, together with the report and management letter of such
accountants covering the results of such audit. The cost of all
<PAGE>
16
audits and reports provided to the Members pursuant to this Section 6.1 shall be
an expense of the Company.
SECTION 6.2 Certain Tax Matters.
(a) The taxable year of the Company shall be the same as its
Fiscal Year (unless otherwise required by applicable law).
(b) The Tax Matters Member shall cause to be prepared all
federal, state and local tax returns of the Company for each year for which such
returns are required to be filed and, after approval of such returns by the
Manager, shall cause such returns to be timely filed. The Manager shall
determine the appropriate treatment in accordance with this Agreement, of each
item of income, gain, loss, deduction and credit of the Company and the
accounting methods and conventions under the tax laws of the United States, the
several states and other relevant jurisdictions as to the treatment of any such
item or any other method or procedure related to the preparation of such tax
returns and shall take all steps necessary to ensure that the other Members are
"notice partners" within the meaning of Section 6231(a)(8) of the Code.
Notwithstanding anything in this Section 6.2 to the contrary, the Tax Matters
Member shall provide all material income tax returns of the Company or its
Subsidiaries to the Members no later than the earlier of (x) August 15th (other
than for the first taxable year of the Company) of the calendar year following
the calendar year in which the Company's applicable taxable year ends, or (y) 30
days prior to the date on which the Manager intends to file such tax return, for
review and comment. Such Members shall provide to the Tax Matters Member any
comments they have within 20 days after receipt of such tax returns. The Tax
Matters Member shall consult in good faith and shall take all reasonable efforts
to incorporate all such reasonable comments into the tax returns prior to
filing.
(c) If a claim for Tax is asserted in a Contest (as defined
below), the Tax Matters Member shall (i) represent the Company's interests in
any such Contest and may employ counsel of its choice at the Company's expense,
and (ii) control the conduct of such Contest, including the settlement or other
disposition thereof, provided, that, if such Contest involves an allocation of
Company income under section 704(c) or an allocation relating to the Safe Harbor
Leases ("Allocation Issues"), then the Tax Matters Member shall consult with the
non-RTI Members regarding any such Contest with respect to the Allocation Issues
and shall allow the non-RTI Members to participate in any such proceeding with
respect to the Allocation Issues, provided, further, that the Tax Matters Member
shall not enter into any settlement or compromise with respect to the Allocation
Issues without the consent of the non-RTI Members, which consent shall not be
unreasonably withheld. If the Tax Matters Member (acting in good faith)
reasonably determines not to continue a Contest involving Allocation Issues, the
non-RTI Members may continue the Contest on behalf of the Company, provided,
that, any costs and expenses (including the fees and expenses of any
consultants, attorneys, accountants or other persons) incurred by the non-RTI
Members shall be solely for their account, provided, however,
<PAGE>
17
that no settlement shall be made without the prior written consent of the Tax
Matters Member, which consent shall not be unreasonably withheld. For purposes
of this Agreement, a "Contest" is any audit, court proceeding or other dispute
with respect to any Tax matter that affects the Company or any of its Members.
(d) The "tax matters partner" for purposes of section
6231(a)(7) of the Code (the "Tax Matters Member") shall be the Manager. The Tax
Matters Member shall have all of the rights, duties, powers and obligations
provided for in sections 6221 through 6232 of the Code with respect to the
Company.
SECTION 6.3 Capital Accounts. There shall be established for
each Member on the books of the Company as of the date hereof, or such later
date on which such Member is admitted to the Company, a capital account (each
being a "Capital Account"). Each Capital Contribution shall be credited to the
Capital Account of such Member on the date of such Capital Contribution. In
addition, each Class B Member's Capital Account shall be (a) credited with such
Member's allocable share of any Net Income of the Company, (b) debited with (i)
distributions to such Member of cash or the fair market value of property
distributed to such Member (reduced by the amount of any Company liabilities
assumed by such Member or secured by the distributed property), (ii) the amount
of any liabilities of such Member assumed by the Company or which are secured by
any property contributed by such Member to the Company, and (iii) such Member's
allocable share of Net Loss of the Company and expenditures of the Company
described or treated under section 704(b) of the Code as described in section
705(a)(2)(B) of the Code, and (c) otherwise maintained in accordance with the
provisions of the Code. In addition, each Class A Member and Class C Member
shall be (x) credited with the applicable Preferred Return and (y) debited with
distributions to such Member of cash or the fair market value of property
distributed to such Member. Any other item which is required to be reflected in
a Member's Capital Account under section 704(b) of the Code or otherwise under
this Agreement shall be so reflected. Capital Accounts shall be appropriately
adjusted to reflect transfers of part (but not all) of a Member's interest in
the Company. Interest shall not be payable on Capital Account balances. The
foregoing Section 6.3(a) and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Regulation
section 1.704-1(b)(iv) and, to the greatest extent practicable, shall be
interpreted and applied in a manner consistent with such Regulation. The Manager
to the extent otherwise consistent with this Agreement shall (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Members and the amount of capital reflected on the
Company's balance sheet, in accordance with Regulation section
1.704-1(b)(2)(iv)(q), (ii) make any appropriate modifications in the events that
unanticipated event might otherwise cause the Agreement not to comply with
Regulation section 1.704- 1(b)(iv), and/or (iii) make any further adjustments
that are necessary or appropriate so as to preserve, to the maximum extent
possible, the economics among the Members as set forth in this Agreement and the
Equityholders Agreement.
<PAGE>
18
SECTION 6.4 Allocations. (a) Net Income (Loss) and Credits of
the Company shall be allocated among all Class B Members in proportion to their
respective number of Class B Units; provided, that, an allocation of income
shall first be made to the Class A Members and the Class C Members in an amount
equal to the applicable Preferred Return without regard to the Net Income or
Loss of the Company.
(b) Notwithstanding anything herein to the contrary, in the
event any Member unexpectedly receives any adjustments, allocations or
distributions described in paragraphs (b)(2)(ii)(d)(4), (5) or (6) of Regulation
section 1.704-1, there shall be specially allocated to such Class B Member such
items of Company income and gain, at such times and in such amounts as will
eliminate as quickly as possible that portion of any deficit in its adjusted
Capital Account caused or increased by such adjustments, allocations or
distributions. To the extent permitted by the Code and the regulations
thereunder, any special allocations of items of income or gain pursuant to this
Section 6.4(b) shall be taken into account in computing subsequent allocations
of Net Income (Loss) pursuant to this Section 6.4 so that the net amount of any
items so allocated and the subsequent allocations of Net Income (Loss) to the
Class B Members pursuant to this Section 6.4 shall, to the extent possible, be
equal to the net amounts that would have been allocated to each such Class B
Member pursuant to the provisions of this Section 6.4 if such unexpected
adjustments, allocations or distributions had not occurred. The provisions of
this Section 6.4(b) are intended to qualify any such allocations as "qualified
income offsets" under section 704(b) of the Code and Regulation section
1.704-1(b)(2)(ii)(d) and shall be interpreted in accordance therewith for all
purposes under this Agreement.
(c) All items of income, gain, loss, deduction and credit of
the Company shall be allocated among the Class B Members for federal, state and
local income tax purposes consistent with the manner that the corresponding
constituent items of Net Income (Loss) shall be allocated among the Class B
Members pursuant to this Agreement, except as may otherwise be provided herein
or by the Code; provided, that, an allocation of income shall first be made to
the Class A Members and the Class C Members in an amount equal to the applicable
Preferred Return without regard to the net income of the Company. The following
allocations to the Class B Members shall be made, solely, for U.S. federal
income tax purposes:
(i) For the term of the lease and while the relevant
Safe Harbor Lease is in effect, all items of income, gain, loss, or
deduction relating to Safe Harbor Leases contributed by USX RTI
Holdings and Kobe RTI Holdings and assumed by the Company as of the
Closing, including, but not limited to, rent expense, interest income,
and lease assumption payments, shall be allocated to USX RTI Holdings
and to Kobe RTI Holdings, and no such items shall be allocated to the
RTI Members, unless otherwise required by a taxing authority and
provided no Contest exists with respect to such items. Such items are
listed in Schedule C, attached hereto (Schedule C will be appropriately
modified in the event of a disposition of the Safe Harbor Leases or the
Safe Harbor Lease Property). For the 1999 tax year, the amounts will be
prorated based
<PAGE>
19
on the number of days remaining from the Closing Date through the end
of the Company's taxable year. All of the items allocated to USX RTI
Holdings and Kobe RTI Holdings pursuant to this Section 6.4(c)(i) shall
be allocated equally as between them, provided, that, items of
deduction will be allocated from USX RTI Holdings to Kobe RTI Holdings
(or vice-versa) in accordance with Schedule C, attached to this
Agreement, unless otherwise required by a taxing authority and provided
no Contest exists with respect to such items.
(ii) For purposes of the allocations under section
704(c) of the Code, the fair market value of the Safe Harbor Leaseholds
shall be equal to zero.
(iii) If a member contributes property to the
Company, either upon formation of the Company or otherwise (other than
the Safe Harbor Leases and the Safe Harbor Lease Property) with a fair
market value that differs from its adjusted basis at the time of
contribution, then income, gain, loss and deductions shall, solely for
federal income tax purposes, be allocated among the members so as to
take account of any such variation using the remedial method of
allocations as described in Treasury Regulation Section 1.704-3(d).
(d) In the event there is any recapture of Depreciation or
item of tax credit, the allocation thereof shall be made among the Members in
accordance with the provisions of Regulation sections 1.1245-1(e) and
1.1250-1(f).
(e) Notwithstanding the provisions of this Section 6.4, net
income, net gain, and net loss of the Company (or items of income, gain, loss,
deduction, or credit, as the case may be) shall be allocated in accordance with
the following provisions of this Section 6.4 to the extent such provisions shall
be applicable; provided, that, income or gain shall be allocated to the Class A
Members and the Class C Members in an amount equal to the applicable Preferred
Return.
(i) Nonrecourse Deductions of the Company for any
Fiscal Year shall be allocated to the Class B Members in proportion to
their number of Units. Member Nonrecourse Deductions of the Company or
deductions for which a Class B Member bears the economic risk of loss
for any Fiscal Year shall be specially allocated to the Member who
bears the economic risk of loss under Regulation section 1.752-2 for
the liability in question. The provisions of this Section 6.4(e)(i) are
intended to satisfy the requirements of Regulation sections
1.704-2(e)(2) and 1.704-2(i)(1) and shall be interpreted in accordance
therewith for all purposes under this Agreement.
(ii) Except as otherwise provided in Regulation
section 1.704-2(f), if there is a net decrease in the Minimum Gain of
the Company during any Company Fiscal Year, each Class B Member shall
be specially allocated items of
<PAGE>
20
Company income and gain for such year in proportion to, and to the
extent of that Member's share of the net decrease in Minimum Gain,
within the meaning of Regulation section 1.704-2(g)(2). The provisions
of this Section 6.4(e)(ii) are intended to comply with the Minimum Gain
chargeback requirements of Regulation section 1.704-2(f) and shall be
interpreted in accordance therewith for all purposes under this
Agreement.
(iii) Except as otherwise provided in regulation
section 1.704-2(i)(4), if there is a net decrease in Member Nonrecourse
Debt Minimum Gain during any Fiscal Year, each Class B Member that has
a share of such Member Nonrecourse Debt Minimum Gain, determined in
accordance with Regulation section 1.704-2(i)(5), as of the beginning
of such year shall be specially allocated items of Company income and
gain for such year (and, if necessary, for succeeding years) in
proportion to, and to the extent of such Class B Member's share of the
net decrease in Member Nonrecourse Debt Minimum Gain. The provisions of
this Section 6.4(e)(iii) are intended to comply with the Member
Nonrecourse Debt Minimum Gain chargeback requirement of Regulation
section 1.704-2(i)(4) and shall be interpreted in accordance therewith
for all purposes under this Agreement.
SECTION 6.5 Withholding. Each Member hereby authorizes the
Company to withhold and to pay over any taxes payable by the Company or any of
its affiliates as a result of such Member's participation in the Company; if and
to the extent that the Company shall be required to withhold any such taxes,
such Member shall be deemed for all purposes of this Agreement to have received
a payment from the Company as of the time such withholding is required to be
paid, which payment shall be deemed to be a distribution to such Member to the
extent that the Member is entitled to receive a distribution. To the extent that
the aggregate of such payments to a Member for any period exceeds the
distributions to which such Member is entitled for such period, the amount of
such excess shall be considered a demand loan from the Company to such Member,
with interest at an interest rate of 5% compounded annually, which interest
shall be treated as an item of Company income until discharged by such Member by
repayment, which may be made in the sole discretion of the Manager out of
distributions to which such Member would otherwise be subsequently entitled. The
withholdings referred to in this Section 6.5 shall be made at the maximum
applicable statutory rate under the applicable tax law unless the Manager
receives documentation, satisfactory to the Manager, to the effect that a lower
rate is applicable, or that no withholding is applicable.
SECTION 6.6 Distributions by Republic Technologies
International, LLC. The Manager shall cause Republic Technologies International,
LLC or any subsidiary of the Company to make such distributions of cash to the
Company (to the extent funds are legally available therefor and permitted by
applicable debt instruments) as are necessary for the Company to make the
distributions contemplated under Article 5.
<PAGE>
21
ARTICLE VII
Dissolution
SECTION 7.1 Dissolution. The Company shall be dissolved and
subsequently terminated upon the earlier to occur of (i) unanimous consent of
the Members and (ii) such time as RTI or its designated successor ceases to act
as Manager if all of the Members then agree to terminate the LLC.
SECTION 7.2 Winding-up. When the Company is dissolved, the
business and property of the Company shall be wound up and liquidated by the
Manager or, if none, by such liquidating trustee as may be approved by the
remaining Members.
SECTION 7.3 Final Distribution. Within 180 calendar days after
the effective date of dissolution of the Company, the assets of the Company
shall be distributed in the following manner and order:
(a) to the payment of the expenses of the winding-up,
liquidation and dissolution of the Company;
(b) to pay all creditors of the Company, either by the payment
thereof or the making of reasonable provision therefor;
(c) to establish reserves, in amounts established by the
Manager or, if none, the liquidating trustee, to meet other liabilities of the
Company;
(d) to the payment of the Class A Stated Value and the
undistributed Class A Preferred Return to the Class A Member;
(e) to the payment of the Class C Stated Value and the
undistributed Class C Preferred Return to the Class C Member; and
(f) to the Non-RTI Members in an amount equal to the
outstanding balance of any Shortfall and accrued interest thereon, provided,
that, any amount distributed pursuant to this Section 7.3(f) shall be deemed a
payment that is applied pro rata between the Recourse Note(s) and the
NonRecourse Note(s) (based on the relative principal amounts outstanding) and
the amount applicable to each such promissory note(s) shall be applied first to
interest thereon and second to reduce the outstanding balance of such promissory
note(s).
The remaining assets of the Company shall be applied and distributed in
accordance with the number of Class B Units held by each Class B Member.
<PAGE>
22
SECTION 7.4 Distribution Upon Dissolution. It is intended
that, to the extent possible, at the dissolution of the Company each Class B
Member's Capital Account balance will be equal to such Class B Member's Targeted
Capital Account Balance. Notwithstanding anything in Article VI to the contrary,
if the ending Capital Account balance of any Class B Member immediately prior to
the distributions to be made pursuant to this Article VII is more or less than
such Class B Member's Targeted Capital Account Balance, then Net Income (Loss)
shall be specially allocated between the Members for such year (or for prior
years to the extent the Code permits amended tax returns to be filed for the
Company) until each Class B Member's actual Capital Account balance, to the
extent possible, is equal to such Class B Member's Targeted Capital Account
Balance. The special allocation provision provided by this Section 7.4 shall be
applied in such a manner so as to cause the difference between each Class B
Member's Targeted Capital Account Balance and the actual balance in such Class B
Member's Capital Account (determined after this allocation, but immediately
prior to the distributions pursuant to this Article VII) to be the smallest
dollar amount possible.
ARTICLE VIII
Transfer of Members' Interests
SECTION 8.1 Restrictions on Transfer of Company Interests. (a)
No Member may transfer, sell, assign, exchange, mortgage, pledge, hypothecate,
assign or otherwise dispose of or encumber all or any part of its interest in
the Company (a "Transfer") to any person (a "Transferee") except as required or
permitted by the Equityholders Agreement.
SECTION 8.2 Other Transfer Provisions. (a) Any purported
Transfer by a Member of all or any part of its interest in the Company to any
Transferee in violation of this Article VIII shall be null and void and of no
force or effect.
(b) A Member shall have no right to withdraw from the Company
prior to its termination without the prior written consent of the Manager (other
than following a Transfer of all of its Units to a Permitted Transferee).
(c) Concurrently with the admission of any additional Member,
the Manager shall forthwith cause any necessary papers to be filed and recorded
and notice to be given wherever and to the extent required showing the admission
of an additional Member, all at the expense, including payment of any
professional and filing fees incurred, of such additional Member.
(d) If any interest in the Company is Transferred during any
accounting period in compliance with the provisions of this Article VIII, each
item of income, gain, loss,
<PAGE>
23
expense, deduction and credit and all other items attributable to such interest
for such period shall be divided and allocated between the transferor and the
transferee by taking into account their varying interests during such period in
accordance with section 706(d) of the Code and the regulation thereunder, using
any conventions permitted by law and selected by the Manager. All distributions
on or before the date of such Transfer shall be made to the transferor, and all
distributions thereafter shall be made to the transferee. Solely for purposes of
making such allocations and distributions, the Company shall recognize a
Transfer on the date that the Members receive notice of the Transfer from the
Member Transferring its interest which complies with this Article VIII.
ARTICLE IX
Miscellaneous
SECTION 9.1 Equitable Relief. The Members hereby confirm that
damages at law may be an inadequate remedy for a breach or threatened breach of
this Agreement and agree that, in the event of a breach or threatened breach of
any provision hereof, the respective rights and obligations hereunder shall be
enforceable by specific performance, injunction or other equitable remedy,
nothing herein contained is intended to, nor shall it, limit or affect any right
or rights at law or by statute or otherwise of a Member aggrieved as against the
other for a breach or threatened breach of any provision hereof, it being the
intention by this Section 9.1 to make clear the agreement of the Members that
the respective rights and obligations of the Members hereunder shall be
enforceable in equity as well as at law or otherwise and that the mention herein
of any particular remedy shall not preclude a Member from any other remedy it,
he or she or it might have, either in law or in equity.
SECTION 9.2 Officers. The Manager, on behalf of the Company,
may employ and retain persons as may be necessary or appropriate for the conduct
of the Company's business, including employees and agents who may be designated
as officers with titles, including, but not limited to, "chief executive
officer," "president," "vice president," "treasurer," "secretary" and "chief
financial officer."
SECTION 9.3 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware. In
particular, the Company is formed pursuant to the LLC Act, and the rights and
liabilities of the Members shall be as provided therein, except as herein
otherwise expressly provided.
SECTION 9.4 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
<PAGE>
24
SECTION 9.5 Access; Confidentiality. By executing this
Agreement, each Member expressly agrees, at all times during the term of the
Company and thereafter and whether or not at the time a Member of the Company
(i) not to issue any press release or advertisement or take any similar action
concerning the Company's business or affairs without first obtaining the consent
of the Manager which shall not be unreasonably withheld, (ii) not to publicize
detailed financial information concerning the Company except as required by law
and (iii) not to disclose the Company's affairs generally without first
obtaining the consent of the Manager which shall not be unreasonably withheld.
The provisions of this Section 9.5 shall survive the termination of the Company.
SECTION 9.6 Notices. Whenever notice is required or permitted
by this Agreement to be given, such notice may be in writing (including
facsimile) and if in writing shall be given to any Member at its address or
facsimile number shown in the Company's books and records (including Schedule A
hereto).
SECTION 9.7 Counterparts. This Agreement may be executed in
any number of counterparts, all of which together shall constitute a single
instrument.
SECTION 9.8 Entire Agreement. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter hereof.
SECTION 9.9 Amendments. Any amendment to this Agreement shall
be effective only with the unanimous written consent of the Members.
SECTION 9.10 Section Titles. Section titles are for
descriptive purposes only and shall not control or alter the meaning of this
Agreement as set forth in the text hereof.
<PAGE>
25
IN WITNESS WHEREOF, the parties have executed this Limited
Liability Company Agreement as of the day and year first above written.
MEMBERS:
Republic Technologies International, Inc., as
Member and Manager
/s/ John B. George
---------------------------------
Name: John B. George
Title: Vice President of Finance,
Treasurer and Secretary
RES Holding Corporation
/s/ David S. Blitzer
---------------------------------
Name: David S. Blitzer
Title: Secretary
USX RTI Holdings, Inc.
/s/ R.M. Stanton
---------------------------------
Name: R.M. Stanton
Title: Vice President
Kobe RTI Holdings, Inc.
/s/ Susumu Okushima
---------------------------------
Name: Susumu Okushima
Title:
<PAGE>
1
SCHEDULE A
MEMBERS OF THE COMPANY
<TABLE>
<CAPTION>
Amt of
Number of Capital
Member Address Units Contribution
- ------ ------- ----- ------------
Class A Units
<S> <C> <C> <C>
Republic Technologies 3770 Embassy Parkway 1,100 $5,500,000 plus
International, Inc. Akron, Ohio 44333-8367 accrued and unpaid
dividends on the
Series A Preferred
from September 26,
1994
Class B Units
Republic Technologies 3770 Embassy Parkway 312.44826
International, Inc. Akron, Ohio 44333-8367
RES Holdings Corporation 3770 Embassy Parkway 389.88325
Akron, Ohio 44333-8367
USX RTI Holdings, Inc. USX Corporation 155.68073
600 Grant Street
Pittsburgh, Pennsylvania 15219-4776
Kobe RTI Holdings, Inc. c/o Kobe Steel, Ltd. 141.98775
10-26 Wakinohamacho 2-Chome
Chuo-Ku, Kobe City, Hyugo 651-0072
Class C Units
Republic Technologies 3770 Embassy Parkway 30,000 $30,000,000
International, Inc. Akron, Ohio 44333-8367
</TABLE>
The aggregate number of Class B Units issued to RTI and RES Holding Corporation
may be adjusted as between them effective as of the Closing of the transactions
contemplated by the MRA to take account of variations of the Capital
Contributions of such Members.
<PAGE>
EXECUTION COPY
LIMITED LIABILITY COMPANY AGREEMENT
of
Bliss & Laughlin, LLC
THE UNDERSIGNED is executing this Limited Liability Company
Agreement (the "Agreement") for the purpose of forming, and does hereby form, a
limited liability company (the "Company") pursuant to the provisions of the
Delaware Limited Liability Company Act, 6 Del. C. Section Section 18-101 et seq.
(the "Act"), and does hereby certify as follows:
1. Name. The name of the Company shall be Bliss & Laughlin,
LLC, or such other name as the Members may from time to time hereafter
designate.
2. Definitions. Capitalized terms not otherwise defined herein
shall have the meanings set forth therefor in Section 18-101 of the Act.
3. Purpose. The Company is formed for the purpose of engaging
in any lawful business permitted by the Act or the laws of any jurisdiction in
which the Company may do business. The Company shall have the power to engage in
all activities and transactions which the Members deem necessary or advisable in
connection with the foregoing.
4. Offices.
(a) The principal place of business and office of the
Company shall be located at, and the Company's business shall be conducted from,
such place or places as the Members may designate from time to time.
(b) The registered office of the Company in the State
of Delaware shall be located at Corporation Trust Center, 1209 Orange Street,
County of New Castle, Wilmington,
<PAGE>
Delaware 19801. The name and address of the registered agent of the Company for
service of process on the Company in the State of Delaware shall be The
Corporation Trust Company, 1209 Orange Street, Wilmington, County of New Castle,
Delaware 19801. The Members may from time to time change the registered agent or
office by an amendment to the certificate of formation of the Company.
5. Members. The name and business or residence address of each
Member of the Company are as set forth on Schedule A attached hereto. The
business and affairs of the Company shall be managed by the Members. The Members
shall have the power to do any and all acts necessary or convenient to or for
the furtherance of the purposes described herein, including all powers,
statutory or otherwise, possessed by members under the laws of the State of
Delaware. Each Member is hereby designated as an authorized person, within the
meaning of the Act, to execute, deliver and file the certificate of formation of
the Company (and any amendments and/or restatements thereof) and any other
certificates (and any amendments and/or restatements thereof) necessary for the
Company to qualify to do business in a jurisdiction in which the Company may
wish to conduct business. The execution by one Member of any of the foregoing
certificates (and any amendments and/or restatements thereof) shall be
sufficient.
6. Term. The term of the Company shall commence on the date of
filing of the certificate of formation of the Company in accordance with the Act
and shall continue until the Company is dissolved and its affairs are wound up
in accordance with Section 13 of this Agreement and a certificate of
cancellation is filed in accordance with the Act.
7. Management of the Company. Any action to be taken by the
Company shall require the affirmative vote of Members holding a majority of the
Limited Liability Company Interests of the Company (except as otherwise
expressly provided herein). Any action
<PAGE>
so approved may be taken by any Member or other Authorized Person on behalf of
the Company and any action so taken shall bind the Company.
8. Capital Contributions. Members shall make capital
contributions to the Company in such amounts and at such times as they shall
mutually agree pro rata in accordance with profit sharing interests as set forth
in Schedule A hereof ("Profit Sharing Interests"), which amounts shall be set
forth in the books and records of the Company.
9. Assignments of Member Interest. A Member may not sell,
assign, pledge or otherwise transfer or encumber any of its Limited Liability
Company Interest in the Company to any person without the written consent of the
other Members, which consent may be granted or withheld in each of their sole
and absolute discretion.
10. Resignation. No Member shall have the right to resign from
the Company except with the consent of all of the Members and upon such terms
and conditions as may be specifically agreed upon between the resigning Member
and the remaining Members. The provisions hereof with respect to distributions
upon resignation are exclusive and no Member shall be entitled to claim any
further or different distribution upon resignation under Section 18-604 of the
Act or otherwise.
11. Allocations and Distributions. Distributions of cash or
other assets of the Company shall be made at such times and in such amounts as
the Members may determine. Distributions shall be made to (and profits and
losses of the Company shall be allocated among) Members pro rata in accordance
with each of their Profit Sharing Interests, or in such other manner and in such
amounts as all of the Members shall agree from time to time and which shall be
reflected in the books and records of the Company.
<PAGE>
12. Return of Capital. No Member has the right to receive any
distributions which include a return of all or any part of such Member's capital
contribution, provided that upon the dissolution and winding up of the Company,
the assets of the Company shall be distributed as provided in Section 18-804 of
the Act.
13. Dissolution. The Company shall be dissolved and its
affairs wound up upon the occurrence of an event causing a dissolution of the
Company under Section 18-801 of the Act, except that the Company shall not be
dissolved upon the occurrence of an event that terminates the continued
membership of a Member if (i) at the time of the occurrence of such event there
are at least two Members of the Company, or (ii) within ninety (90) days after
the occurrence of such event, all remaining Members agree in writing to continue
the business of the Company and to the appointment, effective as of the date of
such event, of one or more additional Members.
14. Certificated Profit Sharing Interests. The Company shall,
upon the request of a Member, issue a certificate to such Member, executed by an
officer of the Company authorized by the Members hereto, representing such
Member's Profit Sharing Interest. Any such certificate representing a Member's
Profit Sharing Interest shall be deemed a "Security" as defined in Section
8-102(a)(15) of the Uniform Commercial Code as in effect in the State of
Delaware from time to time.
15. Amendments. This Agreement may be amended only upon the
written consent of all of the Members.
16. Miscellaneous. The Members shall not have any liability
for the debts, obligations or liabilities of the Company except to the extent
provided by the Act. This
<PAGE>
Agreement shall be governed by, and construed under, the laws of the State of
Delaware, without regard to its conflict of law rules.
17. Officers. The Company, and each Member on behalf of the
Company, acting singly or jointly, may employ and retain persons as may be
necessary or appropriate for the conduct of the Company's business (subject to
the supervision and control of the Members), including employees and agents who
may be designated as officers with titles, including, but not limited to,
"chairman," "chief executive officer," "president," "vice president,"
"treasurer," "secretary," "managing director," "chief financial officer,"
"assistant treasurer" and "assistant secretary" as and to the extent authorized
by the Members.
IN WITNESS WHEREOF, the undersigned has duly executed this
Agreement as of August 13, 1999.
Republic Technologies International, Inc., as sole
member
By: /s/ John B. George
----------------------------------------------
Name: John B. George
Title: Vice President of Finance,
Treasurer and Secretary
<PAGE>
SCHEDULE A
Name and Address of Members Profit Sharing Interests
- --------------------------- ------------------------
Republic Technologies International, Inc. 100%
3770 Embassy Parkway
Akron, Ohio 44333-8367
<PAGE>
EXECUTION COPY
LIMITED LIABILITY COMPANY AGREEMENT
of
Nimishillen & Tuscarawas, LLC
THE UNDERSIGNED is executing this Limited Liability Company
Agreement (the "Agreement") for the purpose of forming, and does hereby form, a
limited liability company (the "Company") pursuant to the provisions of the
Delaware Limited Liability Company Act, 6 Del. C. Section Section 18-101 et seq.
(the "Act"), and does hereby certify as follows:
1. Name. The name of the Company shall be Nimishillen &
Tuscarawas, LLC, or such other name as the Members may from time to time
hereafter designate.
2. Definitions. Capitalized terms not otherwise defined herein
shall have the meanings set forth therefor in Section 18-101 of the Act.
3. Purpose. The Company is formed for the purpose of engaging
in any lawful business permitted by the Act or the laws of any jurisdiction in
which the Company may do business. The Company shall have the power to engage in
all activities and transactions which the Members deem necessary or advisable in
connection with the foregoing.
4. Offices.
(a) The principal place of business and office of the
Company shall be located at, and the Company's business shall be conducted from,
such place or places as the Members may designate from time to time.
(b) The registered office of the Company in the State
of Delaware shall be located at Corporation Trust Center, 1209 Orange Street,
County of New Castle, Wilmington,
<PAGE>
Delaware 19801. The name and address of the registered agent of the Company for
service of process on the Company in the State of Delaware shall be The
Corporation Trust Company, 1209 Orange Street, Wilmington, County of New Castle,
Delaware 19801. The Members may from time to time change the registered agent or
office by an amendment to the certificate of formation of the Company.
5. Members. The name and business or residence address of each
Member of the Company are as set forth on Schedule A attached hereto. The
business and affairs of the Company shall be managed by the Members. The Members
shall have the power to do any and all acts necessary or convenient to or for
the furtherance of the purposes described herein, including all powers,
statutory or otherwise, possessed by members under the laws of the State of
Delaware. Each Member is hereby designated as an authorized person, within the
meaning of the Act, to execute, deliver and file the certificate of formation of
the Company (and any amendments and/or restatements thereof) and any other
certificates (and any amendments and/or restatements thereof) necessary for the
Company to qualify to do business in a jurisdiction in which the Company may
wish to conduct business. The execution by one Member of any of the foregoing
certificates (and any amendments and/or restatements thereof) shall be
sufficient.
6. Term. The term of the Company shall commence on the date of
filing of the certificate of formation of the Company in accordance with the Act
and shall continue until the Company is dissolved and its affairs are wound up
in accordance with Section 13 of this Agreement and a certificate of
cancellation is filed in accordance with the Act.
7. Management of the Company. Any action to be taken by the
Company shall require the affirmative vote of Members holding a majority of the
Limited Liability Company Interests of the Company (except as otherwise
expressly provided herein). Any action
<PAGE>
so approved may be taken by any Member or other Authorized Person on behalf of
the Company and any action so taken shall bind the Company.
8. Capital Contributions. Members shall make capital
contributions to the Company in such amounts and at such times as they shall
mutually agree pro rata in accordance with profit sharing interests as set forth
in Schedule A hereof ("Profit Sharing Interests"), which amounts shall be set
forth in the books and records of the Company.
9. Assignments of Member Interest. A Member may not sell,
assign, pledge or otherwise transfer or encumber any of its Limited Liability
Company Interest in the Company to any person without the written consent of the
other Members, which consent may be granted or withheld in each of their sole
and absolute discretion.
10. Resignation. No Member shall have the right to resign from
the Company except with the consent of all of the Members and upon such terms
and conditions as may be specifically agreed upon between the resigning Member
and the remaining Members. The provisions hereof with respect to distributions
upon resignation are exclusive and no Member shall be entitled to claim any
further or different distribution upon resignation under Section 18-604 of the
Act or otherwise.
11. Allocations and Distributions. Distributions of cash or
other assets of the Company shall be made at such times and in such amounts as
the Members may determine. Distributions shall be made to (and profits and
losses of the Company shall be allocated among) Members pro rata in accordance
with each of their Profit Sharing Interests, or in such other manner and in such
amounts as all of the Members shall agree from time to time and which shall be
reflected in the books and records of the Company.
<PAGE>
12. Return of Capital. No Member has the right to receive any
distributions which include a return of all or any part of such Member's capital
contribution, provided that upon the dissolution and winding up of the Company,
the assets of the Company shall be distributed as provided in Section 18-804 of
the Act.
13. Dissolution. The Company shall be dissolved and its
affairs wound up upon the occurrence of an event causing a dissolution of the
Company under Section 18-801 of the Act, except that the Company shall not be
dissolved upon the occurrence of an event that terminates the continued
membership of a Member if (i) at the time of the occurrence of such event there
are at least two Members of the Company, or (ii) within ninety (90) days after
the occurrence of such event, all remaining Members agree in writing to continue
the business of the Company and to the appointment, effective as of the date of
such event, of one or more additional Members.
14. Certificated Profit Sharing Interests. The Company shall,
upon the request of a Member, issue a certificate to such Member, executed by an
officer of the Company authorized by the Members hereto, representing such
Member's Profit Sharing Interest. Any such certificate representing a Member's
Profit Sharing Interest shall be deemed a "Security" as defined in Section
8-102(a)(15) of the Uniform Commercial Code as in effect in the State of
Delaware from time to time.
15. Amendments. This Agreement may be amended only upon the
written consent of all of the Members.
16. Miscellaneous. The Members shall not have any liability
for the debts, obligations or liabilities of the Company except to the extent
provided by the Act. This
<PAGE>
Agreement shall be governed by, and construed under, the laws of the State of
Delaware, without regard to its conflict of law rules.
17. Officers. The Company, and each Member on behalf of the
Company, acting singly or jointly, may employ and retain persons as may be
necessary or appropriate for the conduct of the Company's business (subject to
the supervision and control of the Members), including employees and agents who
may be designated as officers with titles, including, but not limited to,
"chairman," "chief executive officer," "president," "vice president,"
"treasurer," "secretary," "managing director," "chief financial officer,"
"assistant treasurer" and "assistant secretary" as and to the extent authorized
by the Members.
IN WITNESS WHEREOF, the undersigned has duly executed this
Agreement as of August 13, 1999.
Republic Technologies International, LLC, as sole
member
By: /s/ John B. George
----------------------------------------------
Name: John B. George
Title: Vice President of Finance,
Treasurer and Secretary
<PAGE>
SCHEDULE A
Name and Address of Members Profit Sharing Interests
- --------------------------- ------------------------
Republic Technologies International, LLC 100%
c/o Republic Technologies International, Inc.
3770 Embassy Parkway
Akron, Ohio 44333-8367
<PAGE>
Industry Canada Industre Canada
Canada Business Loi canadienne sur
Corporations Act les societes par actions
I HEREBY CERTIFY THAT THE JE CERTIFIE, PAR LES
ATTACHED IS A TRUE COPY OF PRESENTES, QUE LE DOCUMENT
THE DOCUMENT MAINTAINED CI-JOINT EST UNE COPIE EXACTE
IN THE RECORDS OF THE D'UN DOCUMENT CONTENU
DIRECTOR. DANS LES LIVRES TENUS PAR LE
DIRECTEUR.
Deputy Director - Directeur adjoint Date March 25, 1996
Canada
<PAGE>
Consumer and Consommation
Corporate Affairs Canada et Corporations Canada
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------
Certificate of Incorporation Certificat de constitution
Canada Business Loi regissant les societes
Corporations Act par actions de regime federal
CANADIAN DRAWN STEEL COMPANY INC. 355450-0
Name of Corporation - Determination de la societe Number - Numero
I hereby certify that the Je certif par les presentes que la societe
abovementioned Corporation, mentionnee ci-hant, dont les statuts
the Articles of Incorporation of constitutifs sont joints, a ete
which are attached, was constituee en societe en vertu de la loi
incorporated under the Canada regissant les societes par actions de
Business Corporations Act. regime federal.
Le directeur
December 20, 1989/le 20 deciembre 1989
Date of Incorporation - Date de
Director constitution
- --------------------------------------------------------------------------------------------------------
</TABLE>
Canada
<PAGE>
<TABLE>
<CAPTION>
CANADA BUSINESS LOI SUR LES SOCIETES
CORPORATIONS ACT COMMERCIALES CANADIENNES
FORM 1 FORMULE 1
ARTICLES OF INCORPORATION STATUTS CONSTITUTIFS
(SECTION 6) (ARTICLE 6)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Name of Corporation Denomination de la societe
CANADIAN DRAWN STEEL COMPANY INC.
- ------------------------------------------------------------------------------------------------------------------------
2. The place in Canada where the registered office Lieu au Canada ou doit etre situe le siege social
is to be situated
City of Hamilton, Regional Municipality of
Hamilton-Wentworth
- ------------------------------------------------------------------------------------------------------------------------
3. The classes and any maximum number of Categories et tout nombre maximal d'actions que la
shares that the corporation is authorized to societe est autorisee a emetrre
issue
The corporation is authorized to issue:
an unlimited number of common shares
- ------------------------------------------------------------------------------------------------------------------------
4. Restrictions if any on share transfers Restrictions sur le transfert des actions, s'il y a lieu
</TABLE>
<TABLE>
<S> <C>
No share or shares of the corporation shall at any time be transferred to any person without either (a)
the consent of a majority of the directors to be signified by a resolution passed by the board or by an
instrument or instruments in writing signed by a majority of the directors, or (b) the consent of the
holders of not less than 51% of the outstanding shares of each class of the corporation signified either
by a resolution passed at a meeting of such shareholders or by an
instrument or instruments in writing signed by such shareholders.
</TABLE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------
5. Number (or minimum and maximum number Nombre (ou nombre minimum et maximum
of directors) d'administrateurs)
Minimum of one (1) and maximum of fifteen (15)
- ------------------------------------------------------------------------------------------------------------------------
6. Restrictions if any on business the corporation Limites imposees quant aux activites commerciales
may carry on que la societe peut expoiter, s'il y a lieu
None
- ------------------------------------------------------------------------------------------------------------------------
7. Other provisions if any Autres dispositions s'il y a lieu
The annexed Schedule "A" is incorporated in this form
- ------------------------------------------------------------------------------------------------------------------------
8. Incorporators Fondateurs
- ------------------------------------------------------------------------------------------------------------------------
Names-Norm Address (include postal code) Signature
Adresse (inclure le code postal)
- ------------------------------------------------------------------------------------------------------------------------
John F.T. Warren 66 Grenview Blvd, N.
Toronto, Ontario
M8X 2K4
- ------------------------------------------------------------------------------------------------------------------------
FOR DEPARTMENTAL USE ONLY A L'USAGE DU MINISTERE SEULEMENT
Corporation No-No de la societe Filed-Deposee JAN -5 1990
255450-0
</TABLE>
<PAGE>
Industry Canada Industre Canada
Corporations Directorate Direction generale des Corporations
9th floor, Journal Tower S. 9th etage, Edifice Journal, Tour sud
365 Laurier Avenue West 365, avenue Laurier ouest
Ottawa, Ontario Ottawa (Ontario)
K1A 0C8 K1A 0C8
April 1, 1996/le 1 avril 1996 Your file - Votre reference
BORDEN & ELLIOTT Our file - Notre reference 25545-0
Re - Objet
<TABLE>
CANADIAN DRAWN STEEL COMPANY INC.
<S> <C>
Enclosed herewith is the document issued in the Vous trouverez ci-inclus le document emis dans
above matter. l'affaire precidee.
A notice of issuance of CBCA documents will be Un avis de l'emission de documents en vertu de la
published in the Canada Corporations Bulletin. A LCSA sera publie dans le Bulletin des societes
notice of issuance of CCA documents will be canadiennes. Un avis de l'emission de documents en
published in the Canada Corporations Bulletin and vertu de la LCC sera publie dans le Bulletin des
the Canada Gazette. societes canadiennes et dans la Gazette du Canada.
IF A NAME OR CHANGE OF NAME IS INVOLVED, THE S'IL EST QUESTION D'UNE DENOMINATION SOCIALE
FOLLOWING CAUTION SHOULD BE OBSERVED: OU D'UN CHANGEMENT DE DENOMINATION SOCIALE,
L'AVERTISSEMENT SUIVANT DOIT ETRE RESPECTE:
This name is available for use as a corporate name Cette denomination sociale est disponible en autant
subject to and conditional upon the applicants que les requerants assumene toute responsibilite de
assuming full responsibility for any risk of risque de confusion avec toutes denominations
confusion with existing business names and trade commerciales et toutes marques de commerce
marks (including those set out in the relevant existantes (y compris celles qui sout cities dans le(s)
NUANS search report(s)). Acceptance of such rapport(s) de recherches de NUANS pertinant(s).
responsibility will comprise an obligation to Cette acceptation de responsibilite comprend
change the name to a dissimilar one in the event l'obligation de changer la denomination de la societe
that representations are made and established en une denomination differant advenant le cas ou
that confusion is likely to occur. The use of any des representations sont faites establissant qu'il y a
name granted is subject to the laws of the une probabilite de confusion. L'utilisation de tout
jurisdiction where the company carries on nom nettoyee est sujete a toute loi de la juridiction
business. ou la societe exploite son enterprise.
For the Director General, Corporations Directorate pour le Directeur general, Direction generale des
Corporations
</TABLE>
<PAGE>
SCHEDULE "A"
------------
7. Other provisions:
The board of directors may from time to time, in such amounts
and on such terms as it deems expedient charge, mortgage,
hypothecate or pledge all or any of the currently owned or
subsequently acquired real or personal, movable or immovable,
property of the corporation, including book debts, rights,
powers, franchises and undertaking, to secure any debt
obligations or any money borrowed, or other debt or liability
of the corporation.
The board of directors may from time to time delegate to such
one or more of the directors and officers of the corporation
as may be designated by the board all or any of the powers
conferred on the board above to such extent and in such
manner as the board shall determine at the time of each such
delegation.
The number of shareholders of the corporation, exclusive of
persons who are in its employment and exclusive of persons
who, having been formerly in the employment of the
corporation, were, while in that employment, and have
continued after the termination of that employment to be,
shareholders of the corporation, is limited to not more than
50, 2 or more persons who are the joint registered owners of
one or more shares being counted as one shareholder.
Any invitation to the public to subscribe for securities of
the corporation is prohibited.
Subject to the provisions of the Canada Business Corporations
Act, and except in the case of any class or series of shares
of the corporation listed on a stock exchange, the
corporation shall have a lien on the shares registered in the
name of a shareholder or his legal representative for a debt
of that shareholder to the corporation.
<PAGE>
Industry Canada Industre Canada
Certificate Certificat
of Amendment de modification
Canada Business Loi canadienne sur
Corporations Act les societes par actions
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CANADIAN DRAWN STEEL COMPANY INC. 255450-0
<S> <C>
- --------------------------------- ------------------------------------
Name of corporation-Denomination de la Corporation number-Numero de la societe
societe
I hereby certify that the articles of the above- Je certifie que les statuts de la societe
named corporation were amended: susmentionee ont ete modifies:
(a) under section 13 of the Canada Business /_/ a) en vertu de l'article 13 de la Loi canadienne
Corporations Act in accordance with the sur les societes par actions, conformement
attached notice; a'l'avis ci-joint;
(b) under section 27 of the Canada Business /_/ b) en vertu de l'article 27 de la Loi canadienne
Corporations Act as set out in the attached sur les societes par actions, tel qu'il est
articles of amendment designating a series indique dans les clauses modificatrices
of shares; ci-jointes designant une serie d'actions;
(c) under section 179 of the Canada /X/ c) en vertu de l'article 179 de la Loi canadienne
Business Corporations Act as set out in sur les societes par actions, tel qu'il est
the attached articles of amendment; indique dans les clauses modificatrices ci-
jointes;
(d) under section 191 of the Canada /_/ d) en vertu de l'article 191 de la Loi canadienne
Business Corporations Act as setout in the sur les societes par actions, tel qu'il est
attached articles of reorganization. indique dans les clauses de reorganisation ci-
jointes.
April 1, 1996/le 1 avril 1996
Director - Directeur Date of Amendment - Date de modification
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Industry Canada Industre Canada FORM 4 FORMULE 4
Canada Business Loi canadienne sur ARTICLES OF AMENDMENT CLAUSES MODIFICATRICES
Corporation Act les societes par (SECTION 27 OR 177) (ARTICLES 27 OU 177)
actions
- -------------------------------------------------------------------------------------------------------------------
1 - Name of Corporation - Denomination de la societe 2 - Corporation number - Numero de la societe
CANADIAN DRAWN STEEL COMPANY INC. 255450-0
- -------------------------------------------------------------------------------------------------------------------
3 - The articles of the above-namedcorporation are amended as follows: Les statuts de la societe mentionee
ci-dessus sent modifie de la facon suivante:
1. Paragraphs 3 and 4 contained in the "other provisions" as set out in
Schedule "A" attached to the articles of incorporation of the
corporation are deleted in their entirety.
2. Provide that the "other provisions" attached to the articles of the
corporation are as follows:
a) The board of directors may from time to time, in such amounts
and on such terms as it deems expedient charge, mortgage,
hypothecate or pledge all or any of the currently owned or
subsequently acquired real or personal, movable or immovable,
property of the corporation, including book debts, rights,
powers, franchises and undertaking, to secure any debt
obligations or any money borrowed, or other debt or liability
of the corporation.
b) The board of directors may from time to time delegate to such
one or more of the directors and officers of the corporation
as may be designated by the board all or any of the powers
conferred on the board above to such extent and in such
manner as the board shall determine at the time of each such
delegation.
c) Subject to the provisions of the Canada Business Corporations
Act, and except in the case of any class or series of shares
of the corporation listed on a stock exchange, the
corporation shall have a lien on the shares registered in the
name of shareholder or his legal representative for a debt of
that shareholder to the corporation.
- -------------------------------------------------------------------------------------------------------------------
D.J M Y.A Signature Title - Titre
01 04 96 ASSISTANT SECRETARY
- -------------------------------------------------------------------------------------------------------------------
FOR DEPARTMENTAL USE ONLY - A L'USAGE DU MINISTERE
SEULEMENT
Filed -- Deposee APR - 1 1996
AVR
--------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
and
RTI CAPITAL CORP.,
as Issuers
and
Republic Technologies International Holdings, LLC,
Nimishillen & Tuscarawas, LLC,
Bliss & Laughlin, LLC
and
Canadian Drawn Steel Company Inc.,
as Guarantors
--------------------------
United States Trust Company of New York,
as Trustee
and
United States Trust Company of New York,
as Collateral Agent
---------------------------
INDENTURE
Dated as of August 13, 1999
---------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- ---------------
Section 310 (a)(1) ...................................... 7.10
(a)(2) ...................................... 7.10
(a)(3) ...................................... 7.12
(a)(4) ...................................... N.A.
(b) ......................................... 7.8; 7.10; 12.2
(c) ......................................... N.A.
Section 311 (a) ......................................... 7.11
(b) ......................................... 7.11
(c) ......................................... N.A.
Section 312 (a) ......................................... 2.5
(b) ......................................... 12.3
(c) ......................................... 12.3
Section 313 (a) ......................................... 7.6
(b)(1) ...................................... 7.6
(b)(2) ...................................... 7.6
(c) ......................................... 7.6; 12.2
(d) ......................................... 7.6
Section 314 (a) ......................................... 4.7; 12.2
(b) ......................................... 10.2
(c)(1) ...................................... 12.4
(c)(2) ...................................... 12.4
(c)(3) ...................................... N.A.
(d) ......................................... 10.6
(e) ......................................... 12.5
(f) ......................................... N.A.
Section 315 (a) ......................................... 7.1(b)
(b) ......................................... 7.5; 12.2
(c) ......................................... 7.1(a)
(d) ......................................... 7.1(c)
(e) ......................................... 6.11
Section 316 (a) (last sentence) ......................... 2.9
(a)(1)(A) ................................... 6.5
(a)(1)(B) ................................... 6.4
(a)(2) ...................................... N.A.
(b) ......................................... 6.7
Section 317 (a)(1) ...................................... 6.8
(a)(2) ...................................... 6.9
(b) ......................................... 2.4
Section 318 (a) ......................................... 12.1
- ----------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.................................................1
SECTION 1.2. Incorporation by Reference of Trust Indenture Act..........28
SECTION 1.3. Rules of Construction......................................28
ARTICLE II
THE SECURITIES
SECTION 2.1. Form and Dating............................................29
SECTION 2.2. Execution and Authentication...............................29
SECTION 2.3. Registrar and Paying Agent.................................30
SECTION 2.4. Paying Agent To Hold Money in Trust........................30
SECTION 2.5. Securityholder Lists.......................................31
SECTION 2.6. Transfer and Exchange......................................31
SECTION 2.7. Replacement Securities.....................................32
SECTION 2.8. Outstanding Securities.....................................32
SECTION 2.9. Treasury Securities........................................33
SECTION 2.10. Temporary Securities.......................................33
SECTION 2.11. Cancellation...............................................33
SECTION 2.12. Defaulted Interest.........................................33
SECTION 2.13. CUSIP Number...............................................34
SECTION 2.14. Deposit of Moneys..........................................34
SECTION 2.15. Book-Entry Provisions for Global Securities................34
SECTION 2.16. Special Transfer Provisions................................35
ARTICLE III
REDEMPTION
SECTION 3.1. Notices to Trustee.........................................39
SECTION 3.2. Selection of Securities To Be Redeemed.....................39
SECTION 3.3. Notice of Redemption.......................................39
SECTION 3.4. Effect of Notice of Redemption.............................40
SECTION 3.5. Deposit of Redemption Price................................41
SECTION 3.6. Securities Redeemed in Part................................41
-i-
<PAGE>
Page
----
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Securities......................................41
SECTION 4.2. Maintenance of Office or Agency............................41
SECTION 4.3. Corporate Existence........................................42
SECTION 4.4. Payment of Taxes and Other Claims..........................42
SECTION 4.5. Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.....................................43
SECTION 4.6. Compliance Certificates....................................43
SECTION 4.7. Provision of Financial Information.........................44
SECTION 4.8. Further Assurance to the Trustee or Collateral Agent.......44
SECTION 4.9. Limitation on Additional Indebtedness and Certain
Preferred Stock.........................................45
SECTION 4.10. Limitation on Sale-Leaseback Transactions..................48
SECTION 4.11. Limitation on Liens........................................48
SECTION 4.12. Limitation on Restricted Payments..........................48
SECTION 4.13. Disposition of Proceeds of Asset Sales.....................52
SECTION 4.14. Limitation on Transactions with Affiliates.................56
SECTION 4.15. Change of Control..........................................57
SECTION 4.16. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries..................................60
SECTION 4.17. RTI Capital Corp...........................................60
SECTION 4.18. Limitation on Designations of Unrestricted Subsidiaries....60
SECTION 4.19. Impairment of Security Interest............................61
SECTION 4.20. [Intentionally Omitted]....................................61
SECTION 4.21. Waiver of Stay, Extension or Usury Laws....................61
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, Etc................................62
SECTION 5.2. Successor Entity Substituted...............................63
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1. Events of Default..........................................63
SECTION 6.2. Acceleration...............................................66
SECTION 6.3. Other Remedies.............................................67
SECTION 6.4. Waiver of Past Default.....................................67
SECTION 6.5. Control by Majority........................................67
SECTION 6.6. Limitation on Suits........................................68
-ii-
<PAGE>
Page
----
SECTION 6.7. Rights of Holders To Receive Payment.......................68
SECTION 6.8. Collection Suit by Trustee.................................68
SECTION 6.9. Trustee May File Proofs of Claim...........................69
SECTION 6.10. Priorities.................................................69
SECTION 6.11. Undertaking for Costs......................................69
ARTICLE VII
TRUSTEE
SECTION 7.1. Duties of Trustee..........................................70
SECTION 7.2. Rights of Trustee..........................................71
SECTION 7.3. Individual Rights of Trustee...............................72
SECTION 7.4. Trustee's Disclaimer.......................................72
SECTION 7.5. Notice of Defaults.........................................73
SECTION 7.6. Reports by Trustee to Holders..............................73
SECTION 7.7. Compensation and Indemnity.................................73
SECTION 7.8. Replacement of Trustee.....................................74
SECTION 7.9. Successor Trustee by Merger, Etc...........................75
SECTION 7.10. Eligibility; Disqualification..............................75
SECTION 7.11. Preferential Collection of Claims Against Issuers..........76
SECTION 7.12. Co-Trustee.................................................76
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. Satisfaction and Discharge.................................77
SECTION 8.2. Legal Defeasance and Covenant Defeasance...................78
SECTION 8.3. Application of Trust Money.................................81
SECTION 8.4. Repayment to Company or the Guarantors.....................81
SECTION 8.5. Reinstatement..............................................82
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Without Consent of Holders.................................82
SECTION 9.2. With Consent of Holders....................................83
SECTION 9.3. Compliance with Trust Indenture Act........................85
SECTION 9.4. Revocation and Effect of Consents..........................85
SECTION 9.5. Notation on or Exchange of Securities......................85
SECTION 9.6. Trustee and Collateral Agent To Sign Amendments, Etc.......86
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ARTICLE X
GUARANTEE
SECTION 10.1. Unconditional Guarantee....................................86
SECTION 10.2. Severability...............................................87
SECTION 10.3. Release of a Guarantor.....................................87
SECTION 10.4. Limitation of Guarantor's Liability........................87
SECTION 10.5. Guarantors May Consolidate, etc., on Certain Terms.........88
SECTION 10.6. Contribution...............................................88
SECTION 10.7. Waiver of Subrogation......................................89
SECTION 10.8. Execution of Guarantee.....................................89
SECTION 10.9. Waiver of Stay, Extension or Usury Laws....................89
SECTION 10.10. Canadian Drawn Steel Company Inc...........................89
ARTICLE XI
SECURITY DOCUMENTS
SECTION 11.1. Collateral and Security Documents..........................90
SECTION 11.2. Recording, Etc.............................................90
SECTION 11.3. Certain Dispositions of Collateral Without Release.........92
SECTION 11.4. Release of Collateral......................................94
SECTION 11.5. Substitute Collateral......................................98
SECTION 11.6. New Bar Mill..............................................101
SECTION 11.7. [Intentionally Omitted]...................................102
SECTION 11.8. Eminent Domain and Other Governmental Takings.............102
SECTION 11.9. Trust Indenture Act Requirements..........................103
SECTION 11.10. Suits To Protect the Collateral...........................104
SECTION 11.11. Purchaser Protected.......................................104
SECTION 11.12. Powers Exercisable by Receiver or Trustee.................104
SECTION 11.13. Disposition of Obligations Received.......................104
SECTION 11.14. Determinations Relating to Collateral.....................105
SECTION 11.15. Renewal and Refunding.....................................105
SECTION 11.16. Release upon Termination of the Company's Obligations.....105
ARTICLE XII
APPLICATION OF TRUST MONEYS
SECTION 12.1. Trust Moneys..............................................106
SECTION 12.2. Retirement of Securities..................................106
SECTION 12.3. Withdrawals of Insurance Proceeds and Condemnation Awards.107
SECTION 12.4. Withdrawal of Trust Moneys for Reinvestment...............111
SECTION 12.5. Powers Exercisable Notwithstanding Event of Default.......113
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SECTION 12.6. Powers Exercisable by Collateral Agent or Receiver........113
SECTION 12.7. Disposition of Securities Retired.........................113
SECTION 12.8. Investment of Trust Moneys................................113
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Trust Indenture Act Controls..............................114
SECTION 13.2. Notices...................................................114
SECTION 13.3. Communications by Holders with Other Holders..............115
SECTION 13.4. Certificate and Opinion of Counsel as to Conditions
Precedent..............................................115
SECTION 13.5. Statements Required in Certificate and Opinion of Counsel.115
SECTION 13.6. Rules by Trustee, Paying Agent, Registrar, Collateral
Agent..................................................116
SECTION 13.7. Legal Holidays............................................116
SECTION 13.8. Governing Law.............................................116
SECTION 13.9. No Recourse Against Others................................116
SECTION 13.10. Successors................................................116
SECTION 13.11. Duplicate Originals.......................................116
SECTION 13.12. Severability..............................................116
SECTION 13.13. Table of Contents, Headings, Etc..........................117
SIGNATURES...............................................................S-1
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<PAGE>
EXHIBIT A-1 - Form of Series A Security
EXHIBIT A-2 - Form of Series B Security
EXHIBIT B - Form of Legend for Book-Entry Securities
EXHIBIT C - Form of Certificate To Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors
EXHIBIT D - Form of Certificate To Be Delivered in Connection with
Transfers Pursuant to Regulation S
EXHIBIT E - Form of Mortgage
EXHIBIT F - Form of Security Agreement
EXHIBIT G - Form of Master Pledge Agreement
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<PAGE>
INDENTURE dated as of August 13, 1999, among REPUBLIC INTERNATIONAL
TECHOLOGIES, LLC, a Delaware limited liability company (the "Company"), and RTI
CAPITAL CORP., a Delaware corporation, as Issuers (the "Issuers"), REPUBLIC
TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC, a Delaware limited liability company,
NIMISHILLEN & TUSCARAWAS, LLC, a Delaware limited liability company, BLISS &
LAUGHLIN, LLC, a Delaware limited liability company, and CANADIAN DRAWN STEEL
COMPANY, INC., a Canadian corporation, as Guarantors (the "Guarantors"), UNITED
STATES TRUST COMPANY OF NEW YORK, a New York banking corporation, as Trustee
(the "Trustee"), and UNITED STATES TRUST COMPANY OF NEW YORK, in its capacity as
Collateral Agent.
The Issuers and the Guarantors have duly authorized the execution
and delivery of this Indenture to provide for the issuance of the (i) 13 3/4%
Senior Secured Notes due 2009, Series A, and (ii) 13 3/4% Senior Secured Notes
dues 2009, Series B, to be issued in exchange for the 13 3/4% Senior Secured
Notes due 2009, Series A (the "Securities," such term to include the Initial
Securities, the Private Exchange Securities, if any, and the Unrestricted
Securities, if any, treated as a single class of securities under this
Indenture) and the related Guarantees of the Guarantors.
The parties hereto agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Acquired Indebtedness" means (i) Indebtedness of any Person
existing at the time such Person is or became a Restricted Subsidiary or is
assumed in an Asset Acquisition by the Company excluding Indebtedness incurred
in connection with, or in anticipation of, such Person becoming a Restricted
Subsidiary or such Asset Acquisition and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by the Company or any Restricted Subsidiary.
"Adjusted Net Assets" has the meaning provided in Section 10.6.
"Affiliate" as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to cause the direction of the management or policies of
that Person, whether through the ownership of voting securities or by contract
or otherwise.
"Affiliate Transaction" has the meaning provided in Section 4.14.
"Agent" means any Registrar, Paying Agent or co-registrar.
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"Asset Acquisition" means (a) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Capital Stock, by the Company or any of the Restricted
Subsidiaries in any other Person, in either case pursuant to which such Person
shall become a Restricted Subsidiary of an Issuer or shall be merged with or
into the Company or any of the Restricted Subsidiaries or (b) any acquisition by
the Company or any of the Restricted Subsidiaries of the assets of any Person
which constitute substantially all of an operating unit or business of such
Person.
"Asset Sale" means (i) any direct or indirect sale, conveyance,
transfer, lease or other disposition of property or assets (including by way of
a sale and leaseback) of the Company or any Restricted Subsidiary (each referred
to in this definition as a "disposition") or (ii) the direct or indirect
issuance or sale of Capital Stock of any Restricted Subsidiary, in each case,
other than: (a) a disposition of Cash Equivalents, Investment Grade Securities,
or obsolete, worn out or surplus equipment in the ordinary course of business;
(b) the disposition of all or substantially all of the assets of the Company in
a manner permitted pursuant to the provisions described in Article V; (c) any
Restricted Payment that is permitted to be made, and is made, under Section
4.12; (d) any disposition or series of related dispositions of assets not
constituting Collateral with an aggregate Fair Market Value of less than $1.0
million; (e) any disposition of property or assets (including an issuance of
Capital Stock) by a Restricted Subsidiary to the Company or by the Company or a
Restricted Subsidiary to a Restricted Subsidiary; (f) any financing transaction
with respect to the CAST-ROLL Facility and any other property not constituting
Collateral built or acquired by the Company or any Restricted Subsidiary after
the Issue Date, including, without limitation, sale-leasebacks and asset
securitizations, made in compliance with Section 4.10; (g) any sale of Capital
Stock in, or Indebtedness or other securities of, an Unrestricted Subsidiary;
(h) dispositions of inventory and work-in-process in the ordinary course of
business; (i) issuances of Capital Stock (other than Disqualified Stock) as
directors' qualifying shares or as investments by foreign nationals mandated by
applicable law; (j) the sale, conveyance or transfer of inventory in the
ordinary course of business; and (k) the incurrence of any Permitted Lien.
"Asset Sale Offer" has the meaning provided in Section 4.13.
"Asset Sale Payment Date" means, with respect to any Available
Amount from an Asset Sale, the earliest of (x) the 365th day following receipt
of such Available Amount or (y) the Business Day following the date on which an
Asset Sale Offer shall expire.
"Attributable Value" means, as to any particular lease under which
any Person is at the time liable other than a Capitalized Lease Obligation, and
at any date as of which the amount thereof is to be determined, the total net
amount of rent required to be paid by such Person under such lease during the
initial term thereof as determined in accordance with GAAP, discounted from the
last date of such initial term to the date of determination at a rate per annum
equal to the discount rate which would be applicable to a Capitalized Lease
Obligation with a like term in accordance with GAAP. The net amount of rent
required to be paid under any such lease for any such period shall be the
aggregate amount of rent payable by the lessee with respect to such period after
excluding amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labor costs and similar charges. In the case
of any lease which is terminable by the lessee upon the payment of a penalty,
such net amount shall also include the amount of such penalty, but no rent shall
be con-
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sidered as required to be paid under such lease subsequent to the first date
upon which it may be so terminated. "Attributable Value" means, as to a
Capitalized Lease Obligation under which any Person is at the time liable and at
any date as of which the amount thereof is to be determined, the capitalized
amount thereof that would appear on the face of a balance sheet of such Person
in accordance with GAAP.
"Available Amount" has the meaning provided in Section 4.13.
"Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by dividing
(a) the sum of the products of (i) the number of years (or any fraction thereof)
from such date to the date or dates of each successive scheduled principal
payment (including, without limitation, any sinking fund requirements) of such
Indebtedness multiplied (ii) the amount of each such principal payment by (b)
the sum of all such principal payments.
"Bank Agent" shall have the meaning assigned to the term "Agent"
under the Principal Intercreditor Agreement.
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar
federal, state or foreign law for the relief of debtors.
"Blackstone" means Blackstone Capital Partners II Merchant Banking
Fund L.P., Blackstone Capital Partners III Merchant Banking Fund L.P. and their
respective Affiliates.
"Board of Directors" means, with respect to any Person, the Board of
Directors or comparable governing body (which may be the Board of Directors of a
managing general partner of a partnership or managing member of a limited
liability company or the Board of Directors of its managing general partner or
managing member, or, in the case of CDSC, the shareholder, as authorized
pursuant to CDSC's unanimous shareholders agreement, as the case may be) of such
Person or any committee thereof authorized to act for it hereunder. Unless the
context requires otherwise, "Board of Directors" refers to the Board of
Directors of the Company.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary or other officer
of such Person to have been duly adopted by the Board of Directors of such
Person and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"Business Day" means any day except a Saturday, a Sunday or any day
on which banking institutions in New York, New York are required or authorized
by law or other governmental action to be closed.
"Capital Expenditures" means, with respect to Republic Technologies,
for any period, on a consolidated basis for Republic Technologies and the
Restricted Subsidiaries, the aggregate of all expenditures during such period
which, as determined in accordance with GAAP, are required to be included in
property, plant or equipment or a similar fixed asset account.
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"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting or non-voting) of, such Person's capital stock
(including, without limitation, partnership or membership interests in a
partnership or a limited liability company or any other interest or
participation that confers on a Person the right to receive a share of the
profits and loss of, or distributions of assets of, the issuing Person) whether
outstanding on the Issue Date or issued after the Issue Date, and any and all
rights, warrants or options exchangeable for or convertible into such capital
stock.
"Capitalized Lease Obligation" means any obligation to pay rent or
other amounts under a lease of (or other agreement conveying the right to use)
any property (whether real, personal or mixed) that is required to be classified
and accounted for as a capital lease obligation under GAAP, and, for the
purposes of this Indenture, the amount of such obligation at any date shall be
the capitalized amount thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means, at any time, (i) any evidence of
Indebtedness with a maturity of 365 days or less issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (ii) certificates of deposit
or acceptances with a maturity of 365 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $250.0 million; (iii) commercial
paper with a maturity of 365 days or less issued by a corporation (except an
Affiliate of the Company) organized under the laws of any state of the United
States or the District of Columbia and rated at least A-1 by Standard & Poor's
Corporation ("S&P") or at least P-1 by Moody's Investors Service, Inc.
("Moody's"); (iv) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States Government or issued by any agency thereof and backed by
the full faith and credit of the United States, in each case maturing within one
year from the date of acquisition; provided, however, that the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency; (v) investment funds investing 95%
of their assets in securities of the types described in clauses (i)-(iv) above;
and (vi) readily marketable direct obligations issued by any state of the United
States of America or any political subdivision thereof having one of the two
highest rating categories obtainable from either Moody's or S&P.
"CAST-ROLL Facility" has the meaning provided in the Principal
Intercreditor Agreement.
"Category of Collateral" means those classifications of the
Collateral set forth in the Intercreditor Agreements for priority purposes.
"Change of Control" means the occurrence of one or more of the
following events: (i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all the assets of the Company and its
Subsidiaries, taken as a whole, to a Person other than the Permitted Holders; or
(ii) (A) the Company becomes aware (by way of a report or any other filing
pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or
otherwise) of the acquisition by any
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Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act, or any successor provision), including any group acting for
the purpose of acquiring, holding or disposing of securities (within the meaning
of Rule 13d-5(b)(1) under the Exchange Act), other than the Permitted Holders,
in a single transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision), of 35% or more of the total voting power of the Capital
Stock of the Company and (B) the Permitted Holders beneficially own (as defined
above), directly or indirectly, in the aggregate a lesser percentage of the
total voting power of the Voting Stock of the Company than such other Person or
group and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors.
"Change of Control Date" has the meaning provided in Section 4.15.
"Change of Control Offer" has the meaning provided in Section 4.15.
"Change of Control Payment Date" has the meaning provided in Section
4.15.
"Class of Secured Creditors" means, with respect to each Category of
Collateral, a Secured Creditor or group of Secured Creditors identified in the
priority provisions of the Intercreditor Agreements for purposes of setting
forth relative Lien priorities on each Category of Collateral.
"Closed Facilities" means, upon their shut down or closure and
subsequent sale, scrapping or other disposition as contemplated by the
Consolidation Plan, the No. 4 Blast Furnace, the No. 1 Billet Caster and the 4
Stand Billet Mill at the Lorain facility, the No. 4(B) and No. 4(C) Electric Arc
Furnaces, the Blooming Mill and the ingot teeming facility at the Canton
facility, the 12" bar mill in Canton, Ohio, the cold-finishing facilities in
Medina, Ohio and Batavia, Illinois, the 18" bar mill in Masillon, Ohio and the
11" bar mill in Chicago, Illinois and one additional cold-finishing facility, in
each case to the extent separable and identifiable and not in impairment in any
material respect of any other Collateral.
"Collateral" means, collectively, all of the property and assets
(including, without limitation, Trust Moneys) that are from time to time subject
or required to be made subject to the Lien of the Security Documents.
"Collateral Agent" means United States Trust Company of New York, as
collateral agent under the Intercreditor Agreements and the Security Documents
until a successor replaces it in accordance with the provisions of this
Indenture, the Intercreditor Agreements and the Security Documents, and
thereafter, means each such successor.
"Collateral Proceeds" has the meaning provided in Section 4.13.
"Common Stock" means, with respect to any Person, any and all
shares, interests or other participations in, and other equivalents (however
designated and whether voting or nonvoting)
<PAGE>
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of, such Person's common stock, whether outstanding on the Issue Date or issued
after the Issue Date, and includes, without limitation, all series and classes
of such common stock.
"Company" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and,
thereafter, means the successor.
"Consolidated Cash Flow Available for Fixed Charges" means, with
respect to the Company for any period, (a) the sum of, without duplication, the
amounts for such period, taken as a single accounting period, of (i)
Consolidated Net Income, (ii) Consolidated Non-cash Charges, (iii) Consolidated
Interest Expense, (iv) Consolidated Income Tax Expense, (v) any fees, expenses
or non-recurring charges related to any issuance of Capital Stock, Permitted
Investments, acquisitions, the acquisition or recapitalization of Indebtedness
(in each case, whether or not successful) and fees, expenses or charges related
to the acquisition of Republic Engineered Steels, Inc. by RES Holdings
Corporation and the Transactions (including fees to Blackstone, Veritas, USX and
Kobe) to the extent reducing Consolidated Net Income for such period, (vi) the
amount of any nonrecurring expenses associated with early retirement buy outs as
part of the Consolidation Plan to the extent reducing Consolidated Net Income
for such period, (vii) non-cash OPEB expense determined in accordance with GAAP
to the extent reducing Consolidated Net Income for such period, and (viii) the
amount of annual management, monitoring, consulting and advisory fees and
related expenses paid to Blackstone, Veritas, USX and Kobe and their Affiliates
consistent with past customary practices of Blackstone and Veritas with respect
to portfolio companies, less (b) any non-cash items to the extent increasing
Consolidated Net Income for such period.
"Consolidated Fixed Charge Coverage Ratio" as of any date of
determination means the ratio of (i) the aggregate amount of Consolidated Cash
Flow Available for Fixed Charges for the four quarter period of the most recent
four consecutive fiscal quarters ending prior to the date of such determination
(the "Calculation Date") for which financial statements are available (the "Four
Quarter Period") to (ii) Consolidated Fixed Charges for such Four Quarter
Period. In addition to and without limitation of the foregoing, for purposes of
this definition, "Consolidated Cash Flow Available for Fixed Charges" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to, without duplication, (a) the
incurrence of any Indebtedness by the Company or any of the Restricted
Subsidiaries (and the application of the net proceeds thereof) during the period
commencing on the first day of the Four Quarter Period to and including the
Calculation Date (the "Reference Period"), including, without limitation, the
incurrence of the Indebtedness giving rise to the need to make such calculation
(and the application of the net proceeds thereof), as if such incurrence (and
application) occurred on the first date of the Reference Period, (b) an
adjustment to eliminate or include, as the case may be, the Consolidated Cash
Flow Available for Fixed Charges and Consolidated Fixed Charges of such person
directly or indirectly attributable to assets which are the subject of any Asset
Sale or Asset Acquisition (including, without limitation, any Asset Acquisition
giving rise to the need to make such calculation as a result of the Company or
one of the Restricted Subsidiaries (including any person who becomes a
Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming
or otherwise being liable for Acquired Indebtedness) occurring during the
Reference Period, as if such Asset Sale (after giving effect to any Designation
of Unrestricted Subsidiaries) or Asset Acquisition occurred on the first day of
the Reference Period, (c) the retirement of Indebtedness during the Reference
Period which cannot there-
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after be reborrowed occurring as if retired on the first day of the Reference
Period, (d) an adjustment to eliminate any net after-tax extraordinary gains or
losses, and (e) an adjustment to eliminate any charges arising out of the
Transactions. For purposes of calculating "Consolidated Fixed Charges" for this
"Consolidated Fixed Charge Coverage Ratio," (a) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Calculation Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Calculation Date, (b) if interest on any
Indebtedness actually incurred on the Calculation Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Calculation Date will be deemed to have been in effect during the
Reference Period and (c) notwithstanding clauses (a) and (b) of this sentence,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Rate Protection
Obligations for the twelve month period following the Calculation Date, shall be
deemed to have accrued at the rate per annum resulting after giving effect to
the operation of such agreements to the extent then applicable. If the Company
or any of the Restricted Subsidiaries directly or indirectly guarantees
Indebtedness of a third person, this definition shall give effect to the
incurrence of such guaranteed Indebtedness as if such person or such Restricted
Subsidiary had directly incurred or otherwise assumed such guaranteed
Indebtedness. Notwithstanding the foregoing, for the purposes of making the
computation referred to above, interest on any Indebtedness under a revolving
credit facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period. In
addition, for purposes of this definition, whenever pro forma effect is to be
given to an Asset Acquisition or Investment, pro forma calculations (including,
without limitation, with respect to cost savings and synergies) shall be
determined in accordance with Regulation S-X under the Securities Act and the
interpretations thereof by the SEC; provided that such computation shall be
adjusted from time to time following the Asset Acquisition to eliminate cost
savings and synergies that have either been realized (and therefore are
reflected in actual results) or cannot reasonably be expected to be realized
(whether based upon information and results obtained following the applicable
Asset Acquisition or Investment or otherwise) by the Company and the Restricted
Subsidiaries. In no event shall the Consolidated Fixed Charge Coverage Ratio
reflect any anticipated, but unrealized, cost savings resulting from the
Consolidation Plan (whether or not determined in accordance with Regulation S-X
under the Securities Act and the interpretations thereof by the SEC).
"Consolidated Fixed Charges" means, with respect to the Company for
any period, the sum of, without duplication, the amounts for such period of (a)
the Consolidated Interest Expense of the Company and (b) the aggregate amount of
dividends and other distributions paid or accrued during such period in respect
of Disqualified Capital Stock of the Company and the Restricted Subsidiaries and
Preferred Stock of Restricted Subsidiaries on a consolidated basis.
"Consolidated Income Tax Expense" means, with respect to the Company
for any period, the provision for federal, state, local and foreign income taxes
of the Company and the Restricted Subsidiaries for such period as determined on
a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Company
for any period, without duplication, the sum of (i) the interest expense
(whether cash or non-cash) of the Company
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and the Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP to the extent deducted in calculating Consolidated
Net Income, including, without limitation, (a) any amortization of debt
discount, (b) the net cost under Interest Rate Protection Obligations relating
to interest (including any amortization of discounts), (c) the interest portion
of any deferred payment obligation, (d) all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing and (e) all capitalized interest and all accrued interest and (ii) the
interest component of Capitalized Lease Obligations or any other obligations
representative of interest expense associated with any Sale-Leaseback
Transaction paid, accrued and/or scheduled to be paid or accrued by the Company
and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP to the extent deducted in calculating
Consolidated Net Income.
"Consolidated Net Income" means, with respect to the Company, for
any period, the consolidated net income (or loss) of the Company and the
Restricted Subsidiaries for such period as determined in accordance with GAAP,
adjusted, to the extent included in calculating such net income, by excluding,
without duplication, (a) all net after-tax extraordinary gains or losses
(including any net after-tax income (loss) from the Closed Facilities or the
Specialty Steel Assets and any net after-tax gains or losses on disposal of
discontinued operations), (b) the portion of net income (but not losses) of the
Company and the Restricted Subsidiaries allocable to minority interests in
unconsolidated persons to the extent that cash dividends or distributions have
not actually been received by the Company or one of the Restricted Subsidiaries,
(c) net income (or loss) of any person combined with the Company or one of the
Restricted Subsidiaries on a "pooling of interests" basis attributable to any
period prior to the date of combination, (d) any gain or loss realized upon the
termination of any employee pension benefit plan, on an after-tax basis, (e)
gains or losses in respect of any Asset Sales by the Company or one of the
Restricted Subsidiaries, (f) the cumulative non-cash effect of any change in any
accounting principle, (g) the net income of any Unrestricted Subsidiary, except,
for purposes of Section 4.12, to the extent that cash dividends or distributions
have been actually received by the Company or one of the Restricted
Subsidiaries, (h) the non-cash effect of compensation expense related to the
contribution of shares held by any qualified employee stock ownership trust
formed for employees of the Company and the Restricted Subsidiaries and (i) the
net income of any Restricted Subsidiary of such person to the extent that the
declaration of dividends or similar distributions by that Restricted Subsidiary
of that income is not at the time permitted, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, law, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholder(s).
"Consolidated Non-cash Charges" means, the aggregate depreciation,
amortization and other non-cash expenses of the Company and the Restricted
Subsidiaries (including any non-cash charges related to any employee stock
ownership plan and workforce reduction charges) reducing Consolidated Net Income
of the Company and the Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which required an
accrual of or a reserve for cash charges for any future period).
"Consolidated Tangible Assets" means, as of any date of
determination, the total assets, less goodwill and other intangibles shown on
the balance sheet of the Company and the Re-
<PAGE>
-9-
stricted Subsidiaries as of the most recent date for which such a balance sheet
is available, determined on a consolidated basis in accordance with GAAP.
"Consolidation Plan" means the consolidation plan described in the
Offering Memorandum, as such plan may be modified from time to time.
"Corporate Trust Office" means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Indenture is
located at United States Trust Company of New York, 114 West 47th Street, 25th
Floor, New York, New York 10036, Attention: Cynthia Chaney.
"covenant defeasance" has the meaning provided in Section 8.2.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
against fluctuations in currency values.
"Custodian" has the meaning provided in Section 6.1.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Designation" has the meaning provided in Section 4.18.
"Designation Amount" has the meaning provided in Section 4.18.
"Disinterested Director" means, with respect to any transaction or
series of transactions, a member of the Board of Directors of a particular
Person other than a director who has any material direct or indirect financial
interest in or with respect to such transaction or series of transactions.
"Disqualified Capital Stock" means, with respect to any Person, any
Capital Stock which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
final Stated Maturity of the Notes, but only to the extent such Capital Stock so
matures or is exchangeable or redeemable.
"Event of Default" has the meaning provided in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means the Exchange Offer Registration described in
the Registration Rights Agreement.
<PAGE>
-10-
"Exchange Securities" means the 13 3/4% Senior Secured Notes due
2009, Series B, to be issued in exchange for the Initial Securities pursuant to
the Registration Rights Agreement.
"Existing Liens" has the meaning ascribed to that term under the
definition of "Permitted Collateral Liens."
"Existing Secured Creditors" has the meaning provided in the
Principal Intercreditor Agreement.
"Fair Market Value" or "fair value" means, with respect to any asset
or property, the price which could be negotiated in an arm's-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under undue pressure or compulsion to complete the transaction. Fair
Market Value shall be determined by the Board of Directors of the Company acting
in good faith and shall be evidenced by a Board Resolution of the Company
delivered to the Trustee except (a) any determination of Fair Market Value or
fair value made with respect to any parcel of real property and related fixtures
constituting a part of, or proposed to be made a part of, the Collateral shall
be made by an Independent Appraiser, (b) any determination of Fair Market Value
with respect to any assets to be valued at $10.0 million or more that is
contributed as or received in exchange for Capital Stock of the Company that is
to be included in clause (C) of paragraph (a) of Section 4.12 shall be made by
an Independent Financial Advisor and (c) as otherwise indicated in this
Indenture, the Security Documents or the Intercreditor Agreements.
"Funding Guarantor" has the meaning provided in Section 10.6.
"Funds" means Blackstone Capital Partners II Merchant Banking Fund
L.P., a Delaware limited partnership, Blackstone Offshore Capital Partners II
L.P., a Cayman Islands exempted limited partnership, and Blackstone Family
Investment Partnership II L.P., a Delaware limited partnership.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are applicable as of the
Issue Date.
"Global Securities" means one or more Regulation S Global
Securities, 144A Global Securities and IAI Global Securities.
"Government Assisted Indebtedness" means Indebtedness of the Company
or any of the Restricted Subsidiaries incurred from any federal, state or local
governmental authority, agency or instrumentality, or for which any such
authority, agency or instrumentality provides direct or indirect credit support,
including under any industrial revenue bonds.
<PAGE>
-11-
"Government Assisted Refinancing Indebtedness" means Refinancing
Indebtedness borrowed from any federal, state or local governmental authority,
agency or instrumentality, or for which any such authority, agency or
instrumentality provides direct or indirect credit support.
"Governmental Authority" means any government or political
subdivision of the United States or any other country or any agency, authority,
board, bureau, central bank, commission, department or instrumentality thereof
or therein, including, without limitation, any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to such government or political subdivision.
"guarantee" means, as applied to any obligation, (a) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantee" means the guarantee of the Guarantors set forth in
Article X and any additional guarantee of the Securities executed by any Person.
"Guarantor" means any of the Parent Guarantor or Subsidiary
Guarantors.
"Hazardous Materials" means pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes, including, without
limitation, petroleum, including crude oil or any petroleum product or any
fraction thereof, and asbestos and asbestos-containing materials.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holdings" means Republic Technologies International Holdings, LLC.
"IAI Global Security" means a permanent global note in registered
form representing the aggregate principal amount of Securities sold to
Institutional Accredited Investors in reliance on Rule 506 under the Securities
Act.
"incur" means, with respect to any Indebtedness, to directly or
indirectly, create, incur, assume, issue, guarantee or otherwise become liable
for or with respect to such Indebtedness, and the terms "incurred," "incurrence"
and "incurring" having meanings correlative to the foregoing.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all liabilities of such Person for borrowed money or for the
deferred purchase price of property or services, excluding (1) any trade
accounts payables and other accrued current liabilities incurred in the ordinary
course of business and which are not overdue by more than 180 days and (2) other
payables owed to USX, Kobe and their respective Affiliates in amounts not to
exceed amounts outstanding on the Issue Date, after giving effect to the
Transactions, but including, without limitation, all obligations, contin-
<PAGE>
-12-
gent or otherwise, of such Person in connection with any letter of credit,
bankers' acceptance or other similar credit transaction, (b) all obligations of
such Person evidenced by bonds, notes, debentures or other similar instruments,
(c) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even
if the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), but
excluding trade accounts payable arising in the ordinary course of business, (d)
all Capitalized Lease Obligations of such Person, (e) all Indebtedness referred
to in the preceding clauses of other Persons and all dividends of other Persons,
the payment of which is secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien
(other than statutory Liens) upon property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness (the amount of
such obligation being deemed to be the lesser of the value of such property or
asset or the amount of the obligation so secured), (f) all guarantees of
Indebtedness referred to in this definition by such Person, (g) all Disqualified
Capital Stock of such Person valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued dividends, (h) all
Interest Rate Protection Obligations of such Person and (i) any amendment,
supplement, modification, deferral, renewal, extension, refinancing or refunding
of any liability of the types referred to in clauses (a) through (h) above. For
purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined in good faith by the
Board of Directors of the issuers of such Disqualified Capital Stock. For
purposes of Section 4.9, in determining the principal amount of any Indebtedness
(a) to be incurred by the Company or a Restricted Subsidiary or which is
outstanding at any date, (x) the principal amount of any Indebtedness which
provides that an amount less than the principal amount thereof shall be due upon
any declaration of acceleration thereof shall be the accreted value thereof at
the date of determination and (y) effect shall be given to the impact of any
Currency Agreements with respect to such Indebtedness and (b) outstanding at any
time under any Currency Agreement of the Company or any Restricted Subsidiary
shall be the net payment obligation under such Currency Agreement at such time.
When any Person becomes a Restricted Subsidiary, there shall be deemed to have
been an incurrence by such Restricted Subsidiary of all Indebtedness for which
it is liable at the time it becomes a Restricted Subsidiary. If the Company or
any of the Restricted Subsidiaries, directly or indirectly, guarantees
Indebtedness of a third Person, there shall be deemed to be an incurrence of
such guaranteed Indebtedness as if the Company or such Restricted Subsidiary had
directly incurred or otherwise assumed such guaranteed Indebtedness.
"Indenture" means this Indenture as amended or supplemented from
time to time pursuant to the terms hereof.
"Independent Appraiser" means a Person who in the ordinary course of
its business appraises property and, where real property is involved, is a
member in good standing of the American Institute of Real Estate Appraisers,
recognized and licensed to do business in the jurisdiction where such real
property is situated who (a) does not, and whose directors, officers and
employees
<PAGE>
-13-
and Affiliates do not, have a direct or indirect material financial interest in
the Company or any of its Subsidiaries and (b) in the judgment of the Board of
Directors of the Company, is otherwise independent and qualified to perform the
task for which it is to be engaged.
"Independent Financial Advisor" means a nationally recognized
investment banking, appraisal, consulting or public accounting firm (a) which
does not, and whose directors, officers and employees and Affiliates do not,
have a direct or indirect material financial interest in the Company or any of
its Subsidiaries and (b) which, in the judgment of the Board of Directors of the
Company, is otherwise independent and qualified to perform the task for which it
is to be engaged.
"Initial Purchasers" means Chase Securities Inc., Donaldson, Lufkin
& Jenrette Securities Corporation and BancBoston Robertson Stephens Inc.,
"Initial Securities" means the 13 3/4% Senior Secured Notes due
2009, Series A, of the Issuers.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Intercreditor Agreements" means (i) the Principal Intercreditor
Agreement and (ii) the Pledge Intercreditor Agreement, as each may be amended,
modified or waived in accordance with its respective terms.
"interest," when used with respect to any Security, means the amount
of all interest accruing on such Security, including all interest accruing
subsequent to the occurrence of any events specified in Sections 6.1(a)(vii) and
(viii) or which would have accrued but for any such event.
"Interest Payment Date," when used with respect to any Security,
means the Stated Maturity of an installment of interest specified in such
Security.
"Interest Rate," when used with respect to any Security, means the
rate per annum specified in such Security as the rate of interest accruing on
the principal amount of such Security.
"Interest Rate Protection Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, (i) any direct or
indirect loan, advance (other than advances to customers and employees for
moving, entertainment, travel expenses and commissions, drawing accounts and
similar expenditures in the ordinary course of business), extension of credit
(other than trade credit) or capital contribution to any Person (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or (ii) any purchase or acquisition
by such Person of any Capital Stock, bonds, notes, de-
<PAGE>
-14-
bentures or other securities or evidences of Indebtedness issued by, any other
Person. "Investments" shall not include (x) accounts receivable and extensions
of credit by any Person in the ordinary course of business and (y) Investments
to the extent made with consideration which consists of Capital Stock (other
than Disqualified Capital Stock) of the Company. In addition to the foregoing,
any Currency Agreement shall constitute an Investment hereunder.
"Investment Grade Securities" means (i) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof (other than Cash Equivalents), (ii) debt
securities or debt instruments with a rating of BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such rating by such rating organization,
or, if no rating of S&P or Moody's then exists, the equivalent of such rating by
any other nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries, and (iii) investments in any fund that invests 95% of their
assets in securities in the type described in clauses (i) and (ii) above.
"Issue Date" means August 13, 1999, the date of original issuance of
the Securities.
"Issuers" means the parties named as such in this Indenture, in each
case, until a successor replaces it in accordance with the terms of this
Indenture and, thereafter, includes the successor.
"Issuers Request" or "Issuers Order" means a written request or
order signed in the name of each of the Issuers by any one of the Chairman of
the Board, the Vice-Chairman, the Chief Executive Officer, the President or a
Vice President of each of the Issuers, and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer of each of the Issuers, and
delivered to the Trustee.
"Junior Collateral Proceeds" has the meaning provided in Section
4.13.
"Kobe" means Kobe Steel, Ltd.
"legal defeasance" has the meaning provided in Section 8.2.
"Legal Holiday" means any day other than a Business Day.
"Lien" means any mortgage, charge, lease, lien (statutory or other),
pledge, security interest, encumbrance, claim, hypothecation, assignment for
security, deposit arrangement or preference or other security agreement of any
kind or nature whatsoever. For purposes of the Indenture, a person shall be
deemed to own subject to a Lien any property which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement. In no event shall
an operating lease be deemed to constitute a Lien.
"Master Pledge Agreement" means the master pledge agreement
substantially in the form of Exhibit G hereto, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.
<PAGE>
-15-
"Maturity Date," when used with respect to the Securities, means the
date specified in such Security as the fixed date on which the principal of such
Security is due and payable.
"Mortgage" means each mortgage instrument (or deed of trust) and
assignment of leases and rents, substantially in the form of Exhibit E hereto
(including such changes to such form as may be necessary or desirable to conform
to applicable local laws or customs regarding property in the jurisdiction where
such instrument is to be recorded), as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof and
thereof.
"Mortgaged Property" means any Real Property that is subject to a
Mortgage.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents, including payments in
respect of deferred payment obligations when received in the form of cash or
Cash Equivalents net of (a) brokerage commissions and other reasonable fees and
expenses (including fees and expenses of counsel and investment bankers) related
to such Asset Sale; (b) provisions for all taxes payable as a result of such
Asset Sale, including without limitation any tax distributions payable as
determined under clause (vii) of paragraph (b) of Section 4.12 with respect to
income from Asset Sales, (b) amounts required to be applied to the repayment of
principal, premium (if any) and interest on Indebtedness required (other than
required by Section 4.13 to be paid as a result of such transaction to the
extent secured by a Lien on such Property that is permitted hereunder or under
the applicable Security Document and to the extent the operative agreement
relating to such Indebtedness requires or otherwise permits such a repayment;
and (c) appropriate amounts to be provided by the Company or any of the
Restricted Subsidiaries, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Company or any of the Restricted Subsidiaries, as the case may be, after
such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any representation, warranties or indemnification
obligations associated with such Asset Sale.
"Net Proceeds" has the meaning ascribed to that term in Section
11.4(d).
"New Bar Mill" means the new large size bar mill to be built as part
of the Consolidation Plan.
"New Bar Mill Lenders" has the meaning provided in the Principal
Intercreditor Agreement.
"New Credit Facility" means the Credit Agreement, dated as of the
Issue Date, among Republic Technologies, and BankBoston, N.A. and Bank America
National Trust & Savings Association, as Co-Agents, Bank of America National
Trust & Savings Association, as Syndication Agent, and The Chase Manhattan Bank,
N.A., as Documentation Agent, BancBoston Robertson Stephens Inc. and Bank of
America National Trust & Savings Association, as Co-Arrangers, the lending
institutions parties thereto, and their respective successors and assigns,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith that are permitted under the
Indenture, each as the same may at any time be amended, amended and restated,
<PAGE>
-16-
supplemented or otherwise modified, including any refinancing, refunding,
replacement or extension thereof and whether by the same or any other lender or
group of lenders.
"Non-Collateral Proceeds" has the meaning specified in Section 4.13.
"Non-U.S. Person" has the meaning assigned to such term in
Regulation S.
"Offering Memorandum" means the Offering Memorandum dated August 6,
1999 pursuant to which the Securities were offered, and any supplement thereto.
"Officer" means, with respect to an Issuer, the President, the Chief
Executive Officer, any Vice President, any General Manager, the General Counsel,
the Chief Financial Officer, the Secretary, the Associate General Counsel, the
Treasurer, or the Controller of such Issuer, as the case may be.
"Officers' Certificate" means a certificate signed by two Officers
or by an Officer and an Assistant Treasurer or Assistant Secretary of each of
the Issuers, as the case may be; provided, however, that any Officers'
Certificate delivered pursuant to Section 4.6 of this Indenture shall be signed
by either the principal executive officer, principal financial officer or
principal accounting officer of each of the Issuers.
"144A Global Security" means a permanent global note in registered
form representing the aggregate principal amount of Securities sold in reliance
on Rule 144A under the Securities Act.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee, which may include counsel to the
Issuers.
"Parent Guarantor" means Republic Technologies International
Holdings, LLC in its capacity as a Guarantor and any successors.
"Pari Passu Proceeds" has the meaning provided in Section 4.13.
"Paying Agent" has the meaning provided in Section 2.3.
"Permanent Regulation S Global Security" means a permanent global
security in registered form representing the aggregate principal amount of
Securities sold in reliance on Regulation S under the Securities Act.
"Permitted Collateral Liens" means (i) the Liens created by the
Securities, the Guarantees, this Indenture and the Security Documents; (ii)
Liens existing on the Issue Date to the extent and in the manner such Liens are
in effect on the Issue Date, but after giving effect to the Transactions
("Existing Liens"); (iii) Liens on Collateral other than Capital Stock of the
Company or any of its Subsidiaries securing Government Assisted Refinancing
Indebtedness incurred to refinance Indebtedness which has been secured by
Existing Liens; provided that (x) such Liens are junior in priority to the Lien
on such Collateral of the Trustee and the Holders, and (y) such Liens do not
extend to
<PAGE>
-17-
or cover any Non-Shared Collateral (as defined in the Principal Intercreditor
Agreement) or any property or assets not subject to Existing Liens; (iv) Liens
on Collateral other than Capital Stock of the Company or any of its Subsidiaries
securing Government Assisted Indebtedness incurred in accordance with Section
4.9 and not to exceed $20.0 million in aggregate principal amount outstanding at
any time; provided (x) that such Liens are junior in priority to the Lien on
such Collateral in favor of the Trustee and the Holders (except that a Lien in
favor of any holder of such Government Assisted Indebtedness providing financing
for the construction or acquisition of the New Bar Mill may be a prior Lien
subject to the provisions of the Principal Intercreditor Agreement) and (y) such
Liens do not extend to or cover any Non-Shared Collateral (other than the New
Bar Mill); (v) Liens set forth in the preceding clauses (ii), (iii) and (iv) as
permitted to be altered under the terms of the Intercreditor Agreements and
under Articles XI and XII; (vi) pari passu Liens on the Pledged Securities to
secure the New Credit Facility, provided such Liens are subject to the
agreements set forth in the Pledge Intercreditor Agreement; (vii) Liens on the
New Bar Mill to secure Indebtedness (other than Indebtedness under the New
Credit Facility) incurred to finance the construction or acquisition of the New
Bar Mill (or to refinance such Indebtedness if not under the New Credit
Facility) in an aggregate principal amount not to exceed 65% of the aggregate
cost of construction or acquisition of the New Bar Mill, and (viii) any other
Liens expressly permitted by the applicable Security Documents.
"Permitted Holders" means (i) Blackstone Capital Partners II
Merchant Banking Fund L.P., a Delaware limited partnership, Blackstone Offshore
Capital Partners II L.P., a Cayman Islands exempted limited partnership, and
Blackstone Family Investment Partnership II L.P., a Delaware limited
partnership, (ii) each general partner of any of the foregoing who is a partner
or employee of The Blackstone Group L.P, (iii) USX, (iv) Kobe and (v) any
Affiliate of the Persons specified in clauses (i)-(iv) of this definition;
provided that to the extent a Change of Control occurs that results in a Change
of Control Offer being made and consummated in accordance with Section 4.15, the
Person or group deemed to have acquired control which triggered such Change of
Control shall thenceforth, together with its Affiliates, be deemed to constitute
additional Permitted Holders.
"Permitted Investments" means any of the following: (a) (i)
Investments in any Restricted Subsidiary (including any Person that pursuant to
such Investment becomes a Restricted Subsidiary) and (ii) Investments in any
Person that is merged or consolidated with or into, or transfers or conveys all
or substantially all of its assets to, the Company or any Restricted Subsidiary
at the time such Investment is made; (b) Investments in Cash Equivalents or
Investment Grade Securities; (c) Investments in deposits with respect to leases
or utilities provided to third parties in the ordinary course of business; (d)
Investments in the Notes; (e) Investments in Currency Agreements, Interest Rate
Protection Obligations and commodities hedging arrangements permitted by clause
(viii) or (ix) of Section 4.9(b); (f) loans or advances to officers or employees
of the Company and the Restricted Subsidiaries in the ordinary course of
business for bona fide business purposes of the Company and the Restricted
Subsidiaries (including travel and moving expenses) not in excess of $2.0
million in the aggregate at any one time outstanding; (g) Investments in
evidences of Indebtedness, securities or other property received from another
Person by the Company or any of the Restricted Subsidiaries in connection with
any bankruptcy proceeding or by reason of a composition or readjustment of debt
or a reorganization of such Person or as a result of foreclosure, perfection or
enforcement of any Lien in exchange for evidences of Indebtedness, securities or
other property of such Person held by the Company or any of the Restricted
Subsidiaries, or for other liabilities or obligations of such other Person
<PAGE>
-18-
to the Company or any of the Restricted Subsidiaries that were created in
accordance with the terms of this Indenture; (h) so long as no Default has
occurred and is continuing, Investments in an amount not to exceed the greater
of (i) $15.0 million and (ii) 1.0% of Consolidated Tangible Assets of the
Company at the time of such Investment (with the Fair Market Value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value), less the amount of any Investment under clause (j)
below; (i) any Investment constituting a Restricted Payment received pursuant to
and in compliance with Section 4.13; (j) Investments in Unrestricted
Subsidiaries not to exceed $5.0 million at any time outstanding; (k) Investments
consisting of the licensing or contribution of intellectual property pursuant to
joint marketing arrangements with other Persons; (l) Investments consisting of
purchases and acquisitions of inventory, supplies, materials and equipment or
licenses or leases of intellectual property, in any case, in the ordinary course
of business; (m) any Investment in securities or other assets not constituting
cash or Cash Equivalents and received in connection with an Asset Sale made
pursuant to the provisions of Section 4.13 or any other disposition of assets
not constituting an Asset Sale; and (n) any Investment existing on the Issue
Date.
"Permitted Liens" means, with respect to any Person, (a) Liens to
secure the New Credit Facility, (b) Liens for taxes, assessments or other
governmental charges or levies not yet delinquent, or which are for less than
$10.0 million in the aggregate, or which are being validly contested in good
faith by appropriate proceedings or for property taxes on property that the
Company or any of its Restricted Subsidiaries has determined to abandon if the
sole recourse for such tax, assessment, charge, levy or claim is to such
property; (c) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
laborers', employees' or suppliers' or other like Liens on property of the
Company or any of the Restricted Subsidiaries arising in the ordinary course of
business and securing obligations that are not due and payable or that are being
contested in good faith by negotiations or appropriate proceedings and in
respect of which, if applicable, the Company or the relevant Restricted
Subsidiary shall have set aside on its books reserves in accordance with GAAP;
(d) pledges and deposits made in the ordinary course of business by the Company
or any of the Restricted Subsidiaries in compliance with the Federal Employers
Liability Act or any other workmen's compensation, unemployment insurance and
other social security laws or regulations and deposits securing liability to
insurance carriers under insurance or self-insurance arrangements in respect of
such obligations; (e) deposits by the Company or any of the Restricted
Subsidiaries to secure the performance of tenders, bids, contracts (other than
for Indebtedness), leases (other than Capitalized Lease Obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business, including those
incurred to secure health, safety and environmental obligations in the ordinary
course of business; (f) zoning restrictions, easements, trackage rights, leases
(other than Capitalized Lease Obligations), licenses, special assessments,
rights-of-way, restrictions on use of Real Property and other similar
encumbrances incurred by the Company or any of the Restricted Subsidiaries in
the ordinary course of business which, individually and in the aggregate, are
not substantial in amount and do not materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the business
of the Company or any of the Restricted Subsidiaries; (g) Liens consisting of
interests of lessors under capital or operating leases permitted by Section 4.9;
(h) Liens securing judgments, decrees or orders against the Company or any of
the Restricted Subsidiaries, so long as such Lien is being contested in good
faith and is adequately bonded, any appropriate legal proceedings which may have
been duly initiated for the review of such judgment, decree or order shall not
have been finally terminated or the period within which such pro-
<PAGE>
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ceedings may be initiated shall not have expired; (i) any leases or subleases to
other Persons of properties or assets owned or leased by the Company or any of
the Restricted Subsidiaries; (j) any Lien arising by operation of law pursuant
to Section 107(1) of CERCLA, 42 U.S.C. Section 9607(1), or pursuant to analogous
state law, for costs or damages which are not yet due (by virtue of a written
demand for payment by a government authority) or which are being contested in
good faith by appropriate proceedings, or on property that the Company or any of
the Restricted Subsidiaries has determined to abandon if the sole recourse for
such costs or damages is to such property; provided that the liability of the
Company and the Restricted Subsidiaries with respect to the matter giving rise
to all such Liens shall not, in the reasonable estimate of the Company (in the
light of all attendant circumstances, including the likelihood of contribution
by third parties), exceed $25.0 million; (k) Liens that are contractual rights
of setoff (1) relating to the establishment by the Company or any of its
Subsidiaries of depository relations with banks not given in connection with the
issuance of Indebtedness or (2) pertaining to pooled deposit and/or sweep
accounts of the Company and/or any of the Restricted Subsidiaries to permit
satisfaction of overdraft or similar obligations incurred in the ordinary course
of business of the Company and the Restricted Subsidiaries; (l) Liens securing
obligations in respect of trade-related letters of credit permitted under
Section 4.9 and covering the goods (or the documents of title in respect of such
goods) financed by such letters of credit; (m) the sale of accounts receivable
in connection with collection in the ordinary course of business; (n)
construction Liens arising in the ordinary course of business, including Liens
for work performed for which payment has not been made, securing obligations
that are not due and payable or are being contested in good faith by appropriate
proceedings and in respect of which, if applicable, the Company or the relevant
Restricted Subsidiary shall have set aside on its books reserves in accordance
with GAAP; (o) Liens securing Currency Agreements, Interest Rate Protection
Obligations and commodity hedging agreements; (p) any other Liens encumbering
deposits made to secure obligations arising from statutory, regulatory,
contractual or warranty requirements, including rights of offset and set off;
(q) purchase money Liens to finance the acquisition of property or assets of the
Company or any Restricted Subsidiary of the Company acquired in the ordinary
course of business; provided that (1) the related purchase money Indebtedness
shall not be secured by or extend to any Collateral or any other property or
assets of the Company or any Restricted Subsidiary other than the property or
assets so acquired, (2) the amount of Indebtedness secured by any such Lien
shall not exceed the purchase price of the property or assets acquired and (3)
Lien securing such Indebtedness either (x) exists at the time of such
acquisition or construction or (y) shall be created within 180 days of such
acquisition; (r) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; (s) Liens securing Indebtedness which is incurred to
refinance Indebtedness which has been secured by a Lien or Liens permitted under
this Indenture and which has been incurred in accordance with the provisions of
this Indenture; provided that such Liens do not extend to or cover any property
or assets of the Company or any of the Restricted Subsidiaries not securing the
Indebtedness so refinanced; (t) Liens upon specific items of inventory or other
goods and proceeds of any Person securing such Person's obligations in respect
of bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other goods;
(u) Liens securing reimbursement obligations with respect to commercial letters
of credit which encumber documents and other property relating to such letters
of credit and products and proceeds thereof; (v) Liens securing Acquired
Indebtedness incurred in accordance with Section 4.9; provided that (1) such
Liens secured such Acquired Indebtedness at the time of and prior to the
incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary thereof and were not
<PAGE>
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granted in connection with, or in anticipation of, the incurrence of such
Acquired Indebtedness by the Company or a Restricted Subsidiary thereof and (2)
such Liens do not extend to or cover any property or assets of the Company or
any of the Restricted Subsidiaries other than the property or assets that
secured the Acquired Indebtedness prior to the time such Indebtedness became
Acquired Indebtedness of the Company or such Restricted Subsidiary and are no
more favorable to the Lienholders than those securing the Acquired Indebtedness
prior to the incurrence of such Acquired Indebtedness by the Company or such
Restricted Subsidiary; and (w) Liens on assets acquired or constructed after the
Issue Date and not constituting Collateral securing Indebtedness not to exceed
70% of the lower of the cost of construction or acquisition of such assets or
the fair market value of such assets, in each case determined at the time of
incurrence of such Indebtedness.
"Permitted Related Acquisition" has the meaning provided in Section
4.13.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
charitable foundation, unincorporated organization, government or any agency or
political subdivision thereof or any other entity.
"Physical Securities" has the meaning provided in Section 2.1.
"Pledge Intercreditor Agreement" means the Pledge Intercreditor
Agreement dated as of the date hereof by and among United States Trust Company
of New York, as collateral agent, United States Trust Company of New York, as
trustee and Bank Agent, as the same may be amended, supplemented or otherwise
modified from time to time.
"Pledged Securities" has the meaning provided in the Master Pledge
Agreement.
"Pledgor" means each of the Company, Holdings, RTI Capital Corp.,
Bliss & Laughlin, LLC, Canadian Drawn Steel Company, Inc., Nimshillen and
Tuscarawas, LLC and each other Restricted Subsidiary that becomes a "Pledgor"
under any Security Document.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred or preference stock, whether now outstanding or issued
after the date of this Indenture, and including, without limitation, all classes
and series of preferred or preference stock of such Person.
"principal" of a debt security means the principal amount of the
security plus, when appropriate, the premium, if any, on the security.
"Principal Intercreditor Agreement" means the Amended and Restated
Intercreditor and Subordination Agreement dated as of the date hereof by and
among United States Trust Company of New York, as Collateral Agent, United
States Trust Company of New York, as Trustee with respect to the Securities
issued under this Indenture, the Pennsylvania Lenders (as defined therein),
BankBoston, N.A., as Agent (as defined therein), those parties who in the future
become Government Lenders (as defined therein), those parties who in the future
become Notes Refinancing Lenders (as defined therein), those parties who in the
future become New Bar Mill Lenders, the Issuers, the Guar-
<PAGE>
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antors, and each of the other Pledgors from time to time made party thereto, as
the same may be amended, modified or waived in accordance with its terms.
"Prior Lien" has the meaning assigned to such term in the applicable
Security Document.
"Private Exchange Securities" shall have the same meaning specified
in the Registration Rights Agreement for "Private Exchange Notes."
"Private Placement Legend" shall mean a legend substantially in the
form of the first two paragraphs of the legend initially set forth in the
Securities in the form set forth on Exhibit A-1.
"Property" means any right, title or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible and including ownership interests of any Person.
"Public Equity Offering" means a public offering of Common Stock of
the Company, Parent Guarantor, RTI or any other direct or indirect parent
company of the Company pursuant to an effective registration statement filed
under the Securities Act of 1933, as amended (excluding registration statements
filed on Form S-8).
"Qualified Institutional Buyer" or "QIB" shall have the meaning
assigned to such term in Rule 144A under the Securities Act.
"Real Property" means any interest in any real property or any
portion thereof whether owned in fee or leased or otherwise owned.
"Redemption Date" means, with respect to any Security, the Maturity
Date of such Security or the date on which such Security is to be redeemed
pursuant to the terms of the Securities.
"Refinancing Indebtedness" means (a) Indebtedness of an Issuer or a
Subsidiary Guarantor to the extent the proceeds thereof are used solely to
refinance (whether by amendment, renewal, extension or refunding) all or any
part of any Indebtedness of an Issuer or any of the Restricted Subsidiaries and
(b) Indebtedness of any Restricted Subsidiary (other than a Subsidiary
Guarantor) to the extent the proceeds thereof are used solely to refinance
(whether by amendment, renewal, extension or refunding) all or any part of any
Indebtedness of a Restricted Subsidiary (other than a Subsidiary Guarantor), in
each such event, incurred under paragraph (a) of Section 4.9 or clause (i) or
(ii) of paragraph (b) (other than the Indebtedness refinanced, redeemed or
retired in connection with the offering and sale of the Securities) of Section
4.9; provided that (i) the principal amount of Indebtedness incurred pursuant to
this definition (or, if such Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof, the accreted value of such Indebtedness)
shall not exceed the sum of the principal amount of Indebtedness so refinanced
(less any discount from principal amount due upon payment pursuant to the terms
of such Indebtedness), plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of such Indebtedness or
the amount of any premium rea-
<PAGE>
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sonably determined by the Board of Directors of the Company as necessary to
accomplish such refinancing by means of a tender offer or privately negotiated
purchase, plus the amount of reasonable expenses in connection therewith, (ii)
in the case of Indebtedness incurred pursuant to this definition by the Company
or any Subsidiary Guarantor, such Indebtedness (x) has no scheduled principal
payment prior to the earlier of (A) the final maturity of the corresponding
portion of the Indebtedness being refinanced or (B) the 91st day after the final
maturity date of the Securities and (y) has an Average Life to Stated Maturity
greater than either (A) the Average Life to Stated Maturity of the Indebtedness
refinanced or (B) the remaining Average Life to Stated Maturity of the
Securities and (iii) if the Indebtedness to be refinanced is Subordinated
Indebtedness, the Indebtedness to be incurred pursuant to this definition shall
also be Subordinated Indebtedness.
"Registrar" has the meaning provided in Section 2.3.
"Registration Rights Agreement" means the Notes Exchange and
Registration Rights Agreement dated as of August 13, 1999 by and among the
Issuers, the Guarantors and the Initial Purchasers, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Security" means a permanent global security in
registered form representing the aggregate principal amount of Securities sold
in reliance on Regulation S under the Securities Act.
"Release Notice" has the meaning provided in Section 11.4.
"Released Mortgaged Property" shall mean any vacant and unimproved
portion of any Mortgaged Property (other than the Mortgaged Property located in
Lackawanna, New York and Johnstown, Pennsylvania) which the Company or any other
applicable Pledgor, subject to Section 11.3(b), elects to develop free and clear
of the Lien of the Security Documents.
"Required Filing Dates" has the meaning provided in Section 4.7.
"Requisite Managers" means a majority of the Board of Directors
(including a majority of the Disinterested Directors) of the Company, or if it
has no such governing body, then a majority of the Board of Directors (including
a majority of the Disinterested Directors) of the managing member of the Company
or the managing member of the Parent Guarantor (initially RTI).
"Resale Restriction Termination Date" means the date which is two
years after the later of the Issue Date and the last date on which the Issuers
or any of their respective Affiliates held any beneficial interest in a Security
being acquired or a predecessor to such Securities.
"Responsible Officer" means, with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee, including any Vice
President, Assistant Vice President, Assistant Secretary or any officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also, with respect to a particular matter, any
other officer
<PAGE>
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to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Restricted Payment" has the meaning provided in Section 4.12.
"Restricted Period" has the meaning provided in Section 2.16.
"Restricted Security" means a Security that constitutes a
"restricted security" within the meaning of Rule 144(a)(3) under the Securities
Act; provided, however, that the Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any Security
constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company that has
not been designated by the Board of Directors of the Company, by a Board
Resolution of the Company delivered to the Trustee, as an Unrestricted
Subsidiary pursuant to and in compliance with provided in Section 4.18. Any such
designation may be revoked by a Board Resolution of the Company delivered to the
Trustee, subject to the provisions of such covenant. For purposes of the
definitions of "Consolidated Income Tax Expense," "Consolidated Interest
Expense" and "Consolidated Net Income," RTI Capital Corp. shall be considered a
Restricted Subsidiary.
"Revocation" has the meaning provided in Section 4.18.
"Roll-up Transaction" means any merger or consolidation of the
Company with, or any transfer of all of the assets of, or Capital Stock of, the
Company to, any newly organized Affiliate thereof (having no material
liabilities other than Investments in or liabilities with respect to the Company
or the Restricted Subsidiaries) or to RTI (provided it has no material
liabilities other than Investments in or liabilities with respect to the Company
and the Restricted Subsidiaries) if such transaction and any series of related
transactions are for the sole purpose of creating or having a corporation that
will own all of the assets that the Company owned immediately prior to such
transaction.
"RTI" means Republic Technologies International, Inc. and any
successors.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale-Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person after the acquisition
thereof or the completion of construction or commencement of operation thereof
to such lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor on the security of such property or asset.
The stated maturity of such arrangement shall be the date of the last payment of
rent or any other amount due under such arrangement prior to the first date on
which such arrangement may be terminated by the lessee without payment of a
penalty.
"SEC" means the Securities and Exchange Commission.
<PAGE>
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"Secured Creditors" shall mean, for so long as they are entitled to
the benefits of the security interests in the Collateral pursuant to the terms
of the Principal Intercreditor Agreement, the Trustee, any Bank Agent on its
behalf and on behalf of the Holders, the Existing Secured Creditors, any holders
of Secured Refinancing Indebtedness; any holders of Secured Government Assisted
Indebtedness and any New Bar Mill Lenders.
"Secured Government Assisted Indebtedness" means Indebtedness
incurred pursuant to clause (xiv) of paragraph (b) of Section 4.9 secured by a
Lien on Collateral permitted under Section 4.11.
"Secured Refinancing Indebtedness" means Refinancing Indebtedness
secured by a Lien on Collateral permitted under Section 4.11.
"Securities" means the 13 3/4% Senior Secured Notes Due 2009 issued,
authenticated and delivered under this Indenture, as amended or supplemented
from time to time pursuant to the terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the security agreement substantially in
the form of Exhibit F hereto (including such changes to such form as may be
necessary or desirable to conform to applicable local laws), as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof and thereof.
"Security Documents" means, collectively, (i) the Security
Agreement, (ii) the Master Pledge Agreement, (iii) the Mortgages made by or to
be made by the Company in favor of the Collateral Agent, (iv) the Mortgages made
by Bliss & Laughlin, LLC and Canadian Drawn Steel Company, Inc. in favor of the
Collateral Agent and (v) all security agreements, mortgages, deeds of trust,
pledges, collateral assignments and other agreements or instruments evidencing
or creating any security in favor of the Collateral Agent in any or all of the
Collateral and the New Bar Mill, in each case as amended, amended or restated,
supplemented or otherwise modified from time to time in accordance with their
terms.
"Security Interests" means the Liens on the Collateral created by
the Security Documents in favor of the Collateral Agent for its benefit and the
benefit of the Trustee and the holders of Securities or in favor of the Trustee
for its benefit and the benefit of the holders of the Securities.
"Securityholders' Pro Rata Share" means a fraction, (i) the
numerator of which is the aggregate principal amount of Notes outstanding on the
date the applicable Net Cash Proceeds are received and (ii) the denominator of
which is the sum of (x) the aggregate principal amount of Notes outstanding on
such applicable date and (y) if the New Credit Facility requires such Net Cash
Proceeds to be applied to repay or collateralize (in the case of letters of
credit) extensions of credit thereunder, the aggregate principal amount of
Indebtedness outstanding under the New Credit Facility on such applicable date.
<PAGE>
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"Senior Collateral Proceeds" has the meaning provided in Section
4.13.
"Significant Subsidiary" means a Restricted Subsidiary which is a
"Significant Subsidiary" under Rule 1.02(v) of Regulation S-X under the
Securities Act.
"Specialty Steel Assets" means those assets associated exclusively
with the specialty steel business of Republic Engineered Steels, Inc., including
the equipment of No. 3 Melt Shop and No. 4 Grinding Department in the Canton,
Ohio 8th Street Plant, the equipment and property of the Canton, Ohio Harrison
Road Specialty Plant and the equipment and property of the Baltimore, Maryland
specialty steels plant.
"Stated Maturity" means, when used with respect to any Security or
any installment of interest thereon, the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable, and when used with respect to any other
Indebtedness, means the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such Indebtedness, or
any installment of interest thereon, is due and payable.
"Subordinated Indebtedness" means Indebtedness of an Issuer or a
Subsidiary Guarantor which is expressly subordinated in right of payment to the
Securities or the Guarantee of such Guarantor, as the case may be.
"Subsidiary" means, with respect to any Person, (a) a corporation a
majority of whose Voting Stock is at the time, directly or indirectly, owned by
such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof and (b) any other Person (other than a
corporation), including, without limitation, a joint venture, in which such
Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, have at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Persons performing
similar functions). For purposes of this definition, any directors' qualifying
shares or investments by foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"Subsidiary Guarantor" means (a) each Subsidiary of the Company that
owns or holds any Collateral and (b) any other Subsidiary of the Company that
guarantees the Securities, but shall not include RTI Capital Corp., Oberlin
Insurance Company or the Utility Unrestricted Subsidiaries.
"Substitute Collateral" has the meaning provided in Section 11.5.
"Supply and Services Agreements" means the Round Supply Agreement
dated on or about the Issue Date between the Company and the new tubular steel
products joint venture between Kobe and USX and U.S. Steel Group, the Coke
Supply Agreement dated on or about the Issue Date between the Company and U.S.
Steel Group, the Pellet Supply Agreement dated on or about the Issue Date
between U.S. Steel Group and the Company, the Transition Services Agreement
between the Company and USX Corporation, the Tubular Utilities Agreement and
certain related agreements between the Company and the new tubular steel
products joint venture between Kobe and USX, the
<PAGE>
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Technology Transfer Agreements and certain related agreements each dated on or
about the Issue Date among the Company, Kobe and one of its affiliates and the
Safe Harbor Lease Matters Agreement relating to the Safe Harbor Lease Property.
"Survey" means a survey of any parcel of real property (and all
improvements thereon): (i) prepared by a surveyor or engineer licensed to
perform surveys in the state or province in which such property is located, (ii)
dated (or redated) not earlier than six months prior to the date of delivery
thereof (unless there shall have occurred within six months prior to such date
of delivery any exterior construction on the site of such property, in which
event such survey shall be dated (or redated) after the completion of such
construction or if such construction shall not have been completed as of such
date of delivery, not earlier than 20 days prior to such date of delivery),
(iii) certified by the surveyor in a manner reasonably acceptable to the title
company providing title insurance in respect of the Liens granted under the
Mortgages (provided, however, that such certification shall not be required with
respect to any survey of any parcel of real property located in Canada) and (iv)
complying in all respects with the minimum detail requirements of the American
Land Title Association, or local or foreign equivalent, as such requirements are
in effect on the date of preparation of such survey, or that is otherwise
reasonably acceptable to the Trustee (giving consideration to the applicable
transaction).
"Surviving Entity" has the meaning provided in Section 5.1.
"Temporary Regulation S Global Security" means a temporary global
security in registered form representing the aggregate principal amount of
Securities sold in reliance on Regulation S under the Securities Act. No
interest shall be paid in respect of Securities in the form of the Temporary
Regulation S Global Security until such time as such Securities are exchanged
for interests in the Permanent Regulation S Global Security.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of this Indenture.
"Transactions" means the transactions contemplated by the Master
Restructuring Agreement, dated as of August 13, 1999, among Bar Technologies
Inc., RES Holding Corporation, Republic Engineered Steels, Inc., Blackstone
Capital Partners II Merchant Banking Fund L.P., Blackstone Offshore Capital
Partners II L.P., Blackstone Family Investment Partnership II L.P., The Veritas
Capital Fund, L.P., HVR Holdings, L.L.C., FirstEnergy Services Corp., USX, Kobe,
USS Lorain Holdings Company, Inc., USX RTI Holdings, Inc., Kobe/Lorain Inc.,
Kobe RTI Holdings, Inc. and USS/Kobe Steel Company.
"Trust Moneys" means all cash or Cash Equivalents received by the
Trustee or the Collateral Agent, as the case may be: (a) upon the release of
property from the Lien of any of the Security Documents, including all moneys
received in respect of the principal of all purchase money, governmental and
other obligations; (b) as compensation for, or proceeds of the sale of all or
any part of the Collateral taken by eminent domain or purchased by, or sold
pursuant to any order of, a governmental authority or otherwise disposed of; (c)
as proceeds of insurance upon any, all or part of the Collateral (other than any
liability insurance proceeds payable to the Trustee or the Collateral Agent,
<PAGE>
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as the case may be, for any loss, liability or expense incurred by it); (d)
pursuant to certain provisions of the Mortgages; (e) as proceeds of any other
sale or other disposition of all or any part of the Collateral by or on behalf
of the Trustee or the Collateral Agent, as the case may be, or any collection,
recovery, receipt, appropriation or other realization of or from all or any part
of the Collateral pursuant to the Security Documents or otherwise; or (f) for
application under this Indenture as provided in the Indenture, any Security
Document or the Intercreditor Agreements, or whose disposition is not otherwise
specifically provided for in this Indenture, any Security Document or the
Intercreditor Agreements; provided, however, that "Trust Moneys" shall not
include any property deposited with the Trustee pursuant to Section 4.15 or
Article III or VIII or delivered to or received by the Trustee pursuant to
Section 6.10.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor, and shall in addition include any Person
designated or constituted as a co-trustee or separate trustee pursuant to
Section 7.12 for the limited purposes of such designation or constitution.
"Unrestricted Securities" means one or more Securities that do not
and are not required to bear the Private Placement Legend in the form set forth
in Exhibit A-1, including, without limitation, the Exchange Securities.
"Unrestricted Subsidiary" means any Subsidiary of the Company (other
than a Subsidiary Guarantor or a Subsidiary of the Company which owns or holds
any Collateral) designated as such pursuant to and in compliance with Section
4.18. Any such designation may be revoked by a Board Resolution of an Issuer
delivered to the Trustee, subject to the provisions of such covenant.
"U.S. Government Obligations" has the meaning provided in Section
8.1.
"USX" means USX Corporation.
"Veritas" means The Veritas Capital Fund, L.P. and its Affiliates.
"Voting Stock" means any class or classes of Capital Stock of a
Person pursuant to which the holders thereof have the general voting power under
ordinary circumstances to vote in the election of the Board of Directors,
managers or trustees of such Person (irrespective of whether or not, at the
time, Capital Stock of any other class or classes shall have, or might have,
voting power by reason of the happening of any contingency).
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary
of which 100% of the outstanding Capital Stock is owned by an Issuer or one or
more Wholly-Owned Restricted Subsidiaries of an Issuer. For purposes of this
definition, any directors' qualifying shares or investments by foreign nationals
mandated by applicable law shall be disregarded in determining the ownership of
a Subsidiary.
"Wholly-Owned Subsidiary" means any Subsidiary of an Issuer 99%
(other than shares of Capital Stock representing any directors' qualifying
shares or investments by foreign nation-
<PAGE>
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als mandated by applicable law) of the total voting power of 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 owned by the
Company, by a Wholly-Owned Subsidiary of the Company or by the Company and a
Wholly-Owned Subsidiary of the Company.
SECTION 1.2. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision shall be deemed incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following
meanings:
(a) "Commission" means the SEC;
(b) "indenture securities" means the Securities;
(c) "indenture security holder" means a Securityholder;
(d) "indenture to be qualified" means this Indenture;
(e) "indenture trustee" or "institutional trustee" means the
Trustee; and
(f) "obligor" on the Indenture securities means the Company.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings so assigned to them therein.
SECTION 1.3. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the
plural include the singular;
(d) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other Subdivision;
(e) unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall
be made, and all financial statements required to be delivered hereunder
shall be prepared in accordance with GAAP as in effect from time to time,
applied on a basis consistent with the most recent audited consolidated
financial statements of the Company; and
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(f) "including" means including, without limitation, unless the
context otherwise requires.
ARTICLE II
THE SECURITIES
SECTION 2.1. Form and Dating.
The Initial Securities and the Private Exchange Securities and the
Trustee's certificates of authentication with respect thereto shall be
substantially in the form set forth in Exhibit A-1 annexed hereto. The
Securities other than Initial Securities and the Private Exchange Securities and
the Trustee's certificates of authentication with respect thereto shall be
substantially in the form set forth in Exhibit A-2 annexed hereto. The
Securities may have notations, legends or endorsements required by law, rule,
the rules of any stock exchange on which the Securities are listed, usage or
agreement to which any Issuer is subject (provided that any such notation,
legend or endorsement is in a form reasonably acceptable to the Issuers). Each
Security shall be dated the date of issuance and shall show the date of its
authentication. The terms and provisions contained in the Securities set forth
in Exhibit A-1 and Exhibit A-2 shall constitute, and are expressly made, a part
of this Indenture.
Securities offered and sold in reliance on Rule 144A and Securities
offered and sold in reliance on Regulation S shall be issued initially in the
form of one or more Global Securities, substantially in the form set forth in
Exhibit A-1, deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter provided
and shall bear the legend set forth in Exhibit B. The aggregate principal amount
of the Global Securities may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depository,
as hereinafter provided.
Securities issued in exchange for interests in a Global Security
pursuant to Section 2.15 hereof may be issued in the form of permanent
certificated Securities in registered form in substantially the form set forth
in Exhibit A-1 (the "Physical Securities").
SECTION 2.2. Execution and Authentication.
Two Officers shall execute the Securities on behalf of each of the
Issuers by either manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security or at any time
thereafter, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. Such
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
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The Trustee shall authenticate Securities for original issue in an
aggregate principal amount not to exceed $425,000,000, upon receipt of an
Officers' Certificate signed by two Officers of each of the Issuers. The
Officers' Certificate shall specify the amount of Securities to be
authenticated, the date on which the Securities are to be authenticated and the
aggregate principal amount of Securities outstanding on the date of
authentication and certify that all conditions precedent to the issuance of the
Securities contained herein and in the Security Documents have been complied
with. The aggregate principal amount of Securities outstanding at any time may
not exceed $425,000,000 except as provided in Sections 2.7 and 2.8.
The Trustee may appoint an authenticating agent acceptable to the
Issuers to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. Such authenticating agent shall
have the same rights as the Trustee in any dealings hereunder with the Issuers
or with any of the Issuers' respective Affiliates.
SECTION 2.3. Registrar and Paying Agent.
The Issuers shall maintain an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where Securities may be presented for registration of transfer or for exchange
(the "Registrar"), an office or agency (which shall be located in the Borough of
Manhattan, The City of New York, State of New York) where Securities may be
presented for payment (the "Paying Agent") and an office or agency where notices
and demands to or upon the Issuers in respect of the Securities and this
Indenture may be served. The Registrar shall keep a register of the Securities
and of their transfer and exchange. The Issuers may have one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent. Neither of the Issuers nor any of their
respective Affiliates may act as Paying Agent.
The Issuers shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which shall incorporate the provisions
of the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Issuers shall notify the Trustee of the name and
address of any such Agent. If the Issuers fail to maintain a Registrar or Paying
Agent, or fail to give the foregoing notice, the Trustee shall act as such and
shall be entitled to appropriate compensation in accordance with Section 7.7.
The Issuers initially appoint the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the Securities
to serve until such time as the Trustee has resigned or a successor is appointed
in accordance with this Indenture.
SECTION 2.4. Paying Agent To Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities (whether such money has
been paid to it by the Issuers or any other obligor on the Securities), and
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the Issuers and the Paying Agent shall notify the Trustee of any default by the
Issuers (or any other obligor on the Securities) in making any such payment.
Money held in trust by the Paying Agent need not be segregated except as
required by law and in no event shall the Paying Agent be liable for any
interest on any money received by it hereunder. The Issuers at any time may
require the Paying Agent to pay all money held by it to the Trustee and account
for any funds disbursed and the Trustee may at any time during the continuance
of any Event of Default specified in Sections 6.1(a) and (b), upon written
request to the Paying Agent, require such Paying Agent to pay forthwith all
money so held by it to the Trustee and to account for any funds disbursed. Upon
making such payment and accounting to the satisfaction of the Trustee, the
Paying Agent shall have no further liability for the money delivered to the
Trustee.
SECTION 2.5. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Securityholders. If the Trustee is not the Registrar, the Issuers shall
furnish to the Trustee before each Interest Payment Date, and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Securityholders.
SECTION 2.6. Transfer and Exchange.
The Securities shall be issued in registered form and shall be
transferable only upon the surrender of a Security for registration of transfer.
When Securities are presented to the Registrar or a co-registrar with a request
from the Holder of such Securities to register the transfer or to exchange them
for an equal principal amount of Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested;
provided, that every Security presented or surrendered for registration of
transfer or exchange shall be duly endorsed or be accompanied by a written
instrument of transfer in form satisfactory to the Issuers and the Registrar,
duly executed by the Holder thereof or his attorneys duly authorized in writing.
To permit registrations of transfers and exchanges, the Issuers shall issue and
execute and the Trustee shall authenticate new Securities evidencing such
transfer or exchange at the Registrar's request. No service charge shall be made
to the Securityholder for any registration of transfer or exchange. The Issuers
may require from the Securityholder payment of a sum sufficient to cover any
transfer taxes or other governmental charge that may be imposed in relation to a
transfer or exchange, but this provision shall not apply to any exchange
pursuant to Section 2.10, 3.6, 4.13, 4.15 or 9.5 and the Issuers will be
responsible for the payment of such taxes in such events, unless the Securities
transferred or exchanged are issued to a different Securityholder in which event
the Issuers may require from the Securityholder payment of a sum sufficient to
cover any transfer taxes or other governmental charge that may be imposed in
relation to such transfer or exchange. The Trustee shall not be required to
exchange or register a transfer of any Security for a period of 15 days
immediately preceding the first mailing of notice of redemption of Securities to
be redeemed or of any Security selected, called or being called for redemption
except, in the case of any Security where public notice has been given that such
Security is to be redeemed in part, the portion thereof not to be redeemed.
Prior to the due presentation of transfer of any Security, the Issuers, the
Trustee, or the Registrar may deem and treat the person in whose name a Security
is registered as the absolute owner of such Security for the purpose of
receiving payment of
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principal of and interest on such Security, except as provided in the face of
such Security, and for all other purposes whatsoever, whether or not such
Security is overdue, and none of the Issuers, the Trustee or Registrar shall be
affected by notice to the contrary.
All Securities issued on any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
SECTION 2.7. Replacement Securities.
If a mutilated Security is surrendered to the Registrar or the
Trustee or if the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall
authenticate a replacement Security if the Holder of such Security furnishes to
the Issuers and to the Trustee evidence reasonably acceptable to them of the
ownership and the destruction, loss or theft of such Security and the
requirements of Section 8-405 of the Uniform Commercial Code are met. If
required by the Trustee or the Issuers, an indemnity bond shall be posted,
sufficient in the judgment of both to protect the Issuers, the Trustee or any
Paying Agent from any loss that any of them may suffer if such Security is
replaced. The Issuers may charge such Holder for the Issuers' expenses in
replacing such Security and the Trustee may charge the Issuers for the Trustee's
expenses in replacing such Security. Every replacement Security shall constitute
an additional obligation of the Issuers.
SECTION 2.8. Outstanding Securities.
The Securities outstanding at any time are all Securities that have
been authenticated by the Trustee except for (a) those cancelled by it, (b)
those delivered to it for cancellation, (c) to the extent set forth in Sections
8.1 and 8.2, on or after the date on which the conditions set forth in Sections
8.1 and 8.2 have been satisfied, those Securities theretofore authenticated and
delivered by the Trustee hereunder and (d) those described in this Section 2.8
as not outstanding. A Security does not cease to be outstanding because the
Issuers, the Guarantors or any one of their respective Affiliates holds the
Security.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser in whose hands such Security is a legal, valid
and binding obligation of each of the Issuers. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant to
Section 2.7.
If the Paying Agent holds, in its capacity as such, on any Maturity
Date or on any optional redemption date, money sufficient to pay all accrued
interest and principal with respect to such Securities (or portions thereof)
payable on that date and is not prohibited from paying such money to the Holders
thereof pursuant to the terms of this Indenture, then on and after that date
such Securities (or portions thereof) cease to be outstanding and interest on
them ceases to accrue.
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SECTION 2.9. Treasury Securities.
In determining whether the Holders of the required principal amount
of Securities have concurred in any declaration of acceleration or notice of
default or direction, waiver or consent or any amendment, modification or other
change to this Indenture, Securities owned by the Issuers, the Guarantors or any
of their respective Affiliates shall be disregarded as though they were not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent or any
amendment, modification or other change to this Indenture, only Securities that
a Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded.
SECTION 2.10. Temporary Securities.
Until definitive Securities are prepared and ready for delivery, the
Issuers may prepare and the Trustee shall authenticate temporary Securities upon
receipt of a written order of the Issuers in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of temporary
Securities to be authenticated and the date on which the temporary Securities
are to be authenticated. Temporary Securities shall be substantially in the form
of definitive Securities but may have variations that the Issuers consider
appropriate for temporary Securities. Without unreasonable delay, the Issuers
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities. Until such exchange, temporary Securities
shall be entitled to the same rights, benefits and privileges as definitive
Securities.
SECTION 2.11. Cancellation.
The Issuers at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall (subject to
the record-retention requirements of the Exchange Act) dispose of cancelled
Securities unless the Issuers direct the Trustee to return such Securities to
the Issuers, and, if so disposed of, shall deliver a certificate as to the
disposal thereof to the Issuers. The Issuers may not reissue or resell, or issue
new Securities to replace, Securities that the Issuers or the Guarantors have
redeemed pursuant to Article III or paid at maturity, or that have been
delivered to the Trustee for cancellation, subject to Section 2.15(d).
SECTION 2.12. Defaulted Interest.
If the Issuers default on a payment of interest on the Securities,
they shall pay the defaulted interest, plus (to the extent permitted by law) any
interest payable on the defaulted interest, in accordance with the terms hereof,
to the Persons who are Securityholders on a subsequent special record date,
which date shall be at least five Business Days prior to the payment date. The
Issuers shall fix such special record date and payment date in a manner
satisfactory to the Trustee. At least 15 days before such special record date,
the Issuers shall mail to the Trustee and each Securityholder of such series a
notice that states the special record date, the payment date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any, to
be paid.
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SECTION 2.13. CUSIP Number.
The Issuers in issuing the Securities may use a "CUSIP" number, and
if so, such CUSIP number shall be included in notices of redemption or exchange
as a convenience to Holders; provided, however, that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities. The
Issuers will promptly notify the Trustee of any change in the CUSIP number.
SECTION 2.14. Deposit of Moneys.
On each Interest Payment Date and Maturity Date, the Issuers shall
have deposited with the Paying Agent in immediately available funds money
sufficient to make cash payments, if any, due on such Interest Payment Date or
Maturity Date, as the case may be, in a timely manner which permits the Trustee
to remit payment to the Holders on such Interest Payment Date or Maturity Date,
as the case may be.
SECTION 2.15. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit B.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Security, and the Depository may be treated by the Issuers, the
Trustee and any agent of the Issuers or the Trustee as the absolute owner of the
Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Issuers, the Trustee or any agent of the
Issuers or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and this Indenture. In addition, Physical
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in Global Securities if (i) the Issuers notify the Trustee
in writing that the Depository is no longer willing or able to act as a
Depository or the Depository ceases to be registered as a clearing agency under
the Exchange Act and a successor Depository is not appointed within 90 days of
such notice of cessation, (ii) the Issuers, at their option, notify the Trustee
in writing that they elect to cause the issuance of the Securities in
certificated form under the Indenture or (iii) an Event of Default has occurred
and is continuing and the Registrar has received a written request from the
Depository to issue Physical Securities.
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(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Issuers shall execute, and the Trustee shall authenticate and deliver, one
or more Physical Securities of like tenor and principal amount of authorized
denominations.
(d) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Issuers shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount at
maturity of Physical Securities of like tenor of authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to
subparagraph (b), (c) or (d) of this Section 2.15 shall, except as otherwise
provided by Section 2.16 hereof, bear the Private Placement Legend.
(f) The Holder of any Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 2.16. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following additional provisions shall apply with respect to the registration of
any proposed transfer of a Security to any Institutional Accredited Investor
which is not a QIB:
(i) the Registrar shall register the transfer of any Security,
whether or not such Security bears the Private Placement Legend, if (x)
the requested transfer is after the Resale Restriction Termination Date or
(y) the proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit C hereto and any legal opinions and
certifications required thereby;
(ii) if the proposed transferor is an Agent Member and the
Securities to be transferred consist of Physical Securities which after
transfer are to be evidenced by an interest in the IAI Global Security,
upon receipt by the Registrar of (x) written instructions given in
accordance with the Depositary's and the Registrar's procedures and (y)
the appropriate certificate, if any, required by clause (y) of paragraph
(i) above, together with any required legal opinions and certifications,
the Registrar shall register the transfer and reflect on its book and
records the date an increase in the principal amount of the IAI Global
Security in an amount equal to the principal amount of Physical Securities
to be transferred, and the Trustee shall cancel the Physical Security so
transferred; and
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(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Security, upon receipt by the Registrar
of (x) written instructions given in accordance with the Depository's and
the Registrar's procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (i) above, together with any required
legal opinions and certifications, the Registrar shall register the
transfer and reflect on its books and records the date and (A) a decrease
in the principal amount of the Global Security from which such interests
are to be transferred in an amount equal to the principal amount of the
Securities to be transferred and (B) an increase in the principal amount
of the IAI Global Security in an amount equal to the principal amount of
the Global Security to be transferred.
(b) Transfers to Non-U.S. Persons. The following additional
provisions shall apply with respect to the registration of any proposed transfer
of an Initial Security to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Initial
Security, whether or not such Security bears the Private Placement Legend,
if (x) the requested transfer is after the Resale Restriction Termination
Date or (y) the proposed transferor has delivered to the Registrar a
certificate substantially in the form of Exhibit D hereto and, if
requested by the Company or Trustee, the delivery of an opinion of
counsel, certifications and/or other information satisfactory to each of
them;
(ii) if the proposed transferee is an Agent Member and the
Securities to be transferred consist of Physical Securities which after
transfer are to be evidenced by an interest in the Regulation S Global
Security upon receipt by the Registrar of (x) written instructions given
in accordance with the Depository's and the Registrar's procedures and (y)
the appropriate certificate, if any, required by clause (y) of paragraph
(i) above, together with any required legal opinions and certifications,
the Registrar shall register the transfer and reflect on its books and
records the date and an increase in the principal amount of the Regulation
S Global Security in an amount equal to the principal amount of Physical
Securities to be transferred, and the Trustee shall cancel the Physical
Securities so transferred;
(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Security, upon receipt by the Registrar
of (x) written instructions given in accordance with the Depository's and
the Registrar's procedures and (y) the appropriate certificate, if any,
required by clause (y) of paragraph (i) above, together with any required
legal opinions and certifications, the Registrar shall register the
transfer and reflect on its books and records the date and (A) a decrease
in the principal amount of the Global Security from which such interests
are to be transferred in an amount equal to the principal amount of the
Securities to be transferred and (B) an increase in the principal amount
of the Regulation S Global Security in an amount equal to the principal
amount of the Global Security to be transferred; and
(iv) until the 41st day after the Issue Date (the "Restricted
Period"), an owner of a beneficial interest in the Temporary Regulation S
Global Security may not transfer such interest to a transferee that is a
U.S. person or for the account or benefit of a U.S. person within the
meaning of Rule 902(o) of the Securities Act. During the Restricted
Period, all beneficial
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interests in the Temporary Regulation S Global Security shall be
transferred only through Cedel or Euroclear, either directly if the
transferor and transferee are participants in such systems, or indirectly
through organizations that are participants, in accordance with (x) the
written instructions given in accordance with the Depository's, Euroclear
or Cedel's and the Registrar's procedures and (y) if the proposed
transferor has delivered to the Registrar a certificate substantially in
the form of Exhibit D hereto and, if requested by the Company or Trustee,
the delivery of an opinion of counsel, certifications and/or other
information satisfactory to each of them; and
(v) upon the expiration of the Restricted Period, beneficial
ownership interests in the Temporary Regulation S Global Security may be
exchanged for interests in the Permanent Regulation S Global Security upon
certification to the Registrar that such interest are owned either by
Non-U.S. persons or U.S. persons who purchased such interests pursuant to
an exemption from, or transfer not subject to, the registration
requirements of the Securities Act. Upon the expiration of the Restricted
Period, the Issuers shall prepare and execute the Permanent Regulation S
Global Security in accordance with the terms of this Indenture and deliver
it to the Trustee for authentication. The Trustee shall retain the
Permanent Regulation S Global Security as custodian for the Depository.
Any transfers of beneficial ownership interests in the Temporary
Regulation S Global Security made in reliance on Regulation S shall
thenceforth be recorded by the Trustee by making an appropriate increase
in the principal amount of the Permanent Regulation S Global Security and
a corresponding decrease in the principal amount of the Temporary
Regulation S Global Security. At such time as the principal amount of the
Temporary Regulation S Global Security has been reduced to zero, the
Trustee shall cancel the Temporary Regulation S Global Security and
deliver it to the Issuers.
(c) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Security to a
QIB (excluding Non-U.S. Persons):
(i) the Registrar shall register the transfer of any Initial
Security, whether or not such Security bears the Private Placement Legend,
if (x) the requested transfer is after the Resale Restriction Termination
Date or (y) such transfer is being made by a proposed transferor who has
represented to the Issuers and the Registrar, in writing, that the sale
has been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form of
Security stating, or has otherwise advised the Issuers and the Registrar
in writing, that it is purchasing the Security for its own account or an
account with respect to which it exercises sole investment discretion and
that it and any such account is a QIB within the meaning of Rule 144A, and
is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuers
as it has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A;
(ii) if the proposed transferee is an Agent Member and the Securities
to be transferred consist of Physical Securities which after transfer are
to be evidenced by an interest in the 144A Global Security, upon receipt
by the Registrar of written instructions given in ac-
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cordance with the Depository's and the Registrar's procedures, the
Registrar shall register the transfer and reflect on its book and records
the date and an increase in the principal amount of the 144A Global
Security in an amount equal to the principal amount of Physical Securities
to be transferred, and the Trustee shall cancel the Physical Security so
transferred; and
(iii) if the proposed transferor is an Agent Member seeking to
transfer an interest in a Global Security, upon receipt by the Registrar
of written instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall register the transfer and
reflect on its books and records the date and (A) a decrease in the
principal amount of the Global Security from which interests are to be
transferred in an amount equal to the principal amount of the Securities
to be transferred and (B) an increase in the principal amount of the 144A
Global Security in an amount equal to the principal amount of the Global
Security to be transferred.
(d) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Securities not bearing the Private Placement Legend,
the Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the registration of transfer, exchange or replacement of Securities
bearing the Private Placement Legend, the Registrar shall deliver only
Securities that bear the Private Placement Legend unless (i) the circumstances
contemplated by paragraph (a)(i)(x) of this Section 2.16 exist, (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Issuers and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act or (iii) such Security has been sold pursuant
to an effective registration statement under the Securities Act.
(e) Other Transfers. If a Holder proposes to transfer a Security
constituting a Restricted Security pursuant to any exemption from the
registration requirements of the Securities Act other than as provided for by
Section 2.16(a), (b) and (c) hereof, the Registrar shall only register such
transfer or exchange if such transferor delivers an Opinion of Counsel
satisfactory to the Issuers and the Registrar that such transfer is in
compliance with the Securities Act and the terms of this Indenture; provided,
however, that the Issuers may, based upon the opinion of their counsel, instruct
the Registrar by an Issuers Order not to register such transfer in any case
where the proposed transferee is not a QIB, Non-U.S. Person or Institutional
Accredited Investor.
(f) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 hereof or this Section
2.16. The Issuers shall have the right to inspect and make copies of all such
letters, notices or other written communications at any time upon the giving of
reasonable prior written notice to the Registrar.
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ARTICLE III
REDEMPTION
SECTION 3.1. Notices to Trustee.
If the Issuers elect to redeem Securities pursuant to the terms of
the Securities, they shall do so by notifying the Trustee and the Paying Agent
in writing of the Redemption Date and the principal amount of Securities to be
redeemed as soon as reasonably practicable but in no event later than 3 Business
Days prior to the last day on which notice can be given under Section 3.3.
Each notice provided for in this Section 3.1 shall be accompanied by
an Officers' Certificate stating that such redemption will comply with the
conditions contained herein and in the Securities.
SECTION 3.2. Selection of Securities To Be Redeemed.
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed in compliance with the requirements
of the principal national securities exchange, if any, on which the Securities
being redeemed are listed or, if the Securities are not listed on a national
securities exchange, on a pro rata basis, by lot or by such method as the
Trustee shall deem fair and appropriate, provided that no Securities of a
principal amount of $1,000 or less shall be redeemed in part and provided,
further, that, if a partial redemption is made with the net proceeds of a Public
Equity Offering, selection of the Securities or portions thereof for redemption
shall be made by the Trustee on a pro rata basis or on as nearly a pro rata
basis as possible (provided that no Securities of a principal amount of $1,000
or less shall be redeemed in part and subject to the procedures of the
Depository, unless such method is otherwise prohibited). The Trustee shall make
the selection from the Securities outstanding and not previously called for
redemption. The Trustee shall promptly notify the Company in writing of such
Securities selected for redemption and, in the case of Securities selected for
partial redemption, the principal amount to be redeemed. The Trustee may select
for redemption portions of the principal amount of Securities that have
denominations larger than $1,000. Securities and portions thereof the Trustee
selects shall be in amounts of $1,000 or integral multiples of $1,000. No
Securities that have denominations of $1,000 or less shall be selected by the
Trustee for partial redemption. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption.
SECTION 3.3. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Issuers shall mail or cause the mailing of a notice of redemption by
first-class mail to each Holder of Securities to be redeemed and the Trustee and
any Paying Agent.
The notice shall identify the Securities to be redeemed and shall
state:
(a) the Redemption Date;
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(b) the redemption price and the amount of accrued and unpaid
interest, if any, to be paid;
(c) the name and address of the Paying Agent;
(d) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price and accrued and unpaid
interest, if any;
(e) that, unless the Issuers default in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date and the only remaining right of the Holders
of such Securities of such series is to receive payment of the redemption
price upon surrender to the Paying Agent of the Securities redeemed;
(f) if any Security is to be redeemed in part only, the portion of
the principal amount (equal to $1,000 or any integral multiple thereof) of
such Security to be redeemed and that, on or after the Redemption Date;
(g) if there is to be a partial redemption of certificated
Securities, upon surrender of such Security, a new Security or Securities
in aggregate principal amount equal to the unredeemed portion thereof will
be issued without charge to the Securityholder upon cancellation of the
original Securities;
(h) if less than all of the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities estimated to be
outstanding after such partial redemption; and
(i) the CUSIP number(s), if any, pursuant to Section 2.13 and, at
the option of the Issuers or the Trustee, the disclaimer permitted by
Section 2.13.
At the Issuers' written request, the Trustee shall give the notice
of redemption in the Issuers' name and at the Issuers' expense.
SECTION 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at the
redemption price plus accrued interest, if any, to the Redemption Date, but
interest installments whose maturity is on or prior to such Redemption Date will
be payable on the relevant Interest Payment Dates to the Holders of record at
the close of business on the relevant record dates referred to in the
Securities. Failure to give notice or any defect in the notice to any Holder
shall not affect the validity of the notice to any other Holder.
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SECTION 3.5. Deposit of Redemption Price.
On or before the Redemption Date, the Issuers shall deposit with the
Paying Agent in immediately available funds money sufficient to pay the
redemption price of and accrued interest on all Securities or portions thereof
to be redeemed on that date. The Paying Agent shall return to the Issuers any of
such money not required for such purpose. All money earned on funds held in
trust by the Paying Agent for payment pursuant to this Article III shall be
remitted to the Issuers.
If any Security surrendered for redemption in the manner provided in
the Securities shall not be so paid on the Redemption Date due to the failure of
the Issuers to deposit sufficient funds with the Paying Agent, interest will
continue to accrue from the Redemption Date until such payment is made on the
unpaid principal and, to the extent lawful, on any interest not paid on such
unpaid principal, in each case at the date and in the manner provided in the
Securities.
SECTION 3.6. Securities Redeemed in Part.
Upon surrender to the Paying Agent of a Security that is redeemed in
part, the Issuers shall execute and the Trustee shall authenticate for the
Holder a new Security equal in principal amount to the unredeemed portion of the
Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Securities.
The Issuers shall pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities and this
Indenture.
An installment of principal or interest shall be considered paid on
the date due if the Trustee or the Paying Agent holds by 12:00 Noon on such date
immediately available funds designated for and sufficient to pay such
installment.
The Issuers shall pay interest on overdue principal and (to the
extent permitted by law) on overdue installments of interest at the rate
specified therefor in the Securities.
SECTION 4.2. Maintenance of Office or Agency.
The Issuers shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be surrendered for
registration of transfer or exchange or for presentation for payment and where
notices and demands to or upon the Issuers in respect of the Securities and this
Indenture may be served. The Issuers will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Issuers shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address
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thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section 13.2.
The Issuers may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Issuers of their obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Issuers will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Issuers hereby initially designates the Corporate Trust Office
of the Trustee as an agency of the Issuers in accordance with Section 2.3.
SECTION 4.3. Corporate Existence.
Subject to Article V, the Company shall do or cause to be done, at
its own cost and expense, all things necessary to and will cause each of its
Restricted Subsidiaries to, preserve and keep in full force and effect the
corporate, limited liability company or partnership existence and rights
(charter and statutory), licenses and/or franchises of the Company and each of
its Restricted Subsidiaries; provided, however, that subject to Article XI and
the terms of any Security Document, the Company or any of its Restricted
Subsidiaries shall not be required to preserve any such rights, licenses or
franchises if the Board of Directors of the Company shall reasonably determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Restricted Subsidiaries, taken as a whole, and
the loss thereof is not adverse in any material respect to the Holders; and
provided, further, that this covenant shall not prohibit the combination of any
Restricted Subsidiary with the Company or with any other Restricted Subsidiary.
SECTION 4.4. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes, assessments
and governmental charges levied or imposed upon its or its Restricted
Subsidiaries' income, profits or property and (b) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a Lien upon its
property; provided, however, that, subject to the terms of the applicable
Security Documents, the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate negotiations or proceedings and for which disputed amounts adequate
reserves (in the good faith judgment of the Board of Directors of the Company)
have been made or where the failure to so pay would not have a material adverse
affect upon the Company and its Restricted Subsidiaries, taken as a whole.
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SECTION 4.5. Maintenance of Properties; Insurance; Books and
Records; Compliance with Law.
(a) Subject to, and in compliance with, the provisions of Sections
11.3 and 11.4 and to the provisions of each applicable Security Document, the
Company shall, and shall cause each of its Restricted Subsidiaries to, at all
times cause all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear and casualty excepted) and supplied with all necessary equipment, and
shall cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereto.
(b) The Company and each of its Restricted Subsidiaries shall
maintain insurance subject to the provisions of each applicable Security
Document in such amounts and covering such risks as are usually and customarily
carried with respect to similar facilities according to their respective
locations.
(c) The Company shall and shall cause each of its Restricted
Subsidiaries to keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Company and each Restricted Subsidiary of the Company, in
accordance with GAAP.
(d) The Company shall and shall cause each of its Restricted
Subsidiaries to comply with all statutes, laws, ordinances, or government rules
and regulations to which it is subject, non-compliance with which would
materially adversely affect the business, earnings, properties, assets or
condition (financial or otherwise) of the Company and its Restricted
Subsidiaries, taken as a whole.
SECTION 4.6. Compliance Certificates.
(a) The Issuers shall deliver to the Trustee within 120 days after
the end of each fiscal year, Officers' Certificates of the Issuers stating (i)
that a review of the activities of the Issuers during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Issuers have kept, observed, performed and fulfilled
their respective obligations under this Indenture, and (ii) that, to the best
knowledge of each Officer signing such certificate, the applicable Issuer has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof (or, if a Default or Event of
Default shall have occurred and be continuing, describing all such Defaults or
Events of Default of which such Officers may have knowledge, their status and
what action the Issuers are taking or propose to take with respect thereto).
(b) So long as (and to the extent) not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
annual financial statements delivered pursuant to Section 4.7 shall be
accompanied by a written statement of the Company's independent public
accountants that in making the examination necessary for certification of such
annual financial statements nothing has come to their attention that would lead
them to believe that the Company has violated any provisions of Article IV, V or
VI of this Indenture insofar as they relate to accounting mat-
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ters or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.
(c) The Issuers shall, so long as any of the Securities are
outstanding, deliver to the Trustee, within 10 days of either Issuer becoming
aware of any Event of Default, an Officers' Certificate specifying such Event of
Default and what action the Issuers are taking or propose to take with respect
thereto.
SECTION 4.7. Provision of Financial Information.
Whether or not the Company is subject to Section 13(a) or 15(d) of
the Exchange Act, or any successor provision thereto, the Company shall file
with the SEC (but only if the SEC accepts such filings) the annual reports,
quarterly reports and other documents which the Company would have been required
to file with the SEC pursuant to such Section 13(a) or 15(d) (each, an "Exchange
Act Report") or any successor provision thereto if the Company were so subject,
such documents to be filed with the SEC on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been required so to
file such documents if the Company were so subject. If, at any time prior to the
consummation of the Exchange Offer when the Company is not subject to such
Section 13(a) or 15(d), the information which would be required in an Exchange
Act Report is included in a public filing of the Company under the Securities
Act at the applicable Required Filing Date, such public filing shall fulfill the
filing requirement with the SEC with respect to the applicable Exchange Act
Report. The Company shall also in any event (a) within 15 days of each Required
Filing Date (whether or not permitted or required to be filed with the SEC) (i)
transmit (or cause to be transmitted) by mail to all Holders, as their names and
addresses appear in the Security register, without cost to such Holders, and
(ii) file with the Trustee, copies of the annual reports, quarterly reports and
other documents which the Company is required to file with the SEC pursuant to
this Section, or, if such filing is not so permitted (or, prior to the
consummation of the Exchange Offer, when the Company is not subject to Section
13(a) or 15(d) of the Exchange Act), information and data of a similar nature,
and (b) if, notwithstanding the preceding sentence, filing such documents by the
Company with the SEC is not permitted by SEC practice or applicable law or
regulations, promptly upon written request supply copies of such documents to
any Holder. Notwithstanding the foregoing, if Parent Guarantor remains a
Guarantor with ownership of 100% of the Capital Stock of the Company and with no
material assets other than its interests in the Company, all of the information,
reports and filings otherwise required of the Company may instead be supplied by
and relate to Parent Guarantor and none of the information or reporting
obligations shall apply with respect to the period ended June 30, 1999. In
addition, for so long as any Securities remain outstanding, the Company will
furnish to the Holders and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
SECTION 4.8. Further Assurance to the Trustee or Collateral Agent.
The Issuers shall, upon request of the Trustee or the Collateral
Agent, execute and deliver such further instruments and do such further acts as
may reasonably be necessary or proper to carry out more effectively the
provisions of this Indenture and any Security Document.
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SECTION 4.9. Limitation on Additional Indebtedness and Certain
Preferred Stock.
(a) The Issuers will not (A) incur any Indebtedness (including any
Acquired Indebtedness) and (B) permit any of the Restricted Subsidiaries to
incur any Indebtedness (including Acquired Indebtedness) or issue any Preferred
Stock; provided that (i) the Issuers and the Subsidiary Guarantors will be
permitted to incur Indebtedness (including Acquired Indebtedness) and the
Subsidiary Guarantors may issue Preferred Stock and (ii) a Restricted Subsidiary
that is not a Subsidiary Guarantor will be permitted to incur Acquired
Indebtedness if, in either case, immediately after giving pro forma effect to
the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the
Company would be greater than or equal to (a) 2.25 to 1, if such Indebtedness is
to be incurred on or prior to July 15, 2001, and (b) 2.50 to 1, if such
Indebtedness is to be incurred after July 15, 2001.
(b) Notwithstanding the provisions of paragraph (a) above, the
Issuers and the Restricted Subsidiaries, as applicable, may incur or issue each
and all of the following (each of which shall be given independent effect):
(i) Indebtedness under the Securities, the Exchange Securities, the
Guarantees and this Indenture;
(ii) Indebtedness of the Company and the Restricted Subsidiaries
outstanding on the Issue Date;
(iii) Indebtedness of the Company and the Restricted Subsidiaries
outstanding from time to time pursuant to the New Credit Facility in a
principal amount not to exceed the sum of (1) the greater of (i) $325.0
million and (ii) the sum of (x) 85% of the aggregate book value of the
accounts receivable (determined in accordance with GAAP) of the Company
and the Restricted Subsidiaries and (y) 60% of the aggregate book value of
the inventory (determined in accordance with GAAP) of the Company and the
Restricted Subsidiaries and (2) if such Indebtedness is secured by the
CAST-ROLL Facility and related assets, $125.0 million less amounts
incurred and outstanding under clause (iv) below;
(iv) if Indebtedness outstanding under clause (iii) above is not
secured by the CAST-ROLL Facility and related assets, Indebtedness of the
Company and the Restricted Subsidiaries secured by the CAST-ROLL Facility
in an amount not to exceed 80% of the liquidation value-in place (as such
term is defined in the appraisals delivered in connection with the
Transactions) of the CAST-ROLL Facility plus the appraised Fair Market
Value of the related real estate (determined within 30 days of the date of
any incurrence of Indebtedness secured by the CAST-ROLL Facility);
(v) Indebtedness of a Restricted Subsidiary owed to and held by the
Company or another Restricted Subsidiary, in each case which is not
subordinated in right of payment to any Indebtedness of such Restricted
Subsidiary, except that (i) any transfer of such Indebtedness by the
Company or a Restricted Subsidiary (other than to the Company or to a
Restricted Subsidiary) and (ii) the sale, transfer or other disposition by
the Company or any Restricted
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Subsidiary of Capital Stock of or the occurrence of any other event which
results in any Restricted Subsidiary which is owed Indebtedness of another
Restricted Subsidiary ceasing to be a Restricted Subsidiary shall, in each
such event, be deemed an incurrence of Indebtedness subject to the other
provisions of this Section 4.9;
(vi) Indebtedness of an Issuer owed to and held by a Restricted
Subsidiary; provided that if such Indebtedness is owed to and held by a
Restricted Subsidiary (other than RTI Capital Corp.) that is not a
Subsidiary Guarantor, it shall be unsecured and subordinated in right of
payment to the payment and performance of such Issuer's obligations under
this Indenture and the Securities; provided, further, in any such case,
that (i) any transfer of such Indebtedness by a Restricted Subsidiary
(other than to another Restricted Subsidiary) and (ii) the sale, transfer
or other disposition by an Issuer or any Restricted Subsidiary of Capital
Stock or the occurrence of any other event which results in any Restricted
Subsidiary which holds Indebtedness of such Issuer ceasing to be a
Restricted Subsidiary shall, in each such event, be deemed an incurrence
of Indebtedness subject to the other provisions of this Section 4.9;
(vii) shares of Preferred Stock of a Restricted Subsidiary issued to
and held by an Issuer or a Restricted Subsidiary; provided that (i) any
transfer (other than to another Restricted Subsidiary) of such shares and
(ii) the sale, transfer or other disposition by an Issuer or any
Restricted Subsidiary of Capital Stock of any Restricted Subsidiary or the
occurrence of any other event which results in any Restricted Subsidiary
which holds such shares such that it ceases to be a Restricted Subsidiary
shall, in each such event, be an issuance of Preferred Stock subject to
the other provisions of this Section 4.9;
(viii) Interest Rate Protection Obligations of the Company or a
Restricted Subsidiary relating to Indebtedness of the Company or a
Restricted Subsidiary; provided that (x) any Indebtedness to which any
such Interest Rate Protection Obligations relate is otherwise permitted to
be incurred under this Section 4.9 and (y) the notional principal amount
of any such Interest Rate Protection Obligations at the time of incurrence
does not exceed the principal amount of the Indebtedness to which such
Interest Rate Protection Obligations relate;
(ix) Indebtedness of the Company or any of the Restricted
Subsidiaries under (i) Currency Agreements relating to Indebtedness or
other obligations of the Company or one of the Restricted Subsidiaries
entered into to hedge actual currency exposure or (ii) commodities hedging
agreements entered into to hedge actual commodity price exposure;
(x) Indebtedness of the Company or any of the Restricted
Subsidiaries (including Indebtedness represented by letters of credit for
the account of the Company or a Restricted Subsidiary) in respect of
financing workers' compensation, health, disability or other employee
benefits, social security payments, property, casualty or liability
insurance or other claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business;
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(xi) Indebtedness representing obligations in respect of performance
bonds, bid bonds, appeal bonds, surety bonds, completion guarantees and
similar obligations and trade-related letters of credit, in each case
provided in the ordinary course of business, including those incurred to
secure health, safety and environmental obligations in the ordinary course
of business, and any extension, renewal or refinancing thereof to the
extent not provided to secure the repayment of other Indebtedness and to
the extent that the amount of refinancing Indebtedness is not greater than
the amount of Indebtedness being refinanced;
(xii) Indebtedness arising from agreements of an Issuer or a
Restricted Subsidiary providing for indemnification, adjustment of
purchase price, earnouts or similar obligations, in each case, incurred or
assumed in connection with the disposition of any business, assets or a
Restricted Subsidiary, other than guarantees of Indebtedness incurred by
any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition;
(xiii) Indebtedness extinguished within five Business Days of
incurrence arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except
in the case of daylight overdrafts) drawn against insufficient funds;
(xiv) Government Assisted Indebtedness of the Company or any of the
Restricted Subsidiaries; provided such Government Assisted Indebtedness
does not have a Stated Maturity prior to the final Stated Maturity of the
Securities and is not secured by any Lien on any Collateral that would not
constitute a Permitted Collateral Lien with respect to such Collateral;
(xv) Indebtedness secured by purchase money liens on equipment in an
amount not to exceed $50.0 million at any time outstanding;
(xvi) Indebtedness of the Company or any of the Restricted
Subsidiaries, in addition to that described in clauses (i) through (xv)
above or clause (xvii) below, in an aggregate principal amount not to
exceed $50.0 million at any time outstanding; and
(xvii) Refinancing Indebtedness.
(c) For purposes of determining compliance with this Section 4.9, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of permitted Indebtedness described in clauses (i) through (xvii)
of paragraph (b) above or is entitled to be incurred pursuant to paragraph (a)
above, the Company shall, in its sole discretion, classify or reclassify such
item of Indebtedness in any manner that complies with this Section 4.9 and such
item of Indebtedness will be treated as having been incurred pursuant to only
one of clauses (i) through (xvii) of paragraph (b) or pursuant to paragraph (a)
above. Accrual of interest, the accretion of accreted value and the payment of
interest in the form of additional Indebtedness will not be deemed to be an
incurrence of Indebtedness for purposes of this Section 4.9.
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SECTION 4.10. Limitation on Sale-Leaseback Transactions.
The Issuers will not, and will not permit any of the Restricted
Subsidiaries to, enter into any Sale-Leaseback Transaction with respect to any
property of the Company or any of the Restricted Subsidiaries. Notwithstanding
the foregoing, the Company and the Restricted Subsidiaries may enter into
Sale-Leaseback Transactions with respect to property not constituting Collateral
which is acquired or constructed after the Issue Date; provided that (a) the
Attributable Value of such Sale-Leaseback Transaction shall be deemed to be
Indebtedness of the Company or such Restricted Subsidiary, as the case may be,
(b) after giving pro forma effect to any such Sale-Leaseback Transaction and the
foregoing clause (a), the Company would be able to incur $1.00 of additional
Indebtedness pursuant to paragraph (a) of Section 4.9 (or, in the case of a
Sale-Leaseback Transaction involving the CAST-ROLL Facility, in accordance with
clause (iii) or (iv) of paragraph (b) of Section 4.9) and (d) such
Sale-Leaseback Transaction shall be in compliance with Section 4.11.
Notwithstanding the foregoing, the Company and the Restricted Subsidiaries may
enter into and assume certain safe harbor leases to which USS/Kobe Steel Company
is a party in connection with the Transactions.
SECTION 4.11. Limitation on Liens.
The Issuers will not, and will not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create, incur, assume,
affirm or permit or suffer to exist or remain in effect any Liens:
(a) upon any item of Collateral or upon the New Bar Mill other than
Permitted Collateral Liens; and
(b) upon any other properties or assets of the Company or of any of
the Restricted Subsidiaries, whether owned on the Issue Date or acquired
after the Issue Date, not constituting Collateral, except (i) Liens
existing on the Issue Date to the extent and in the manner such Liens are
in effect on the Issue Date and (ii) Permitted Liens.
The Company and the Pledgors will be permitted to incur and suffer
to exist purchase money Liens to finance the acquisition or construction of
personal property or fixtures of the Company or any Restricted Subsidiary free
of the Liens securing the Securities under the Security Documents for so long as
the related Indebtedness shall be outstanding, notwithstanding any contrary
provision of the Security Documents or this Indenture; provided that (i) the
aggregate principal amount of all related purchase money Indebtedness (and
refinancings thereof) contemplated by this sentence shall not exceed $15.0
million, (ii) the related Indebtedness shall not be secured by any property or
assets of an Issuer or any of its Subsidiaries other than the property or assets
so acquired or constructed and (iii) each such purchase money Lien shall either
(x) exist at the time of acquisition or construction or (y) be created within
180 days of such acquisition or construction.
SECTION 4.12. Limitation on Restricted Payments.
(a) The Issuers will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly:
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(i) declare or pay any dividend or make any other distribution or
payment on or in respect of Capital Stock of the Company or any payment
made to the direct or indirect holders (in their capacities as such) of
Capital Stock of the Company (other than dividends or distributions
payable solely in Capital Stock of the Company (other than Disqualified
Capital Stock) or in options, warrants or other rights to purchase Capital
Stock of the Company (other than Disqualified Capital Stock));
(ii) purchase, redeem, defease or otherwise acquire or retire for
value any Capital Stock of the Company (other than any such Capital Stock
owned by a Restricted Subsidiary);
(iii) make any principal payment on, or purchase, defease,
repurchase, redeem or otherwise acquire or retire for value, in each case,
prior to any scheduled maturity, scheduled repayment, scheduled sinking
fund payment or other Stated Maturity, any Subordinated Indebtedness
(other than (A) the payment, redemption, repurchase, defeasance,
acquisition or retirement of Subordinated Indebtedness in anticipation of
satisfying a sinking fund obligation, principal installment or final
maturity, in any case due within one year of the date of such payment,
redemption, repurchase, defeasance, acquisition or retirement and (B) any
such Subordinated Indebtedness owned by the Company or a Restricted
Subsidiary); or
(iv) make any Investment (other than any Permitted Investment) in
any Person
(such payments or Investments described in the preceding clauses (i), (ii),
(iii) and (iv) are collectively referred to as "Restricted Payments"), unless,
at the time of and after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, shall be the Fair
Market Value on the date of such Restricted Payment of the asset(s) proposed to
be transferred by the Company or such Restricted Subsidiary, as the case may be,
pursuant to such Restricted Payment),
(A) no Default shall have occurred and be continuing,
(B) immediately after giving effect to such Restricted Payment, the
Consolidated Fixed Change Coverage Ratio of the Company would be equal to
or greater than 2.5 to 1, and
(C) the aggregate amount of all Restricted Payments declared or made
from and after the Issue Date would not exceed the sum of, without
duplication, (1) 50% of the Consolidated Net Income of the Company accrued
on a cumulative basis during the period (taken as one accounting period)
beginning on October 1, 1999 and ending on the last day of the fiscal
quarter of the Company immediately preceding the date of such proposed
Restricted Payment (or, if such aggregate cumulative Consolidated Net
Income of the Company for such period shall be a deficit, minus 100% of
such deficit) plus (2) 100% of the aggregate net cash proceeds and the
Fair Market Value of property other than cash received by the Company
(other than net cash proceeds received as part of the Transactions) either
(x) from the issuance or sale of Capital Stock (excluding Disqualified
Capital Stock, but including Capital Stock issued upon the conversion of
convertible Indebtedness or from the exercise of options, warrants or
rights to purchase Capital Stock (other than Disqualified Capital Stock))
of the Com-
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pany after the Issue Date or (y) as a capital contribution in respect of
Capital Stock (other than Disqualified Capital Stock) of the Company after
the Issue Date, in each case to or from any Person (other than (i) to or
from a Restricted Subsidiary or (ii) to or from any employee, officer,
director or employee stock ownership trust qualified under the Internal
Revenue Code of 1986, as amended, to the extent the issuance and sale was
directly or indirectly funded by a loan or advance by the Company or any
Subsidiary of the Company to such trust or such Persons) plus (3) 100% of
the aggregate net cash proceeds and the Fair Market Value of property
(other than property constituting Investments that would be Restricted
Payments) that are received upon the sale, liquidation or other
disposition or other return of capital for cash in respect of any
Investment constituting a Restricted Payment made after the Issue Date to
the extent included in the calculation of this clause (C), less the cost
of the disposition of such Investment plus (4) so long as the Designation
thereof was treated as a Restricted Payment made after the Issue Date,
with respect to any Unrestricted Subsidiary that has been redesignated as
a Restricted Subsidiary after the Issue Date in accordance with Section
4.18, the Fair Market Value of the interests of the Company and any of the
Restricted Subsidiaries in such Subsidiary; provided that such amount
shall not in any case exceed the Designation Amount with respect to such
Subsidiary upon its Designation.
For purposes of the preceding clause (C)(2), upon the issuance of
Capital Stock either from the conversion of convertible Indebtedness or in
exchange for outstanding Indebtedness or upon the exercise of options, warrants
or rights, the amount counted as net cash proceeds received will be the cash
amount received by the Company at the original issuance of the Indebtedness that
is so converted or exchanged or from the issuance of options, warrants or
rights, as the case may be, plus the incremental amount of cash received by the
Company, if any, upon the conversion, exchange or exercise thereof, in each case
when so received.
(b) None of the provisions of paragraph (a) above will prohibit:
(i) the payment of any dividend within 60 days after the date of its
declaration, if at the date of declaration such payment would be permitted
by paragraph (a) above;
(ii) the redemption, repurchase or other acquisition or retirement
of any shares of any class of Capital Stock of the Company or any
Restricted Subsidiary in exchange for, or out of the net cash proceeds of,
(x) a substantially concurrent issue and sale of other shares of Capital
Stock (other than Disqualified Capital Stock) of the Company to any Person
(other than to a Subsidiary of the Company) or (y) a capital contribution
in respect of Capital Stock (other than Disqualified Capital Stock) of the
Company; provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase or other acquisition or
retirement shall be excluded from clause (C) of paragraph (a) above;
(iii) any redemption, repurchase or other acquisition or retirement
of (1) Subordinated Indebtedness in exchange for, or out of the net cash
proceeds (excluding net cash proceeds received as part of the
Transactions) of, a substantially concurrent issue and sale of (x) Capital
Stock (other than Disqualified Capital Stock) of the Company to any Person
(other than to a Subsidiary of the Company) or (y) a capital contribution
from the Com-
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pany; provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase or other acquisition or
retirement shall be excluded from clause (C) of paragraph (a) above; or
(2) Indebtedness of the Company issued to any Person (other than a
Subsidiary of the Company), so long as such Indebtedness is Subordinated
Indebtedness which (x) has no scheduled principal payments earlier than
the 91st day after the final maturity date of the Securities and (y) is
subordinated to the Securities in the same manner and at least to the same
extent as the Subordinated Indebtedness so purchased, exchanged, redeemed,
acquired or retired;
(iv) Investments made out of the net cash proceeds (excluding net
cash proceeds received as part of the Transactions) of a substantially
concurrent issue and sale of shares of Capital Stock (other than
Disqualified Capital Stock) of the Company to any Person (other than to a
Subsidiary of the Company); provided that the amount of any such net cash
proceeds shall be excluded from clause (C) of paragraph (a) above;
(v) payments to Parent Guarantor, RES Holding Corporation and RTI to
allow Parent Guarantor, RES Holding Corporation and RTI to pay their
operating and administrative expenses, including, without limitation,
directors fees, legal and audit expenses, SEC compliance expenses and
corporate franchise and other taxes that are directly attributable to the
Company and the Restricted Subsidiaries;
(vi) payments made to Parent Guarantor, RES Holding Corporation and
RTI or by the Company to permit the purchase or redemption of their
Capital Stock (including related stock appreciation rights or similar
securities) held by present or former officers, employees or consultants
of RTI or the Company or any of its Subsidiaries or by any employee
pension benefit plan or management equity or stock option plan or
agreement upon such Person's death, disability, retirement or termination
of employment or under the terms of any such employee pension benefit plan
or any other agreement under which such Capital Stock or related rights
were issued; provided that the aggregate amount of such purchases or
redemptions that may be made under this clause (vi) shall not exceed $3.0
million per year (the "Base Amount"); provided that, to the extent that
not all of the Base Amount is utilized in any year, the unused portion of
such Base Amount may be carried forward to and be deemed part of the Base
Amount only for the immediately subsequent year and not any succeeding
year;
(vii) provided that the Company is then treated as a partnership (or
a pass-through or disregarded entity) for federal or state income tax
purposes, distributions in respect of Capital Stock of the Company or
Investments by the Company to the extent necessary to permit direct or
indirect beneficial holders to receive tax distributions, as provided for
in the limited liability company agreement of Parent Guarantor not to
exceed the tax liabilities payable by such owners in respect of income of
the Company and any of its Subsidiaries that, for tax purposes, are
treated as pass-through or disregarded entities; provided that nothing in
this clause (vii) will be deemed to permit any such distribution (1) in
excess of amounts that a consolidated group that includes the Company as
the "parent" and any of its Subsidiaries that, for tax purposes, are
treated as pass-through or disregarded entities would be required to pay
on a stand-alone basis were such entities taxable as a consolidated group
of corporations, ex-
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cept for distributions to the extent necessary to permit such holders to
pay their tax liabilities attributable to the disproportionate sharing of
income or loss of the Company and its Subsidiaries and (2) to pay any tax
liabilities of direct or indirect investors in the Company or Parent
Guarantor resulting from the conversion of the Company from a limited
liability company to corporate form, including pursuant to a Roll-up
Transaction;
(viii) the declaration and payment of dividends or distributions to
holders of any class or series of Disqualified Capital Stock issued or
incurred in compliance with Section 4.9;
(ix) Restricted Payments made in connection with the completion of
the Transactions;
(x) so long as no Default shall have occurred and be continuing,
Restricted Payments made in order to enable RTI to make dividend payments
on, and the scheduled redemption of, the Bethlehem Preferred Stock, as in
effect on the Issue Date;
(xi) so long as no Default shall have occurred and be continuing,
Restricted Payments the proceeds of which are or will be used to pay or to
fund the payment of management fees and monitoring fees in an amount not
to exceed $4.0 million in any calendar year; provided that (1) if such
Restricted Payment is to be made on or after January 15, 2001, the
Consolidated Fixed Charge Coverage Ratio of the Company would equal or
exceed 1.75 to 1 at the time of such payment and (2) payments which are
not permitted under this clause (xi) by reason of a Default or the
preceding clause (1) may be accrued and carried forward to subsequent
periods notwithstanding the $4.0 million limitation otherwise applicable;
(xii) repurchases of Capital Stock deemed to occur upon exercise of
stock options if such Capital Stock represents a portion of the exercise
price of such options; and
(xiii) the exchange of an Investment constituting a Restricted
Payment which was included in clause (C) of paragraph (a) above for
another Investment which would constitute a Restricted Payment of
approximately equal or greater Fair Market Value.
In computing the amount of Restricted Payments previously made for
purposes of clause (C) of paragraph (a) above, Restricted Payments made under
clauses (i), (iv), (v), (vi), (viii), (x) and, without duplication to the extent
deducted in arriving at Consolidated Net Income, (vii) and (xi) of this
paragraph (b) shall be included and clauses (ii), (iii), (ix), (xii) and (xiii)
of this paragraph (b) shall not be so included.
SECTION 4.13. Disposition of Proceeds of Asset Sales.
(a) The Issuers will not, and will not permit any of the Restricted
Subsidiaries to, make any Asset Sale unless (i) such Asset Sale is for Fair
Market Value, (ii) at least 75% of the proceeds therefrom consist of cash and/or
Cash Equivalents; provided that (x) if such Asset Sale does not involve the
sale, transfer or other disposition of any Collateral, Indebtedness (other than
Subordinated
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Indebtedness) of the Company or any of the Restricted Subsidiaries assumed by
the purchaser shall be counted as cash for such purposes if the Company and the
Restricted Subsidiaries are unconditionally released from any liability
therefor, (y) if such Asset Sale involves the sale, transfer or other
disposition of any Collateral, Indebtedness of any Pledgor secured by a
Permitted Collateral Lien upon such Collateral that ranks prior to the
Securities assumed by the purchaser shall be treated as cash for such purposes
if such Pledgor is unconditionally released from any liability therefor and (z)
to the extent such Asset Sale involves the Specialty Steel Assets or the Closed
Facilities, this clause (ii) need not be complied with, (iii) if such Asset Sale
involves the sale, transfer or other disposition of any Collateral, it shall be
in compliance with the applicable provisions of Articles XI and XII and (iv) the
Issuers shall apply the Net Cash Proceeds of such Asset Sale within 365 days of
receipt thereof, as follows:
(1) first, to the extent such Net Cash Proceeds are received from an
Asset Sale (x) not involving the sale, transfer or disposition of any
Collateral ("Non-Collateral Proceeds") or (y) involving the sale, transfer
or disposition of Collateral which is subject to a Permitted Collateral
Lien which is prior to the Lien granted to the Collateral Agent for the
benefit of the Trustee and the Holders ("Senior Collateral Proceeds"), to
satisfy all mandatory repayment obligations arising by reason of such
Asset Sale under the terms of any instrument (or related security
agreement) governing any Indebtedness which is secured by the assets which
are the subject of such Asset Sale; provided that the available borrowings
(if applicable) under, and the outstanding amount of; such Indebtedness
shall be permanently reduced to the extent such Non-Collateral Proceeds or
Senior Collateral Proceeds are so applied;
(2) second, to the extent such Net Cash Proceeds are received from
an Asset Sale involving the sale, transfer or disposition of Collateral
which is subject to a Permitted Collateral Lien which ranks pari passu
with the Lien granted to the Collateral Agent for the benefit of the
Trustee and the Holders ("Pari Passu Proceeds"), that portion of the Pari
Passu Proceeds not constituting the Securityholders' Pro Rata Share
thereof to satisfy to the extent permitted by applicable law all mandatory
prepayment obligations arising by reason of such Asset Sale under the
terms of the New Credit Facility; provided that the available borrowings
under, and the outstanding amount of, such Indebtedness shall be
permanently reduced to the extent such Pari Passu Proceeds are so applied;
and
(3) third, with respect to any Non-Collateral Proceeds, Senior
Collateral Proceeds and Pari Passu Proceeds remaining after application
pursuant to the preceding paragraphs (1) and (2) and any Net Cash Proceeds
received from an Asset Sale involving the sale, transfer or other
disposition of any Collateral (other than Net Cash Proceeds from an Asset
Sale of Collateral subject to a Permitted Collateral Lien that is prior to
or pari passu with the Lien of the Trustee and the Holders ("Junior
Collateral Proceeds")) (any such remaining Non-Collateral Proceeds,
remaining Senior Collateral Proceeds, Junior Collateral Proceeds and Pari
Passu Proceeds are referred to herein as the "Available Amount"), either
or both of the Issuers shall make an offer to purchase (the "Asset Sale
Offer") from all Holders, up to a maximum principal amount (expressed as a
multiple of $1,000) of Securities plus accrued and unpaid interest
thereon, if any, equal to the Available Amount at a purchase price equal
to 100% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the
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date of purchase; provided that the Issuers will not be required to apply
pursuant to this paragraph (3) any Available Amount received from any
Asset Sale if, and only to the extent that, (x) such Net Cash Proceeds are
applied by the Issuers or any Restricted Subsidiary to acquire or
construct property or assets in lines of business related to the Issuers'
and the Restricted Subsidiary's business at such time (a "Permitted
Related Acquisition") and (y) if any of the Available Amount so invested
pursuant to a Permitted Related Acquisition derived directly or indirectly
from an Asset Sale of Collateral, the property and assets so acquired are
made subject to a Lien securing the Securities and any other Indebtedness
secured by such Collateral having the same relative priorities pursuant to
the Intercreditor Agreements as the Lien on the Collateral subject to the
Asset Sale pursuant to, and subject to, the provisions of Articles XI and
XII and the relevant Pledgor becomes a Subsidiary Guarantor. The Issuers
may defer the Asset Sale Offer until there is an aggregate unutilized
Available Amount equal to or in excess of $25.0 million resulting from one
or more Asset Sales (at which time, the entire unutilized Available
Amount, and not just the amount in excess of $25.0 million, shall be
applied as required pursuant to this paragraph).
Notwithstanding the foregoing, neither the Company nor any
Restricted Subsidiary shall be subject to the terms of paragraphs (1) through
(3) above (x) with respect to any tax distributions as determined under clause
(vii) of paragraph (b) of Section 4.12 with respect to income from Asset Sales
(without duplication for amounts deducted in arriving at the amount of Net Cash
Proceeds) and (y) to the extent that the Net Cash Proceeds received by the
Company or a Restricted Subsidiary in connection with any Asset Sale involving
Specialty Steel Assets or the Closed Facilities are applied to repay
Indebtedness under the New Credit Facility or to make capital expenditures or to
acquire tangible assets.
Whenever Net Cash Proceeds from an Asset Sale of Collateral are
received by the Company or any Restricted Subsidiary, the Issuers shall deposit,
or cause to be deposited, an amount equal to such Net Cash Proceeds with the
Collateral Agent as Trust Moneys subject to disposition as provided in this
Section 4.13 or as provided under Articles XI and XII and such Net Cash Proceeds
shall be set aside by the Collateral Agent pending application to either the
purchase of Securities or their other permitted applications. At the direction
of the Issuers, such Net Cash Proceeds shall be required to be invested by the
Collateral Agent in Cash Equivalents. The Company or the Restricted Subsidiary,
as applicable, shall be entitled to any interest or dividends accrued, earned or
paid on such investments.
(b) The Issuers shall provide the Trustee and the Collateral Agent
with notice of the Asset Sale Offer as soon as reasonably practicable. Notice of
an Asset Sale Offer shall be mailed by the Issuers to all Holders of Securities
not less than 30 days before the Asset Sale Payment Date at their last
registered address with a copy to the Trustee and the Paying Agent. The Asset
Sale Offer shall remain open from the time of mailing for at least 20 Business
Days and until at least 5:00 p.m., New York City time, on the Business Day next
preceding the Asset Sale Payment Date. The notice, which shall govern the terms
of the Asset Sale Offer, shall include such disclosures as are required by law
and shall state:
(i) that the Asset Sale Offer is being made pursuant to this Section
4.13;
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(ii) the purchase price (including the amount of accrued and unpaid
interest, if any) for each Security and the Asset Sale Payment Date;
(iii) that any Security not tendered or accepted for payment will
continue to accrue interest in accordance with the terms thereof;
(iv) that, unless the Issuers default on making the payment, any
Security accepted for payment pursuant to the Asset Sale Offer shall cease
to accrue interest after the Asset Sale Payment Date;
(v) that Holders electing to have Securities purchased pursuant to
an Asset Sale Offer will be required to surrender their Securities to the
Paying Agent at the address specified in the notice prior to 5:00 p.m.,
New York City time, on the Business Day next preceding the Asset Sale
Payment Date and must complete any form letter of transmittal proposed by
the Issuers and acceptable to the Trustee and the Paying Agent;
(vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than 5:00 p.m., New York City time, on
the Business Day next preceding the Asset Sale Payment Date, a tested
telex, facsimile transmission or letter setting forth the name of the
Holder, the aggregate principal amount of Securities the Holder delivered
for purchase, the Security certificate number (if any) and a statement
that such Holder is withdrawing his election to have such Securities
purchased;
(vii) that if Securities in an aggregate principal amount in excess
of the Available Amount are tendered pursuant to the Asset Sale Offer, the
Issuers shall purchase Securities on a pro rata basis among the Securities
tendered (with such adjustments as may be deemed appropriate by the
Issuers so that only Securities in denominations of $1,000 or integral
multiples of $1,000 shall be acquired);
(viii) that Holders whose certificated Securities are purchased only
in part will be issued new certificated Securities equal in aggregate
principal amount to the unpurchased portion of the Securities surrendered;
and
(ix) the instructions that Holders must follow in order to tender
their Securities.
On or before the Asset Sale Payment Date, the Issuers shall (i)
accept for payment (subject to adjustment as contemplated by clause (vii) above)
Securities or portions thereof tendered pursuant to the Asset Sale Offer, (ii)
cause the Collateral Agent to liquidate the necessary amount of Cash Equivalents
and to deposit with the Paying Agent on the Asset Sale Payment Date money, in
immediately available funds, in an amount sufficient to pay the purchase price
of all Securities or portions thereof so tendered and accepted and (iii) deliver
to the Collateral Agent and the Paying Agent an Officers' Certificate setting
forth the Securities or portions thereof tendered and accepted for payment by
the Issuers. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
certificated Security equal in principal amount to any
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unpurchased portion of any certificated Security surrendered. Any Securities not
so accepted shall be promptly mailed or delivered by the Issuers to the Holder
thereof. To the extent the Asset Sale Offer is not fully subscribed to by the
Holders, the Company or the Restricted Subsidiary, as the case may be, may
retain such unutilized portion of the Available Amount free and clear of the
Lien of the Security Documents. Notwithstanding anything herein to the contrary,
in no event shall the Trustee or the Collateral Agent be liable for any loss
incurred as a result of the liquidation of any Cash Equivalents absent its gross
negligence or willful misconduct.
If the Issuers are required to make an Asset Sale Offer, the Issuers
will comply with all applicable tender offer laws and regulations, including, to
the extent applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and
any other applicable securities laws and regulations and any applicable
requirements of any securities exchange on which the Securities are listed and
shall not be deemed to have breached their obligations under this Section 4.13
or any other provision of this Indenture by virtue thereof.
SECTION 4.14. Limitation on Transactions with Affiliates.
The Issuers shall not, and shall not permit, cause or suffer any of
the Restricted Subsidiaries to, conduct any business or enter into any
transaction or series of transactions with or for the benefit of any of their
respective Affiliates (each an "Affiliate Transaction"), unless (a) such
transaction or series of related transactions is on terms reasonably believed to
be no less favorable to such Issuer or such Restricted Subsidiary, as the case
may be, than those which could have been obtained in a comparable transaction at
such time with an unrelated Person, and (b) with respect to a transaction or
series of related transactions involving aggregate payments or Fair Market Value
equal to or greater than $10.0 million, the Issuers shall have delivered an
Officers' Certificate to the Trustee certifying that such transaction or series
of related transactions complies with the preceding clause (a) and that such
transaction or series of related transactions has been approved by the Requisite
Managers; provided that, in lieu of complying with clause (b), the Issuers may
obtain a written opinion from an Independent Financial Advisor qualified to pass
upon the required matters stating that the terms of such transaction or series
of transactions are fair to such Issuer or such Restricted Subsidiary, as the
case may be, from a financial point of view
Notwithstanding the foregoing, this Section 4.14 will not restrict
the Issuers or the Restricted Subsidiaries from: (a) making Restricted Payments
permitted under Section 4.12; (b) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans approved by
the Board of Directors of the Company; (c) transactions among an Issuer and
Restricted Subsidiaries and transactions among Restricted Subsidiaries of an
Issuer otherwise permitted by this Indenture; (d) the making of loans and
advances and the payment of fees and indemnities to directors, officers and
employees of the Issuers and the Restricted Subsidiaries in the ordinary course
of business; (e) transactions pursuant to agreements in existence on the Issue
Date (including, without limitation, the limited liability company agreement for
the Company) or any amendment thereto (so long as any such amendment is not
disadvantageous to the Holders in any material respect); (f) any employment
agreements entered into by an Issuer or any of the Restricted Subsidiaries in
the ordinary course of business; (g) any sale of Capital Stock (other than
Disqualified Capital Stock) of an Issuer; (h) so long
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as no Default has occurred and is continuing, the payment of management,
consulting, monitoring and advisory fees and related expenses to Blackstone,
Veritas, USX and Kobe and their Affiliates not to exceed $4.0 million in the
aggregate in any calendar year to the extent it would be permitted under clause
(xi) of paragraph (b) of Section 4.12 (including payment of accrued and unpaid
amounts carried forward to subsequent periods, notwithstanding the $4.0 million
limitation otherwise applicable); (i) payments by an Issuer or any of the
Restricted Subsidiaries to Blackstone, Veritas, USX and Kobe and their
Affiliates made for any financial advisory, underwriting or placement services
or in respect of other investment banking activities consistent with past
customary practice of Blackstone and Veritas, respectively, with respect to
their portfolio companies, including, without limitation, in connection with
acquisitions or divestitures, which payments are approved by a majority of the
Board of Directors of the Issuer in good faith; (j) transactions with customers,
clients, suppliers, or purchasers or sellers of goods or services, in each case
in the ordinary course of business and otherwise in compliance with the terms of
this Indenture; (k) transactions and payments pursuant to the Supply and Service
Agreements and any other agreements in effect as of the Issue Date or any
amendment thereto (so long as any such amendment is not disadvantageous from the
perspective of the Holders in any material respect) or any transaction
explicitly contemplated thereby; (l) transactions pursuant to the management
agreement with Haynes International, Inc. relating to the Specialty Steel
Assets; (m) an Asset Sale of the Specialty Steel Assets made in compliance with
Section 4.13; and (n) the provision of reasonable assistance to any Affiliates
of the Issuers in connection with processing financing transactions, including,
without limitation, offerings of securities by RTI and its stockholders.
SECTION 4.15. Change of Control.
Upon the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), either or both of the Issuers
shall notify the Holders, in the manner prescribed below, of such occurrence and
shall make an offer to purchase (the "Change of Control Offer") on a Business
Day (the "Change of Control Payment Date") that is not later than 60 days
following the Change of Control Date, all Securities then outstanding at a
purchase price equal to 101% of the principal amount thereof plus accrued and
unpaid interest and liquidated damages, if any, to the Change of Control Payment
Date.
Notice of a Change of Control Offer shall be mailed by the Issuers
to the Securityholders not less than 30 days nor more than 60 days before the
Change of Control Payment Date. The Change of Control Offer shall remain open
from the time of mailing for at least 20 Business Days and until 5:00 p.m., New
York City time, on the Business Day preceding the Change of Control Payment
Date. The notice, which shall govern the terms of the Change of Control Offer,
shall include such disclosures as are required by law and shall state:
(a) that a Change of Control Offer is being made pursuant to this
Section 4.15 and that all Securities validly tendered and not properly
withdrawn will be accepted for payment;
(b) the purchase price (including the amount of accrued interest, if
any) for each Security and the Change of Control Payment Date;
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(c) that any Security not tendered for payment will continue to
accrue interest in accordance with the terms thereof;
(d) that, unless the Issuers default on making the payment, any
Security accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;
(e) that Holders electing to have Securities purchased pursuant to a
Change of Control Offer will be required to surrender their Securities to
the Paying Agent at the address specified in the notice prior to 5:00
p.m., New York City time, on the Business Day preceding the Change of
Control Payment Date and must complete any form letter of transmittal
proposed by the Issuers;
(f) that Holders of Securities will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New York
City time, on the Business Day preceding the Change of Control Payment
Date, a tested telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Securities delivered for
purchase, the Security certificate number (if any) and a statement that
such Holder is withdrawing his election to have such Securities purchased;
(g) that Holders whose certificated Securities are purchased only in
part will be issued certificated Securities equal in principal amount to
the unpurchased portion of the Securities surrendered;
(h) the instructions that Holders must follow in order to tender
their Securities; and
(i) the summary of the circumstances and relevant facts regarding
such Change of Control.
On the Change of Control Payment Date, the Issuers shall (i) accept
for payment Securities or portions thereof validly tendered and not properly
withdrawn pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Securities or portions
thereof so tendered and accepted and (iii) deliver to the Trustee the Securities
so accepted together with an Officers' Certificate setting forth the Securities
or portions thereof tendered to and accepted for payment by the Issuers. The
Paying Agent shall promptly mail or deliver to the Holders of Securities so
accepted payment in an amount equal to the purchase price, and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new certificated
Security equal in principal amount to any unpurchased portion of any
certificated Security surrendered. Any Securities not so accepted shall be
promptly mailed or delivered by the Issuers to the Holder thereof.
Notwithstanding the foregoing, the Issuers shall not be required to
make a Change of Control Offer following a Change of Control if, with the prior
consent of the Issuers, a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements
applicable to a Change of Control Offer made by the Issuers and purchases all
Securities validly tendered and not properly withdrawn under such Change of
Control Offer. Alternatively, the
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Issuers may assign to any Person (the "Assignee") their rights pursuant to the
foregoing paragraph as they may relate to all or any portion of the Securities
tendered in a Change of Control Offer. To the extent of any such assignment, the
Issuers' obligations under this Section 4.15 to purchase Securities shall be
discharged if the Assignee shall (i) purchase such Securities or portions
thereof validly tendered and not properly withdrawn pursuant to the Change of
Control Offer as to which the assignment is made and (ii) deposit with the
Paying Agent money sufficient to pay the purchase price of all Securities or
portions thereof so tendered in connection with the assignment, whereupon the
Assignee shall be entitled to have delivered to it or to its nominee the
Securities so purchased. Upon completion of any Change of Control Offer in
connection with which an assignment is made, the Issuers shall deliver to the
Trustee an Officers' Certificate setting forth all of the Securities or portions
thereof tendered and accepted for payment pursuant to the Change of Control
Offer. The Paying Agent shall promptly mail or deliver to the Holders of
Securities purchased by the Issuers or the Assignee payment in an amount equal
to the purchase price, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new certificated Security equal in principal amount to
any unpurchased portion of the certificated Security surrendered. No assignment
made pursuant to this paragraph shall relieve the Issuers of their obligations
under the foregoing paragraph in the event that the Assignee shall fail to
deposit with the Paying Agent money sufficient to pay the purchase price in
respect of Securities or portions thereof as to which an assignment has been
made pursuant to this paragraph. Nothing herein shall imply or create any
liability by the Assignee to any Holder should the Assignee fail to make such
deposit and purchase the assigned Securities nor shall any Assignee have any
liability in respect of the Change of Control Offer.
A Change of Control Offer may be made in advance of a Change of
Control, and conditioned upon such Change of Control to the extent a definitive
agreement is in place for the Change of Control at the time of making of the
Change of Control Offer. Securities repurchased by either Issuer pursuant to a
Change of Control Offer will have the status of Securities issued but not
outstanding or will be retired and cancelled, at the option of the Company.
Securities purchased by a third party upon assignment or otherwise will have the
status of Securities issued and outstanding and shall continue to accrue
interest.
The delivery to the Trustee of Securities accepted for payment
pursuant to a Change of Control Offer may be for the purpose of transfer of
registration or exchange or for the purpose of cancellation, as directed by the
Issuers.
Any Securities acquired by the Assignee pursuant to an assignment by
the Issuers or acquired by the Issuers and held for the account of the Issuers
shall take the form of certificated securities and shall bear substantially the
Private Placement Legend.
If the Issuers are required to make a Change of Control Offer, the
Issuers will comply with all applicable tender offer laws and regulations,
including, to the extent applicable, Section 14(e) and Rule 14e-1 under the
Exchange Act, and any other applicable securities laws and regulations and any
applicable requirements of any securities exchange on which the Securities are
listed and shall not be deemed to have breached their obligations under this
Section 4.15 or any other provision of this Indenture by virtue thereof.
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SECTION 4.16. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
The Issuers will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make any
other distributions on or in respect of its Capital Stock or any other interest
or participation in, or measured by, its profits, (b) pay any Indebtedness owed
to an Issuer or any other Restricted Subsidiary, (c) make loans or advances to,
or any investment in, an Issuer or any other Restricted Subsidiary, or (d) sell,
lease or transfer any of its properties or assets to an Issuer or any other
Restricted Subsidiary, except for such encumbrances or restrictions existing
under or by reason of (i) this Indenture, the New Credit Facility and the
Security Documents, (ii) any restrictions existing under or contemplated by
agreements in effect on the Issue Date, (iii) with respect to a Restricted
Subsidiary of an Issuer that is not a Restricted Subsidiary of such Issuer on
the Issue Date, in existence at the time such Person becomes a Restricted
Subsidiary of such Issuer (but not created in contemplation of such Person
becoming a Restricted Subsidiary), (iv) applicable law or any applicable rule,
regulation or order, (v) customary restrictions arising from Liens permitted
under Section 4.11 to the extent related to the assets subject to such Liens,
(vi) restrictions on cash or other deposits imposed by customers under contracts
entered into in the ordinary course of business, (vii) customary provisions
contained in leases and other agreements entered into in the ordinary course of
business, (viii) any restrictions existing under any agreement that refinances
or replaces an agreement containing a restriction permitted by clauses (i), (ii)
and (iii) above; provided that the terms and conditions of any such restrictions
under this clause (viii) are not materially less favorable to the Holders than
those under or pursuant to the agreement being replaced or the agreement
evidencing the Indebtedness refinanced, (ix) provisions contained in agreements
or instruments which prohibit the transfer of all or substantially all of the
assets of the obligor and its Subsidiaries unless the transferee shall assume
the obligations of the obligor under such agreement or instrument, and (x)
customary restrictions in any sale contract relating to any asset (including
Capital Stock) which is the subject of the completed sale.
SECTION 4.17. RTI Capital Corp.
The Company will at all times own 100% of the Capital Stock of RTI
Capital Corp. and RTI Capital Corp. will not hold any operating assets or other
properties or conduct any business other than to serve as an Issuer and
co-obligor with respect to the Securities and will not own any Capital Stock of
any other Person.
SECTION 4.18. Limitation on Designations of Unrestricted
Subsidiaries.
An Issuer may designate any Subsidiary of the Company (other than
RTI Capital Corp., a Subsidiary Guarantor or any Subsidiary which owns or holds
any Collateral) as an "Unrestricted Subsidiary" under this Indenture (a
"Designation") only if: (a) no Default shall have occurred and be continuing at
the time of or after giving effect to such Designation; (b) the Company would be
permitted under this Indenture to make an Investment at the time of Designation
(assuming the effectiveness of such Designation) in an amount (the "Designation
Amount") equal to the Fair Market Value of the Capital Stock of such Subsidiary
on such date; and (c) the Company would be permitted
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under this Indenture to incur $1.00 of additional Indebtedness pursuant to
paragraph (a) of Section 4.9 at the time of Designation (assuming the
effectiveness of such Designation). In the event of any such Designation, the
Company shall be deemed to have made an Investment constituting a Restricted
Payment pursuant to Section 4.12 for all purposes of this Indenture in the
Designation Amount.
In addition, (i) the Issuers shall not, and shall not permit any
Restricted Subsidiary to, at any time provide credit support for, or a guarantee
of, any Indebtedness of any Unrestricted Subsidiary (including any undertaking,
agreement or instrument evidencing such Indebtedness), (y) be directly or
indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (z) be
directly or indirectly liable for any Indebtedness which provides that the
holder thereof may (upon notice, lapse of time or both) declare a default
thereon or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary), except in the case of
clause (x) or (y) to the extent permitted under Section 4.12, and (ii) no
Unrestricted Subsidiary shall at any time guarantee or otherwise provide credit
support for any obligation of the Company or any Restricted Subsidiary (other
than Indebtedness not under the New Credit Facility in amounts not to exceed
$50.0 million in aggregate for all Unrestricted Subsidiaries).
The Issuers may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if: (a) no Default shall have occurred
and be continuing at the time of and after giving effect to such Revocation; and
(b) all Liens, Indebtedness and Affiliate Transactions of or involving such
Unrestricted Subsidiary outstanding immediately following such Revocation would,
if incurred at such time, have been permitted to be incurred for all purposes of
this Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions of the Issuers delivered to the Trustee certifying compliance with
this Section 4.18.
SECTION 4.19. Impairment of Security Interest.
The Company shall not, and shall not permit any of its Subsidiaries
to, take or knowingly or negligently omit to take any action which action or
omission might or would have the result of impairing the security interest in
favor of the Collateral Agent, on behalf of the Secured Creditors, with respect
to any Property then constituting Collateral, and the Issuers shall not grant to
any Person (other than the Collateral Agent on behalf of the Secured Creditors)
any interest whatsoever in such Collateral other than Liens permitted by this
Indenture, the Security Documents or the Intercreditor Agreements.
SECTION 4.20. [Intentionally Omitted].
SECTION 4.21. Waiver of Stay, Extension or Usury Laws.
The Issuers covenant (to the extent permitted by law) that neither
will at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury law or other
law that would prohibit or forgive either Issuer from paying
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all or any portion of the principal of or interest on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
that may affect the covenants or the performance of this Indenture; and (to the
extent permitted by law) the Issuers hereby expressly waive all benefit or
advantage of any such law, and covenant that they will not hinder, delay or
impede the execution of any power herein granted to the Trustee or the
Collateral Agent, but will suffer and permit the execution of every such power
as though no such law had been enacted.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, Etc.
The Company will not, in any transaction or series of transactions,
merge or consolidate with or into, or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets as an
entirety to, any Person or Persons, and the Company will not permit any of the
Restricted Subsidiaries to enter into any such transaction or series of
transactions if such transaction or series of transactions, in the aggregate,
would result in a sale, assignment, conveyance, transfer, lease or other
disposition of all or substantially all of the properties and assets of the
Company and the Restricted Subsidiaries, taken as a whole, to any other Person
or Persons, unless at the time of and after giving effect thereto:
(a) either (i) if the transaction or series of transactions is a
merger or consolidation, the Company shall be the surviving Person of such
merger or consolidation, or (ii) the Person formed by any such
consolidation or into which the Company or such Restricted Subsidiary is
merged or to which the properties and assets of the Company and/or any
Restricted Subsidiary, as the case may be, are transferred (any such
surviving Person or transferee Person being a "Surviving Entity") shall be
a corporation or limited liability company organized and existing under
the laws of the United States of America, any state thereof or the
District of Columbia and shall expressly assume by a supplemental
indenture executed and delivered to the Trustee in form reasonably
satisfactory to the Trustee, all the obligations of the Company under the
Securities, and this Indenture and the Security Documents, and in each
case, this Indenture shall remain in full force and effect;
(b) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (including,
without limitation, any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction or series of
transactions), no Default shall have occurred and be continuing;
(c) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred by the Company and the
Restricted Subsidiaries in connection with or in respect of such
transaction or series of transactions), the Company or the Surviving
Entity, as the case may be, (i) could incur $1.00 of additional
Indebtedness pursuant to the proviso of paragraph
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(a) of Section 4.9 and (ii) has a Consolidated Fixed Charge Coverage Ratio
that is either (x) 3.0 to 1 or greater or (y) greater than the
Consolidated Fixed Charge Coverage Ratio of Republic Technologies before
giving effect to such transaction or series of transactions on a pro forma
basis;
(d) each Subsidiary Guarantor (other than a Guarantor whose
Guarantee is to be released in accordance with the terms of this
Indenture), unless it is the other party to the transaction, shall, to the
extent permitted by applicable law, have by supplemental indenture
confirmed that after consummation of such transaction its Subsidiary
Guarantee shall apply, as such Subsidiary Guarantee applied on the date it
was granted under the Securities to the obligations of the Company under
the Securities, to the obligations of the Company or such Person, as the
case may be, under this Indenture and the Securities; and
(e) the Company or the surviving entity shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel stating that
such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction or
series of transactions, such supplemental indenture comply with this
Section 5.1, and that all conditions precedent in this Indenture relating
to the transaction or series of transactions have been satisfied.
The provisions of clause (c) above shall not prevent a Roll-up
Transaction.
SECTION 5.2. Successor Entity Substituted.
Upon any consolidation, or merger or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.1 in
which the Company is not the continuing corporation, the successor Person formed
by such consolidation or into which the Company is merged or to which such
conveyance, lease or transfer is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture and
the Securities with the same effect as if such surviving entity had been named
as such.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1. Events of Default.
The following are "Events of Default" under this Indenture:
(a) default in the payment of any interest on the Securities when it
becomes due and payable and continuance of such default for a period of 30
days;
(b) default in the payment of the principal of, or premium, if any,
on the Securities when due and payable, at maturity, upon acceleration,
redemption, pursuant to a required offer to purchase or otherwise;
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(c) the failure by the Issuers to comply with their obligations
under Section 5.1, continued for 30 days after notice, or the failure by
Issuers to comply for 30 days after notice with any of its obligations
under Section 4.15;
(d) default in the performance of or compliance with, or breach of,
any term, covenant, condition or provision of the Securities, this
Indenture or the Intercreditor Agreements (other than defaults specified
in clause (a), (b) or (c) above), and continuance of such default or
breach for a period of 60 days after written notice to the Issuers by the
Trustee or to the Issuers and the Trustee by the Holders of at least 25%
in aggregate principal amount of the outstanding Securities;
(e) default in the performance of or compliance with, or breach of,
any term, covenant, condition, or provision of the Security Documents,
which default or breach shall continue unremedied for 45 days after
written notice to the Issuers and the applicable Pledgor by the Trustee or
to the Issuers and the applicable Pledgor and the Trustee by Holders of at
least 25% in aggregate principal amount of the outstanding Securities
unless the remedy or cure of such default requires work to be performed,
acts to be done or conditions to be removed which cannot, by their nature,
reasonably be performed, done or removed within such 45-day period, or if
such remedy or cure is prevented by causes outside of the control or
responsibility of the Issuers, in which case no "Event of Default" shall
be deemed to exist so long as the Issuers shall have commenced cure within
such 45-day period and shall diligently prosecute the same to completion,
but in no event longer than 90 days thereafter;
(f) either (i) default or defaults in the payment of any principal,
premium or interest under one or more agreements, instruments, mortgages,
bonds, debentures or other evidences of Indebtedness (a "Debt Instrument")
under which the Company or one or more Restricted Subsidiaries or the
Company and one or more Restricted Subsidiaries then have outstanding
Indebtedness in excess of $25.0 million, individually or in the aggregate
within five days after the date such payment was due and after the
expiration of any applicable grace period, or (ii) any other default or
defaults under one or more Debt Instruments under which the Company or one
or more Restricted Subsidiaries or the Company and one or more Restricted
Subsidiaries then have outstanding Indebtedness in excess of $25.0
million, individually or in the aggregate, and in the case of this clause
(ii) either (x) such Indebtedness is already due and payable in full or
(y) such default or defaults have resulted in the acceleration of such
Indebtedness prior to its express maturity;
(g) one or more judgments, orders or decrees of any court or
regulatory or administrative agency of competent jurisdiction for the
payment of money in excess of $25.0 million, either individually or in the
aggregate, shall be entered against the Company or any Restricted
Subsidiary of the Company or any of their respective properties and shall
not be discharged or fully bonded and there shall have been a period of 60
days after the date on which any period for appeal has expired and during
which a stay of enforcement of such judgment, order or decree shall not be
in effect;
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(h) either (i) the collateral agent under the New Credit Facility,
(ii) any holder of Indebtedness secured by any of the Collateral or (iii)
any holder of at least $25.0 million in aggregate principal amount of
Indebtedness of the Company or any of the Restricted Subsidiaries shall
commence (or have commenced on its behalf) judicial proceedings to
foreclose upon assets of the Company or any of the Restricted Subsidiaries
having an aggregate Fair Market Value, individually or in the aggregate,
in excess of $25.0 million or shall have exercised any right under
applicable law or applicable security documents to take ownership of any
such assets in lieu of foreclosure;
(i) any Guarantee ceases to be in full force and effect or is
declared null and void or any Guarantor denies that it has any further
liability under any Guarantee or gives notice to such effect (other than
by reason of the termination of this Indenture or the release of any such
Guarantee in accordance with the Indenture);
(j) except as contemplated by their terms, any of the Security
Documents or the Intercreditor Agreements ceases to be in full force and
effect or any of the Security Documents or the Intercreditor Agreements
ceases to give the Collateral Agent or the Trustee, in any material
respect, the Liens, rights, powers and privileges purported to be created
thereby;
(k) any Issuer, Guarantor or Significant Subsidiary of the Company
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against it in
an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors or
(E) shall admit in writing its inability to pay its debts
generally; or
(l) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against any Issuer, Guarantor or Significant
Subsidiary of the Company in an involuntary case or proceeding,
(B) appoints a Custodian of any Issuer, Guarantor or
Significant Subsidiary of the Company for all or substantially all
of its properties, or
(C) orders the liquidation of any Issuer, Guarantor or
Significant Subsidiary of the Company,
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and in each case the order or decree remains unstayed and in effect for 60
days; provided, however, that if the entry of such order or decree is
appealed and thereafter dismissed on appeal then the Event of Default
hereunder by reason of the entry of such order or decree shall be deemed
to have been cured.
For purposes of this Section 6.1, the term "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator or similar official
charged with maintaining possession or control over property for one or more
creditors.
Subject to the provisions of Sections 7.1 and 7.2, the Trustee shall
not be charged with knowledge of any Event of Default unless written notice
thereof shall have been given to a Responsible Officer at the Corporate Trust
Office of the Trustee by the Company or any other Person.
SECTION 6.2. Acceleration.
If an Event of Default (other than an Event of Default with respect
to an Issuer or any Guarantor specified in clauses (k) and (l) of Section 6.1)
occurs and is continuing, then the Holders of at least 25% in aggregate
principal amount of the outstanding Securities may, by written notice to the
Issuers, the Trustee and the Collateral Agent, and the Trustee upon the request
of the Holders of not less than 25% in aggregate principal amount of the
outstanding Securities shall, declare the principal of, premium, if any, and
accrued interest on, all the Securities to be due and payable immediately. Upon
any such declaration such principal shall become due and payable immediately. If
an Event of Default specified in clause (k) or (l) of Section 6.1 with respect
to an Issuer or any Guarantor occurs and is continuing, then the principal of,
premium, if any, and accrued interest on, all the Securities shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.
After a declaration of acceleration under this Section 6.2, but
before a judgment or decree for payment of the money due has been obtained by
the Trustee and before any foreclosure (whether pursuant to judicial proceedings
or otherwise), or the taking of ownership in lieu of foreclosure, upon any
Collateral by the Collateral Agent (on behalf of the Trustee or Holders), by the
Trustee or at the direction of the Holders, the Holders of not less than a
majority in aggregate principal amount of outstanding Securities, by written
notice to the Issuers and the Trustee, may rescind such declaration if (a) the
Issuers have paid or deposited with the Trustee or the Collateral Agent a sum
sufficient to pay (i) all sums paid or advanced by the Trustee or the Collateral
Agent under this Indenture, the Security Documents and the Intercreditor
Agreements and the reasonable compensation, expenses, disbursements and advances
of the Trustee and the Collateral Agent and their respective agents and counsel,
(ii) all overdue interest on all Securities, (iii) the principal of and premium,
if any, on any Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne by the
Securities, and (iv) to the extent that payment of such interest is lawful,
interest upon overdue interest and overdue principal at the rate borne by the
Securities which has become due otherwise than by such declaration of
acceleration; (b) the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction; and (c) all Events of Default, other than
the non-payment of principal of, premium, if any, and interest on the Securities
that have become due solely by such declaration of acceleration, have been cured
or waived.
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SECTION 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities, this Indenture or, subject to
the terms of this Indenture, the Security Documents and the Intercreditor
Agreements.
All rights of action and claims under this Indenture or the
Securities may be enforced by the Trustee even if the Trustee does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
Each Holder, by accepting a Security, acknowledges that the exercise
of remedies by the Collateral Agent with respect to the Collateral is subject to
the terms and conditions of this Indenture, the Security Documents and the
Intercreditor Agreements and the proceeds received upon realization of this
Indenture and the Collateral shall be applied by the Collateral Agent in
accordance with the Security Documents and the Intercreditor Agreements and the
Trustee shall thereafter apply any proceeds received by it in accordance with
Section 6.11.
By acceptance of the benefits of this Indenture and the Security
Documents each Holder and the Trustee confirms that the Collateral Agent is
authorized to execute and deliver and perform its obligations under the
Intercreditor Agreements and the remedies set forth herein shall be subject to
the terms of such Intercreditor Agreements.
SECTION 6.4. Waiver of Past Default.
Subject to Sections 6.7 and 9.2, the Holders of not less than a
majority in aggregate principal amount of the outstanding Securities by notice
to the Trustee may on behalf of the Holders of all the Securities waive any past
Default or Event of Default and its consequences, except a Default specified in
Section 6.1(a) or (b) or in respect of any provision hereof which cannot be
modified or amended without the consent of the Holder so affected pursuant to
Section 9.2. When a Default or Event of Default is so waived, it shall be deemed
cured and shall cease.
SECTION 6.5. Control by Majority.
Subject to Section 11.8, the Holders of at least a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it; provided, however, that the
Trustee may refuse to follow any direction that (i) conflicts with law or this
Indenture, any Security Document or any Intercreditor Agreement, (ii) the
Trustee determines may be unduly prejudicial to the rights of another
Securityholder, or (iii) may involve the Trustee in personal liability unless
the Trustee has indemnification satisfactory to it in its sole discretion
against any loss or expense
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caused by its following such direction; and provided, further, that the Trustee
may take any other action deemed proper by the Trustee that is not inconsistent
with such direction.
SECTION 6.6. Limitation on Suits.
Subject to Section 11.8, no Holder has any right to institute any
proceeding with respect to this Indenture, the Security Documents, the
Intercreditor Agreements, the Securities or the Guarantees or any remedy
thereunder, unless the Holders of at least 25% (or, in the case of the Security
Documents and the Intercreditor Agreements only, a majority) in aggregate
principal amount of the outstanding Securities have made written request, and
offered reasonable security or indemnity, to the Trustee and, if requested, the
Collateral Agent to institute such proceeding as Trustee or Collateral Agent, as
applicable, the Trustee or Collateral Agent, as applicable, has failed to
institute such proceeding within 60 days after receipt of such notice and the
Trustee, within such 60-day period, has not received directions inconsistent
with such written request by Holders of a majority in aggregate principal amount
of the outstanding Securities and, if applicable, the Collateral Agent, within
such 60-day period, has not received directions inconsistent with such written
request by the Trustee. Such limitations do not apply, however, to a suit
instituted by a holder of a Security for the enforcement of the payment of the
principal of, premium, if any, or interest on such Security on or after the
respective due dates expressed in such Security.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.7. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of, premium, if any, and interest on
a Security, on or after the respective due dates expressed in the Security, or
to bring suit for the enforcement of any such payment on or after such
respective dates, is absolute and unconditional and shall not be impaired or
affected without the consent of such Holder except to the extent that the
institution or prosecution of such suit or the entry of judgment therein would,
under applicable law, result in the surrender, impairment or waiver of the Lien
of this Indenture and the Security Documents upon the Collateral.
SECTION 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(a) or (b) occurs and
is continuing, the Trustee and/or the Collateral Agent may recover judgment in
its own name and as trustee of an express trust against the Company or any other
obligor on the Securities for the whole amount of principal, premium, if any,
and accrued interest remaining unpaid, together with interest overdue on
principal, premium, if any, and, to the extent that payment of such interest is
lawful, interest on overdue installments of interest, in each case at the
Interest Rate and in such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee and/or the Collateral Agent,
their respective agents and counsel.
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SECTION 6.9. Trustee May File Proofs of Claim.
The Trustee and/or the Collateral Agent shall be entitled and
empowered to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee and/or the
Collateral Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee and/or the Collateral Agent, its or
their respective agents and counsel) and the Securityholders allowed in any
judicial proceedings relative to the Company, the Guarantors and the Pledgors,
their creditors or their property and shall be entitled and empowered to collect
and receive any monies or other property payable or deliverable on any such
claims and to distribute the same, and any Custodian in any such judicial
proceedings is hereby authorized by each Securityholder to make such payments to
the Trustee and/or the Collateral Agent and, in the event that the Trustee
and/or the Collateral Agent shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee and/or the Collateral
Agent any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and/or the Collateral Agent, its or
their respective agents and counsel, and any other amounts due the Trustee under
Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee
and/or the Collateral Agent to authorize or consent to or accept or adopt on
behalf of any Securityholder any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Securityholder
in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article VI or as
a result of a distribution by the Collateral Agent pursuant to any of the
Security Documents, it shall pay out such money in the following order:
First: to the Trustee for all amounts due under Section 7.7;
Second: to Holders for interest accrued on the Securities, ratably,
without preference or priority of any kind, according to the
amounts due and payable on the Securities for interest;
Third: to Holders for principal amounts owing under the Securities,
ratably, without preference or priority of any kind, according to
the amounts due and payable on the Securities for principal; and
Fourth: to the Issuers or the Guarantors.
The Trustee, upon prior written notice to the Issuers, may fix a
record date and payment date for any payment to Securityholders pursuant to this
Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may
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require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.7, or a suit by Holders of
more than 10% in aggregate principal amount of the outstanding Securities.
ARTICLE VII
TRUSTEE
SECTION 7.1. Duties of Trustee.
(a) If an Event of Default known to the Trustee has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, the Intercreditor Agreements and the Security Documents
and use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
The Trustee shall not be deemed to have knowledge of an Event of Default unless
it is actually known by a Responsible Officer or written notice thereof has been
given to a Responsible Officer by the Company or another Person.
(b) Except during the continuance of an Event of Default actually
known to a Responsible Officer of the Trustee:
(i) The Trustee need perform only those duties as are specifically
set forth in this Indenture, in the Intercreditor Agreements and in the
Security Documents and no others and no implied covenants or obligations
shall be read into this Indenture against the Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions or such
other documents furnished to the Trustee and conforming to the
requirements of this Indenture, the Security Documents or the
Intercreditor Agreements. However, in the case of any such certificates or
opinions or such other documents which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall
examine such certificates and opinions to determine whether they conform
to the requirements of this Indenture, the Security Documents or the
Intercreditor Agreements.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1.
(ii) The Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
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(iii) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.2, 6.4 or 6.5.
(d) No provision of this Indenture, the Security Documents or the
Intercreditor Agreements shall require the Trustee or the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or under the Security Documents or
exercise any of its rights or powers hereunder or under the Security Documents
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.1.
(f) Neither the Trustee nor the Collateral Agent shall be liable for
interest on any money received by it except as the Trustee or the Collateral
Agent may agree in writing with the Issuers. Except as otherwise provided for in
Section 7.1(g) below, money held in trust by the Trustee or the Collateral Agent
need not be segregated from other funds except to the extent required by law.
(g) Notwithstanding anything herein to the contrary, all Net Cash
Proceeds delivered to the Trustee or the Collateral Agent, as applicable, shall
be invested on behalf of the Issuers in Cash Equivalents pursuant to the written
directions of the Issuers delivered to the Trustee or the Collateral Agent, as
applicable. Such written directions shall specify the Cash Equivalents into
which the Net Cash Proceeds shall be invested and the maturity of such Cash
Equivalents, all subject to the requirements of this Indenture.
(h) Notwithstanding anything herein or in the Security Documents to
the contrary, the Trustee may refuse to perform any duty or exercise any right
or power arising hereunder or under the Security Documents unless it is provided
adequate funds to enable it to do so and it receives indemnity satisfactory to
it in its sole discretion against any loss, liability, fee or expense.
SECTION 7.2. Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee shall
not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Issuers, personally or by
agent or attorney.
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(b) Before the Trustee acts or refrains from acting with respect to
any matter contemplated by this Indenture, it may require an Officers'
Certificate or an Opinion of Counsel, which shall conform to the
provisions of Section 13.5. The Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on such certificate or
opinion.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent (other
than the negligence or willful misconduct of an agent who is an employee
of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel and the advice or opinion
of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action
taken, omitted or suffered by it hereunder in good faith and in accordance
with the advice or opinion of such counsel.
(f) Subject to Section 9.2 and Section 11.8 hereof, the Trustee may
(but shall not be obligated to), without the consent of the Holders, give
any consent, waiver or approval required hereunder or under any of the
Security Documents or Intercreditor Agreements or by the terms hereof with
respect to the Collateral, but shall not without the consent of the
Holders of a majority in aggregate principal amount of the Securities at
the time outstanding (i) give any consent, waiver or approval or (ii)
agree to any amendment or modification of any of the Security Documents or
Intercreditor Agreements, in each case which will have an adverse effect
on the interests of any Holder.
(g) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture, the Intercreditor
Agreements or the Security Documents at the request or direction of any
Holder pursuant to this Indenture, unless such Holder shall have offered
to the Trustee and/or the Collateral Agent security or indemnity
satisfactory to the Trustee and/or the Collateral Agent against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction.
SECTION 7.3. Individual Rights of Trustee.
The Trustee in its individual capacity or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with the
Issuers and their respective Affiliates with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights. However, the
Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture, the Securities, the
Intercreditor Agreements or the Security Documents or the Collateral covered
thereby, or of any insurance thereon, and it shall not be accountable for the
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Company's use of the proceeds from the issuance of the Securities, and it shall
not be responsible for any statement of the Company or the Guarantors in this
Indenture, the Intercreditor Agreements, the Security Documents or any document
issued in connection with the sale of Securities or any statement in the
Securities other than the Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults.
If a Default or an Event of Default with respect to the Securities
occurs and is continuing and is known to a Responsible Officer, the Trustee
shall mail to each Securityholder and the Collateral Agent notice of the Default
or Event of Default within 30 days after obtaining knowledge thereof. Except in
the case of a Default or an Event of Default in payment of principal of or
interest on any Security, the Trustee may withhold the notice to such parties if
a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interest of Securityholders.
SECTION 7.6. Reports by Trustee to Holders.
To the extent required by TIA Section 313(a), within 60 days after
May 15 of each year commencing with the year 2000 and for as long as there are
Securities outstanding hereunder, the Trustee shall mail to each Securityholder
the Issuers' brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Section 313(b) and TIA Section
313(c) and (d). A copy of such report at the time of its mailing to
Securityholders shall be filed with the SEC, if requested by the Issuers, and
each stock exchange, if any, on which the Securities are listed. A copy of each
report at the time of its mailing to holders of Securities shall be mailed to
the Company and filed with the SEC and each securities exchange, if any, on
which the Securities are listed.
The Issuers shall promptly notify the Trustee if the Securities
become listed on any stock exchange, and the Trustee shall comply with TIA
Section 313(d).
SECTION 7.7. Compensation and Indemnity.
The Issuers shall pay to the Trustee, the Paying Agent, the
Registrar and the Collateral Agent from time to time reasonable compensation for
their respective services rendered hereunder. The Trustee's, the Paying Agent's,
the Registrar's and the Collateral Agent's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Issuers shall
reimburse the Trustee, the Paying Agent, the Registrar and the Collateral Agent
upon request for all reasonable out-of-pocket disbursements, expenses and
advances (including reasonable fees and expenses of counsel) incurred or made by
any of them in addition to the compensation for their respective services. Such
expenses shall include the reasonable compensation, out-of-pocket disbursements
and expenses of the Trustee's, the Paying Agent's, the Registrar's and the
Collateral Agent's agents, accountants, experts, custodians and counsel and any
taxes or other expenses incurred by a trust created pursuant to Section 8.1
hereof.
The Issuers shall indemnify the Trustee, the Paying Agent, the
Registrar and the Collateral Agent for, and hold each of them harmless against,
any claim, demand, expense (including but not limited to attorneys' fees and
expenses), loss or liability incurred by any of them arising out of or
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in connection with the administration of this Indenture or the Security
Documents, as applicable and their respective duties hereunder or thereunder.
Each of the Trustee, the Paying Agent, the Registrar and the Collateral Agent
shall notify the Issuers promptly of any claim asserted against it for which it
may seek indemnity. However, failure by the Trustee, the Paying Agent, the
Registrar and the Collateral Agent to so notify the Issuers shall not relieve
the Issuers of their obligations hereunder. Notwithstanding anything to the
contrary herein, the Issuers need not reimburse any expense or indemnify against
any loss or liability incurred by the Trustee, the Paying Agent, the Registrar
and the Collateral Agent which is determined by a court of competent
jurisdiction by final judgment to have been caused by the Trustee's, the Paying
Agent's, the Registrar's or the Collateral Agent's, as the case may be, own
willful misconduct, negligence or bad faith.
To secure the Issuers' payment obligations in this Section 7.7, each
of the Trustee, the Paying Agent, the Registrar and the Collateral Agent shall
have a lien prior to the Securities on all money or property held or collected
by it, in its capacity as Trustee, Paying Agent, Registrar and the Collateral
Agent, as the case may be, except money or property held in trust to pay
principal of or interest on particular Securities.
When any of the Trustee, the Paying Agent, the Registrar or the
Collateral Agent incurs expenses (including the reasonable fees and expenses of
counsel) or renders services after an Event of Default specified in Section
6.1(k) or (l) occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any Bankruptcy Law.
The obligations under this Section 7.7 shall survive the resignation
and removal of the Trustee, discharge of this Indenture and, to the extent
permitted by applicable law, rejection or termination in bankruptcy.
SECTION 7.8. Replacement of Trustee.
The Trustee may resign at any time (subject to the further
provisions of this Section 7.8) by so notifying the Issuers in writing, such
resignation to be effective upon the appointment of a successor Trustee. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the Issuers' consent. The Issuers may remove the Trustee
within a reasonable period of time following a request by the Issuers if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting or fails to act in
accordance with its obligations hereunder.
If the Trustee resigns or is removed or if a vacancy exists in the
office of the Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuers
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shall promptly appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holders of a majority in principal amount of the
Securities may appoint a successor Trustee, whose identity shall be subject to
the Issuers' consent, to replace the successor Trustee appointed by the Issuers.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and the Issuers. Immediately after that, the
retiring Trustee shall transfer, after payment to it of all sums owing to the
Trustee pursuant to this Indenture, all property held by it as Trustee to the
successor Trustee (subject to the lien provided in Section 7.7), the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or the
Holders of at least 25% in principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee. Any successor Trustee appointed
pursuant to this Indenture shall be deemed to be an appointment of such
successor in all capacities of the former Trustee under each of the
Intercreditor Agreements and the Security Documents and such successor shall
assume all of the obligations of the Trustee pursuant to the Intercreditor
Agreements and the Security Documents.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Issuers' obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee. The retiring Trustee shall have no liability for any
act or omissions by any successor Trustee.
SECTION 7.9. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or national banking association, the resulting, surviving or
transferee corporation or national banking association without any further act
shall be the successor Trustee provided such corporation shall be otherwise
qualified and eligible under this Article VII.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (2). The Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA Section
310(b); provided, however, that there shall be excluded from the operation of
TIA Section 310(b)(1) any indenture or indentures under which other securities,
or certificates of interest or participation in other securities, of the Issuers
are outstanding if the requirements for such exclusion set forth in TIA
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Section 310(b)(1) are met. The provisions of TIA Section 310 shall apply to the
Issuers, as co-obligors of the Securities.
SECTION 7.11. Preferential Collection of Claims Against Issuers.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Issuers as
co-obligors on the Securities.
SECTION 7.12. Co-Trustee.
(a) If at any time or times it shall be necessary or prudent in
order to conform to any law of any jurisdiction in which any of the Collateral
shall be located, or the Trustee shall be advised by counsel satisfactory to it,
that it is necessary or prudent in the interest of the Holders, or 25% of the
Holders of the outstanding Securities shall in writing so request the Trustee
and the Issuers, or the Trustee shall deem it desirable for its own protection
in the performance of its duties hereunder, the Trustee and the Issuers shall
execute and deliver all instruments and agreements necessary or proper to
constitute another bank or trust company, or one or more Persons approved by the
Trustee and the Issuers, either to act as co-trustee or co-trustees (each a
"co-trustee") of all or any of the Collateral, jointly with the Trustee, or to
act as separate trustee or trustees of any such property. If the Issuers shall
not have joined in the execution of such instruments and agreements within 10
days after they receive a written request from the Trustee to do so, or if a
notice of acceleration is in effect, the Trustee may act under the foregoing
provisions of this Section 7.12 without the concurrence of the Issuers. The
Issuers hereby appoint the Trustee as their agent and attorney to act for them
under the foregoing provisions of this Section 7.12 in either of such
contingencies.
(b) Every separate trustee and every co-trustee, other than any
successor Trustee appointed pursuant to Section 7.8, shall, to the extent
permitted by law, be appointed and act and be such, subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee hereunder shall be conferred or imposed and exercised or
performed by the Trustee and such separate trustee or separate trustees or
co-trustee or co-trustees, jointly, as shall be provided in the instrument
appointing such separate trustee or separate trustees or co-trustee or
co-trustees, except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed the Trustee shall
be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such separate trustee or separate trustees or co-trustee or
co-trustees;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Issuers and the Trustee, at any time by an instrument in
writing executed by them jointly, may accept the resignation of or remove
any such separate trustee or co-
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trustee and, in that case by an instrument in writing executed by them
jointly, may appoint a successor to such separate trustee or co-trustee,
as the case may be, anything contained herein to the contrary
notwithstanding. If the Issuers shall not have joined in the execution of
any such instrument within 10 days after they receive a written request
from the Trustee to do so, or if a notice of acceleration is in effect,
the Trustee shall have the power to accept the resignation of or remove
any such separate trustee or co-trustee and to appoint a successor without
the concurrence of the Issuers, the Issuers hereby appointing the Trustee
their agent and attorney to act for them in such connection in such
contingency. If the Trustee shall have appointed a separate trustee or
separate trustees or co-trustee or co-trustees as above provided, the
Trustee may at any time, by an instrument in writing, accept the
resignation of or remove any such separate trustee or co-trustee and the
successor to any such separate trustee or co-trustee shall be appointed by
the Issuers and the Trustee, or by the trustee alone pursuant to this
Section.
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of further
effect (except as to those obligations referred to in the penultimate paragraph
of this Section 8.1) as to all outstanding Securities and all rights of the
Trustee and the Holders in and to the Collateral under the Security Documents
and the Intercreditor Agreements shall be released when:
(a) either (i) all the Securities theretofore authenticated and
delivered (except lost, stolen or destroyed Securities which have been
replaced or repaid and Securities for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Issuers and
thereafter repaid to the Issuers or discharged from such trust) have been
delivered to the Trustee for cancellation or (ii) all Securities not
theretofore delivered to the Trustee for cancellation (except lost, stolen
or destroyed Securities which have been replaced or paid) have been called
for redemption pursuant to the terms of the Securities or have otherwise
become due and payable and the Issuers have irrevocably deposited or
caused to be deposited with the Trustee funds in an amount sufficient to
pay and discharge the entire Indebtedness on the Securities theretofore
delivered to the Trustee for cancellation, for principal of, premium, if
any, and interest on the Securities to the date of deposit together with
irrevocable instructions from the Issuers directing the Trustee to apply
such funds to the payment thereof at maturity or redemption, as the case
may be; and
(b) the Issuers and the Guarantors have paid all other sums payable
under this Indenture, the Securities, the Guarantees, the Security
Documents and the Intercreditor Agreements (so long as such agreements
relate to the Securities) by the Issuers and the Guarantors; and
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(c) there exists no Default under this Indenture; and
(d) the Issuers have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that all conditions
precedent under this Section 8.1 relating to satisfaction and discharge of
this Indenture, the Securities and the Guarantees have been complied with.
Notwithstanding the foregoing paragraph, the Issuers' obligations in
Sections 2.5, 2.6, 2.7, 2.8, 4.1, 4.2, 7.7, 7.8, 8.2, 8.4 and 8.5 shall survive
until the Securities are no longer outstanding. After the Securities are no
longer outstanding, the Issuers' obligations in Sections 7.7, 8.4 and 8.5 shall
survive.
After such delivery or irrevocable deposit the Trustee shall
acknowledge in writing the discharge of the Issuers' and the Guarantors'
obligations under the Securities, the Guarantees and this Indenture except for
those surviving obligations specified above.
SECTION 8.2. Legal Defeasance and Covenant Defeasance.
(a) The Issuers may, at their option by Board Resolution, at any
time, with respect to the Securities, elect to have either paragraph (b) or
paragraph (c) below be applied to the outstanding Securities upon compliance
with the conditions set forth in paragraph (d).
(b) Upon the Issuers' exercise under paragraph (a) of the option
applicable to this paragraph (b), each of the Issuers and the Guarantors shall
be deemed to have been released and discharged from its obligations with respect
to the outstanding Securities and Guarantees on the date the conditions set
forth below are satisfied (hereinafter, "legal defeasance"). For this purpose,
such legal defeasance means that the Issuers shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Securities,
which shall thereafter be deemed to be "outstanding" only for the purposes of
paragraph (e) below and the other Sections of and matters under this Indenture
referred to in (i) and (ii) below, and to have satisfied all their other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Issuers, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in paragraph (d) below and as more fully set forth in such paragraph,
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (ii) the Issuers' obligations with
respect to such Securities under Sections 2.3, 2.6, 2.7. and 4.2, and, with
respect to the Trustee, under Section 7.7, (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (iv) this Section 8.2. In
addition, for this purpose, such legal defeasance means that the Guarantors
shall be deemed to have discharged and satisfied their obligations under the
Guarantees (and the Trustee, at the expense of the Issuers, shall execute proper
instruments acknowledging the same). Subject to compliance with this Section
8.2, the Issuers may exercise their option under this paragraph (b)
notwithstanding the prior exercise of their option under paragraph (c) below
with respect to the Securities.
(c) Upon the Issuers' exercise under paragraph (a) of the option
applicable to this paragraph (c), the Issuers and the Guarantors shall be
released and discharged from their obligations
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under any covenant contained in Article V and in Sections 4.5 through 4.21, and
6.1(d) through 6.1(h) and Section 6.1(j) with respect to the outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"), and the Securities shall thereafter be
deemed to be not "outstanding" for the purpose of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the outstanding Securities, the Issuers and each
Guarantor may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.1, but, except as specified
above, the remainder of this Indenture and such Securities shall be unaffected
thereby.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Securities (unless
indicated otherwise below):
(i) the Issuers shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 7.10 who shall agree to comply with the provisions of this
Section 8.2 applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (A)
cash in United States dollars in an amount, or (B) U.S. Government
Obligations which through the scheduled payment of principal of, premium,
if any, and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment,
money in an amount, or (C) a combination thereof, sufficient, in the
opinion of an Independent Financial Adviser expressed in a written
certification thereof delivered to the Trustee, to pay and discharge and
which shall be applied by the Trustee (or other qualifying trustee) to pay
and discharge principal of, premium, if any, and interest on the
outstanding Securities (except lost, stolen or destroyed Securities which
have been replaced or paid) on the Maturity Date or the applicable
Redemption Date, as the case may be, of such principal or installment of
principal, premium, if any, or interest in accordance with the terms of
this Indenture and of such Securities; provided, however, that the Trustee
(or other qualifying trustee) shall have received an irrevocable written
order from the Issuers instructing the Trustee (or other qualifying
trustee) to apply such money or the proceeds of such U.S. Government
Obligations to said payments with respect to the Securities;
(ii) no Default or Event of Default or event which with notice or
lapse of time or both would become a Default or an Event of Default with
respect to the Securities shall have occurred and be continuing on the
date of such deposit or, insofar as Sections 6.1(k) and (l) are concerned,
at any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period);
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(iii) such legal defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a Default or Event of Default
under, this Indenture or any other material agreement or instrument to
which an Issuer or any of its Subsidiaries is a party or by which it is
bound;
(iv) in the case of an election under paragraph (b) above, the
Issuers shall have delivered to the Trustee an Opinion of Counsel stating
that (x) the Issuers have received from, or there has been published by,
the Internal Revenue Service a ruling or (y) since the date of this
Indenture, there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of the outstanding Securities will not
recognize income, gain or loss for Federal income tax purposes as a result
of such legal defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if such legal defeasance had not occurred;
(v) in the case of an election under paragraph (c) above, the
Issuers shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Holders of the outstanding Securities will not recognize
income, gain or loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred;
(vi) in the case of an election under either paragraph (b) or (c)
above, an Opinion of Counsel to the effect that, (x) the trust funds will
not be subject to any rights of any other holders of Indebtedness of the
Company, and (y) after the 91st day following the deposit (or such longer
period as may be provided in an applicable state Bankruptcy Law), the
trust funds will not be subject to the effect of any applicable Bankruptcy
Law; provided, however, that if a court were to rule under any such law in
any case or proceeding that the trust funds remained property of the
Issuers, no opinion needs to be given as to the effect of such laws on the
trust funds except the following: (A) assuming such trust funds remained
in the Trustee's possession prior to such court ruling to the extent not
paid to Holders of Securities, the Trustee will hold, for the benefit of
the Holders of Securities, a valid and enforceable security interest in
such trust funds that is not avoidable in bankruptcy or otherwise, subject
only to principles of equitable subordination, (B) the Trustee on behalf
of the Holders of Securities will be entitled to receive adequate
protection of its interests in such trust funds if such trust funds are
used, and (C) property, rights in property or other interests granted to
the Trustee or the Holders of Securities in exchange for or with respect
to any of such funds will not be subject to any prior rights of any other
Person, subject only to Sections 363 and 364 of Title 11 of the U.S.
Bankruptcy Code (or any section of any other Bankruptcy Law having the
same effect), but still subject to the foregoing clause (B);
(vii) in the case of an election under either paragraph (b) or (c)
above, such legal defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest with respect to any securities of
the Issuers for purposes of the TIA; and
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(viii) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the legal defeasance under
paragraph (b) above or the covenant defeasance under paragraph (c) above,
as the case may be, have been complied with.
(e) All money and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this paragraph (e), the "Trustee") pursuant to
paragraph (d) above in respect of the outstanding Securities shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
Paying Agent as the Trustee may determine, to the Holders of such Securities of
all sums due and to become due thereon in respect of principal, premium, if any,
and interest, but such money need not be segregated from other funds except to
the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to paragraph (d) above or the principal, premium, if any, and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities.
Anything in this Section 8.2 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request,
in writing, by the Company any money or U.S. Government Obligations held by it
as provided in paragraph (d) above which, in the opinion of an Independent
Financial Adviser expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent legal defeasance or covenant defeasance.
(f) In the event of a legal defeasance or covenant defeasance, all
rights of the Trustee and the Holders in and to the Collateral under the
Security Documents and the Intercreditor Agreements shall be released, except
those related to the deposit in paragraph (e) above.
SECTION 8.3. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Sections 8.1 and 8.2, and shall apply the
deposited money and the money from U.S. Government Obligations in accordance
with this Indenture to the payment of principal of, premium, if any, and
interest on the Securities.
SECTION 8.4. Repayment to Company or the Guarantors.
Subject to Sections 7.7, 8.1 and 8.2, the Trustee shall promptly pay
to the Issuers, or if deposited with the Trustee by any Guarantor, to such
Guarantor, upon receipt by the Trustee of an Officers' Certificate, any excess
money, determined in accordance with Sections 8.2(d)(i) and (e), held by it at
any time. The Trustee and the Paying Agent shall pay to the Issuers, or if
deposited with the Trustee by any Guarantor, to such Guarantor, upon receipt by
the Trustee or the Paying Agent, as
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the case may be, of an Officers' Certificate, any money held by it for the
payment of principal, premium, if any, or interest that remains unclaimed for
two years; provided, however, that the Trustee and the Paying Agent before being
required to make any payment may, but need not, at the expense of the Company
cause to be published once in a newspaper of general circulation in The City of
New York or mail to each Holder entitled to such money notice that such money
remains unclaimed and that after a date specified therein, which shall be at
least 30 days from the date of such publication or mailing, any unclaimed
balance of such money then remaining will be repaid to the Company or a
Guarantor. After payment to the Issuers or a Guarantor, as the case may be,
Securityholders entitled to money must look solely to the Issuers for payment as
general creditors unless an applicable abandoned property law designates another
Person, and all liability of the Trustee or Paying Agent with respect to such
money shall thereupon cease.
SECTION 8.5. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Indenture by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
and only then the Issuers' and each Guarantor's obligations under this Indenture
and the Securities shall be revived and reinstated as though no deposit had been
made pursuant to this Indenture until such time as the Trustee is permitted to
apply all such money or U.S. Government Obligations in accordance with this
Indenture; provided, however, that if the Issuers or any Guarantor, as the case
may be, make or makes any payment of interest on, premium, if any, or principal
of any Securities because of the reinstatement of their obligations, the Issuers
or any Guarantor, as the case may be, shall be subrogated to the rights of the
holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Without Consent of Holders.
The Issuers and the Guarantors, when authorized by Board Resolutions
of their respective Boards of Directors, and the Trustee may amend, waive or
supplement (or, if applicable, authorize the Collateral Agent to amend, waive or
supplement) this Indenture, the Securities, the Guarantees, any Security
Document and/or the Intercreditor Agreements without notice to or consent of any
Securityholder:
(a) to cure any ambiguity, defect or inconsistency, provided that
such amendment or supplement does not adversely affect the rights of any
Holder;
(b) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
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(c) to comply with any requirements of the SEC under the TIA,
including the qualification of the Indenture under the TIA or the
requirement of the Canada Business Corporations Act;
(d) to evidence the succession in accordance with Article V or X
hereof of another Person to an Issuer or a Guarantor, as the case may be,
and the assumption by any such successor of the covenants of an Issuer or
a Guarantor herein and in the Securities;
(e) to mortgage, pledge or grant a security interest in favor of the
Collateral Agent as additional security for the payment and performance of
its obligations under this Indenture, in any property or assets, including
any which are required to be mortgaged, pledged or hypothecated, or in
which a security interest is required to be granted, to the Collateral
Agent pursuant to Section 11.6 hereof, any Security Document or otherwise;
(f) to evidence and provide for the acceptance of appointment
hereunder by a separate or successor Trustee with respect to the
Securities and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trust hereunder by more than one Trustee, pursuant to the requirements
of Section 7.12;
(g) to make any change that does not adversely affect the rights of
any Holder;
(h) to add or release any Guarantor strictly in accordance with
another provision of this Indenture or under the Security Documents
expressly providing for such addition or release; or
(i) to release from the Lien of the Security Documents any Closed
Facility, the Specialty Steel Assets or any Released Mortgaged Property,
in each case in accordance with Section 11.3(b).
SECTION 9.2. With Consent of Holders.
Subject to Section 6.7, the Issuers, the Guarantors and the Trustee
and, if applicable, the Collateral Agent may amend or supplement this Indenture,
the Securities, the Guarantees, the Security Documents and/or the Intercreditor
Agreements, without notice to any other holders of Securities, with the written
consent of the Holders of not less than a majority in aggregate principal amount
of the Securities then outstanding. Subject to Section 6.7, the Holders of, in
the aggregate, not less than a majority in aggregate principal amount of the
outstanding Securities affected may waive compliance by the Issuers and the
Guarantors with any provision of this Indenture, the Securities, the Guarantees,
the Security Documents and/or the Intercreditor Agreements, without notice to
any other Securityholder; provided, however, (1) without the consent of each
Securityholder affected, an amendment, supplement or waiver, including a waiver
pursuant to Section 6.4, may not:
(a) reduce the principal amount of, extend the fixed maturity of or
alter the redemption provisions of the Securities;
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(b) change the currency in which any Securities or any premium or
the interest thereon is payable or make the principal of, premium, if any,
or interest on any Securities payable in a currency other than that stated
in the Securities;
(c) reduce the percentage in principal amount of outstanding
Securities that must consent to an amendment, supplement or waiver or
consent to take any action under this Indenture, any Guarantee, the
Securities, the Security Documents or the Intercreditor Agreements;
(d) impair the right to institute suit for the enforcement of any
payment on or with respect to the Securities or any Guarantee;
(e) waive a default in payment with respect to the Securities or any
Guarantee;
(f) following the occurrence of a Change of Control or the execution
of a definitive agreement with respect to a Change of Control or the
occurrence of an Asset Sale, as applicable, amend, change or modify the
obligations of the Issuers to make and consummate a Change of Control
Offer with respect to such Change of Control or make and consummate the
Asset Sale Offer with respect to such Asset Sale or modify any of the
provisions or definitions with respect thereto;
(g) reduce or change the rate or time for payment of interest on the
Securities;
(h) except as expressly provided in Section 11.3(b), modify or
change any provision of this Indenture, the Security Documents or the
Intercreditor Agreements affecting the ranking of the Securities or any
Guarantee or the priority of the claims of the Holders in and to the
Collateral in any manner adverse to the Holders; or
(i) release any Guarantor from any of its obligations under its
Guarantee or the Indenture other than in compliance with this Indenture;
and (2) no such modification or amendment may, without the consent of the
Holders of 95% of the aggregate principal amount of outstanding Securities,
directly or indirectly release any Lien on the Collateral except in compliance
with the terms of this Indenture (including, without limitation, Section
11.3(b)), the Securities, the Security Documents and the Intercreditor
Agreements (for so long as such agreements relate to the Securities).
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Issuers shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
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SECTION 9.3. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture, the Security
Documents, the Intercreditor Agreements or the Securities shall comply with the
TIA as then in effect.
SECTION 9.4. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of that Security or portion of that Security that evidences
the same debt as the consenting Holder's Security, even if notation of the
consent is not made on any Security. However, any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of a Security,
provided that the consent was not by its terms an irrevocable consent. Any
Permitted revocation shall be effective only if the Trustee receives the notice
of revocation before the date the amendment, supplement or waiver becomes
effective. Notwithstanding the above, nothing in this paragraph shall impair the
right of any Securityholder under Section 316(b) of the TIA.
The Issuers may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the second
and third sentences of the immediately preceding paragraph, those Persons who
were Holders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to consent to such amendment, supplement or
waiver or, provided that the consent was not by its terms an irrevocable
consent, to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. Such consent shall be effective
only for actions taken within 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(a) through (i) of Section 9.2; if it makes such a change, the amendment,
supplement or waiver shall bind every subsequent Holder of a Security or portion
of a Security that evidences the same debt as the consenting Holder's Security.
SECTION 9.5. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee shall (in accordance with the specific written direction
of the Issuers) request the Holder of the Security to deliver it to the Trustee.
The Trustee shall (in accordance with the specific written direction of the
Issuers) place an appropriate notation on the Security about the changed terms
and return it to the Holder. Alternatively, if the Issuers or the Trustee so
determines, the Issuers in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms. Failure to
make the appropriate notation or issue a new Security shall not affect the
validity and effect of such amendment, supplement or waiver.
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SECTION 9.6. Trustee and Collateral Agent To Sign Amendments, Etc.
The Trustee and Collateral Agent shall sign any amendment,
supplement or waiver authorized pursuant to this Article IX if the amendment,
supplement or waiver does not adversely affect the rights, duties or immunities
of the Trustee or Collateral Agent, as applicable. If it does, the Trustee or
Collateral Agent, as applicable, may, but need not, sign it. In signing any
amendment, supplement or waiver, the Trustee and Collateral Agent shall be
entitled to receive, if requested, an indemnity satisfactory to it in its sole
discretion and to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article IX is authorized or permitted by this
Indenture. No Issuer or Guarantor may sign an amendment until its respective
Board of Directors approves it.
ARTICLE X
GUARANTEE
SECTION 10.1. Unconditional Guarantee.
Each Guarantor hereby unconditionally, jointly and severally,
guarantees, to each Holder of a Security authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, that: (i) the
principal of and interest on the Securities will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration or otherwise and interest on the overdue principal, if any, and
interest on any interest, to the extent lawful, of the Securities and all other
obligations of the Issuers to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (ii) in case of any extension of time of payment or
renewal of any Securities or of any such other obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, subject to any applicable grace period, whether at stated
maturity, by acceleration or otherwise, subject, however, in the case of clauses
(i) and (ii) above, to the limitations set forth in Section 10.4. Each Guarantor
hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Securities or
this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Securities with respect to any provisions hereof or
thereof, the recovery of any judgment against any Issuer, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of any Issuer, any right to require a
proceeding first against the Issuers, protest, notice and all demands whatsoever
and covenants that this Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities, this Indenture and
in this Guarantee. If any Holder or the Trustee is required by any court or
otherwise to return to any Issuer, any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to any Issuer or any
Guarantor, any amount paid by any Issuer or any Guarantor to the Trustee or such
Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor further agrees that, as
between each Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, to the extent
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permitted by applicable law, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article VI for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any acceleration of such obligations as provided in Article VI,
such obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Guarantee.
SECTION 10.2. Severability.
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 10.3. Release of a Guarantor.
If no Default exists or would exist under this Indenture,
concurrently with any sale or disposition of any Subsidiary Guarantor by merger,
sale of all or substantially all of its assets, liquidation or otherwise which
is in compliance with the terms of this Indenture (other than a transaction
subject to the provisions described under Section 5.1), such Subsidiary
Guarantor and each Subsidiary of such Guarantor that is also a Subsidiary
Guarantor will automatically and unconditionally be released from all
obligations under its Guarantee and any Collateral relating thereto, and Liens
of this Indenture and the Security Documents thereon, shall concurrently be
automatically and unconditionally released. In addition, subject to the
foregoing conditions, any Subsidiary Guarantor and each Subsidiary of such
Subsidiary Guarantor that is also a Subsidiary Guarantor will automatically and
unconditionally be released from all obligations under its Guarantee and any
Collateral relating thereto, and Liens of this Indenture and the Security
Documents thereon, shall concurrently be automatically and unconditionally
released, unless the Issuers otherwise elect, if such Subsidiary Guarantor is
designated as an Unrestricted Subsidiary in compliance with the terms of this
Indenture and all other guarantees of such Subsidiary Guarantor of Indebtedness
of the Issuers and the Restricted Subsidiaries are released in connection
therewith. A sale of assets or Capital Stock of a Subsidiary Guarantor may
constitute an Asset Sale subject to Section 4.13.
The Trustee shall execute and deliver an appropriate instrument
evidencing such release upon receipt of a request by the Issuers accompanied by
an Officers' Certificate and Opinion of Counsel certifying as to the compliance
with this Section 10.3. Any Guarantor not so released remains liable for the
full amount of principal of and interest on the Securities as provided in this
Article X.
SECTION 10.4. Limitation of Guarantor's Liability.
Each Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal, state or
foreign law. To effectuate the foregoing intention, the Holders and such
Guarantor hereby irrevocably
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agree that the obligations of such Guarantor under the Guarantee shall be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 10.6, result in the obligations of such Guarantor under the
Guarantee not constituting such fraudulent transfer or conveyance.
SECTION 10.5. Guarantors May Consolidate, etc., on Certain Terms.
(a) Nothing contained in this Indenture or in any of the Securities
shall prevent any consolidation or merger of a Guarantor with or into an Issuer
or another Guarantor or shall prevent any sale of assets or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety, to an
Issuer or another Guarantor. Upon any such consolidation, merger, sale or
conveyance, the Guarantee given by such Guarantor shall no longer have any force
or effect.
(b) Except in the case in which a Subsidiary Guarantor's Guarantee
is subject to release as provided under Section 10.3, each Guarantor will not,
and the Issuers will not cause or permit any Subsidiary Guarantor to,
consolidate with or merge with or into any Person other than an Issuer or any
other Guarantor unless: (i) the entity formed by or surviving any such
consolidation or merger (if other than the Guarantor) or to which such sale,
lease, conveyance or other disposition shall have been made is a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia or, in the case of Canadian Drawn Steel Company,
Inc., the laws of Canada or a political subdivision thereof; (ii) such entity
assumes by supplemental indenture all of the obligations of the Guarantor on the
Guarantee; and (iii) immediately after giving effect to such transaction, no
Default shall have occurred and be continuing. Any merger or consolidation of a
Guarantor with and into an Issuer (with an Issuer being the surviving entity) or
another Guarantor need only comply with clauses (b) and (e) of Section 5.1.
SECTION 10.6. Contribution.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under the
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Issuer's
obligations with respect to the Securities or any other Guarantor's obligations
with respect to the Guarantee. "Adjusted Net Assets" of such Guarantor at any
date shall mean the lesser of the amount by which (x) the fair value of the
property of such Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), but
excluding liabilities under the Guarantee, of such Guarantor at such date and
(y) the present fair saleable value of the assets of such Guarantor at such date
exceeds the amount that will be required to pay the probable liability of such
Guarantor on its debts (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date and after giving effect to any
collection from any Subsidi-
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ary of such Guarantor in respect of the obligations of such Subsidiary under the
Guarantee), excluding debt in respect of the Guarantee of such Guarantor, as
they become absolute and matured.
SECTION 10.7. Waiver of Subrogation.
Until all Obligations are paid in full, each Guarantor hereby
irrevocably waives any claim or other rights which it may now or hereafter
acquire against any Issuer that arise from the existence, payment, performance
or enforcement of such Guarantor's obligations under the Guarantees and this
Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Securities against any Issuer, whether or not
such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from any
Issuer, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Securities shall not have been paid in full, such amount shall
have been deemed to have been paid to such Guarantor for the benefit of, and
held in trust for the benefit of, the Holders of the Securities, and shall
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Securities, whether matured or unmatured, in accordance
with the terms of this Indenture. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
10.7 is knowingly made in contemplation of such benefits.
SECTION 10.8. Execution of Guarantee.
Each Guarantor hereby agrees that its Guarantee set forth in this
Article X shall remain in full force and effect notwithstanding the fact that no
Guarantee is endorsed on the Securities.
SECTION 10.9. Waiver of Stay, Extension or Usury Laws.
Each Guarantor covenants (to the extent permitted by law) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive such Guarantor from performing its
Guarantee as contemplated herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of this
Indenture; and (to the extent permitted by law) each such Guarantor hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 10.10. Canadian Drawn Steel Company Inc.
Notwithstanding anything in this Article X or elsewhere in this
Indenture or in the Securities to the contrary, the Guarantee of Canadian Drawn
Steel Company Inc. hereunder and the related obligations with respect thereto
such as contribution extends only to the obligations of the Company and not RTI
Capital Corp. and no other Guarantor shall have any right of contribution or
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other claim as against Canadian Drawn Steel Company, Inc. in respect of any
obligation of RTI Capital Corp.
ARTICLE XI
SECURITY DOCUMENTS
SECTION 11.1. Collateral and Security Documents.
(a) In order to secure the due and punctual payment of the
Securities, the Pledgors have entered into the respective Security Documents to
which they are party to create the Security Interests and for related matters.
(b) Each holder of a Security, by accepting a Security, agrees to
all of the terms and provisions of the Intercreditor Agreements and the Security
Documents, as the same may be amended from time to time pursuant to the
provisions of the Intercreditor Agreements, the Security Documents and this
Indenture.
SECTION 11.2. Recording, Etc.
(a) The Company will, and will cause each other Pledgor to, take or
cause to be taken all action required or desirable to maintain, preserve and
protect the Security Interests in the Collateral granted by the Security
Documents, including, but not limited to, causing all financing statements,
Mortgages, other instruments of further assurance, including, without
limitation, continuation statements covering security interests in personal
property, and all mortgages securing purchase money obligations delivered to the
Trustee or to the trustee, mortgagee or other holder of a Permitted Lien under
Section 11.4 to be promptly recorded, registered and filed, and at all times to
be kept recorded, registered and filed, and will execute and file such financing
statements and cause to be issued and filed such continuation statements or
renewals, as the case may be, all in such manner and in such places as may be
required by law fully to preserve and protect the rights of the holders of the
Securities, the Collateral Agent and the Trustee under this Indenture and the
Security Documents to all property comprising the Collateral. Without limiting
the generality of the foregoing covenant, the Company will cause each
Wholly-Owned Restricted Subsidiary that is not in existence on the date hereof
to execute and deliver to the Collateral Agent a supplement to the Master Pledge
Agreement substantially in the form of Annex 1 thereto at such time as (A) such
Subsidiary owns or possesses property that constitutes Collateral (as defined in
the Master Pledge Agreement) or (B) such Subsidiary acquires or possesses
property that constitutes Collateral (as defined in the Security Agreement).
The Company will from time to time promptly pay and discharge all
mortgage and financing and continuation statement recording and/or filing fees,
charges and taxes relating to this Indenture and the Security Documents, any
amendments thereto and any other instruments of further assurance. Without
limiting the generality of the foregoing covenant, in the event at any time the
Trustee or the Collateral Agent shall determine that additional mortgage
recording, transfer or similar taxes are required to be paid to perfect or
continue any Lien on any Real Property in an amount at
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least equal to the Fair Market Value from time to time of such Real Property,
the Company shall pay such taxes promptly upon demand by the Trustee or the
Collateral Agent. Notwithstanding the foregoing, the Trustee and the Collateral
Agent shall not have any duty or obligation to ascertain whether any such taxes
are required to be paid at any time, and the determination referred to in the
preceding sentence shall only be made by the Trustee or the Collateral Agent, as
the case may be, upon receipt of written notice that such taxes are due and
owing.
(b) The Company shall furnish or cause to be furnished to the
Trustee and the Collateral Agent:
(i) at the time of execution and delivery of this Indenture,
Opinion(s) of Counsel required by the terms of the Purchase Agreement,
which the Trustee and the Collateral Agent may rely upon solely to the
extent indicated therein; and
(ii) at the time of execution and delivery of this Indenture, (1)
with respect to each Mortgage (other than the Mortgage executed and
delivered in respect of the Mortgaged Property located in Hamilton,
Ontario, Canada), a policy of title insurance (or commitment to issue such
a policy) insuring (or committing to insure) the Lien of such Mortgage as
a valid first mortgage Lien on the Real Property and fixtures described
herein in an amount not less than the fair market value of such Real
Property and fixtures, which policy or commitment shall (a) be issued by
Title Associates Inc., as agent for Chicago Title Insurance Company, (b)
include such reinsurance arrangements (with provisions for direct access)
as shall be reasonably acceptable to the Collateral Agent, (c) have been
supplemented by such endorsements, or, where such endorsements are not
available at commercially reasonable premium costs, opinion letters of
special counsel, architects or other professionals, which counsel,
architects or other professionals shall be reasonably acceptable to the
Collateral Agent, as shall be reasonably requested by the Collateral Agent
(including, without limitation, endorsements or opinion letters on matters
relating to usury, first loss, last dollar, zoning, non-imputation, public
road access, contiguity (where appropriate), cluster, survey, doing
business, variable rate and so-called comprehensive coverage over
covenants and restrictions) and (d) contain only such exceptions to title
as shall be agreed to by the Collateral Agent prior to the Issue Date with
respect to such Mortgaged Property and (2) with respect to the Mortgage
executed and delivered in respect of the Mortgaged Property located in
Hamilton, Ontario, Canada, a title Opinion of Counsel in form and
substance reasonably acceptable to the Collateral Agent;
(iii) within 30 days after the Issue Date, Opinion(s) of Counsel
either (a) substantially to the effect that, in the opinion of such
counsel, this Indenture, each Security Document and all other instruments
of further assurance or assignment have been properly recorded, registered
and filed to the extent necessary to perfect the Security Interests
created by each such Security Document and reciting the details of such
action, and stating that as to the Security Interests created pursuant to
each such Security Document, such recordings, registerings and filings are
the only recordings, registerings and filings necessary to give notice
thereof and that no re-recordings, re-registerings or refilings are
necessary to maintain such notice (other than as stated in such opinion),
or (b) to the effect that, in the opinion of such counsel, no such action
is necessary to perfect such Security Interests; and
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(iv) within 30 days after August 1 in each year beginning with
August 1, 2000, an Opinion of Counsel, dated as of such date, either (a)
to the effect that, in the opinion of such counsel, such action has been
taken with respect to the recordings, registerings, filings,
re-recordings, re-registerings and refilings of all financing statements,
continuation statements or other instruments of further assurance as is
necessary to maintain the Security Interests of each of the Security
Documents and reciting with respect to such Security Interests the details
of such action or referencing prior Opinions of Counsel in which such
details are given, and stating that all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the rights of the holders and the Trustee
hereunder and under each of the Security Documents with respect to the
Security Interests, or (b) to the effect that, in the opinion of such
Counsel, no such action is necessary to maintain such Security Interests.
SECTION 11.3. Certain Dispositions of Collateral Without Release.
(a) Notwithstanding the provisions of Section 11.4 or 11.5, as
applicable, so long as no Event of Default shall have occurred and be continuing
and the Fair Market Value of the Collateral sold, exchanged or otherwise
disposed of in accordance with this Section 11.3 in no event exceeds $10,000,000
in the aggregate during the term of the Securities, the Pledgors may, without
any requirement of release or consent by the Collateral Agent or the Trustee:
(i) sell or otherwise dispose of any machinery, equipment,
furniture, apparatus, tools or implements, materials or supplies or other
similar property subject to the Lien of the Security Documents, which may
have become worn out or obsolete, not exceeding in value in any one
calendar year $500,000;
(ii) grant rights-of-way and easements over or in respect of any
Real Property; provided, however, that such grant will not, in the
reasonable opinion of the Board of Directors of the relevant Pledgor,
impair the usefulness of such property in the conduct of the relevant
Pledgor's business and will not be prejudicial to the interests of the
holders of Securities;
(iii) abandon, terminate, cancel, release or make alterations in or
substitutions of any leases, contracts or of rights-of-way subject to the
Lien of the Security Documents; provided, however, that any altered or
substituted leases, contracts or rights-of-way shall forthwith, without
further action, be subject to the Lien of the Security Documents to the
same extent as those previously existing; and provided, further, that if
the relevant Pledgor shall receive any money or property in excess of such
Pledgor's expenses in connection with such termination, cancellation,
release, alteration or substitution as consideration or compensation for
such termination, cancellation, release, alteration or substitution, such
money or property, to the extent it exceeds $500,000 (in which case all of
the money and property so received and not just the portion in excess of
$500,000 shall be subject to this clause), forthwith upon its receipt by
such Pledgor, shall be deposited with the Collateral Agent (unless
otherwise required by a Prior Lien permitted under the applicable Security
Documents) as Trust Moneys subject to disposition as provided in Article
XII hereof or otherwise subjected to the Lien of Security Documents;
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(iv) surrender or modify any franchise, license or permit subject to
the Lien of any of the Security Documents which it may own or under which
it may be operating; provided, however, that, after the surrender or
modification of any such franchise, license or permit, the relevant
Pledgor shall still, in the reasonable opinion of the Board of Directors
of such Pledgor, be entitled, under some other or without any franchise,
license or permit, to conduct its business in the territory in which it is
then operating; and provided, further, that if such Pledgor shall be
entitled to receive any money or property in excess of such Pledgor's
expenses in connection with such surrender or modification as
consideration or compensation for such surrender or modification, such
money or property, to the extent that it exceeds $500,000 (in which case
all of the money and property so received and not just the portion in
excess of $500,000 shall be subject to this clause), forthwith upon its
receipt by such Pledgor, shall be deposited with the Collateral Agent
(unless otherwise required by a Prior Lien permitted under the applicable
Security Documents) as Trust Moneys subject to disposition as provided in
Article XII hereof, or otherwise subjected to the Lien of the Security
Documents;
(v) alter, repair, replace, change the location or position of and
add to its plants, structures, machinery, systems, equipment, fixtures and
appurtenances; provided, however, that no change in the location of any
such Collateral subject to the Lien of any of the Security Documents shall
be made which (1) removes such property into a jurisdiction in which any
instrument required by law to preserve the Lien of any of the Security
Documents on such property, including all necessary financing statements
and continuation statements, has not been recorded, registered or filed in
the manner required by law to preserve the Lien of any of the Security
Documents on such property, (2) does not comply with the terms of this
Indenture and the Security Documents or (3) otherwise impairs the Lien of
the Security Documents;
(vi) demolish, dismantle, tear down or scrap any Collateral, or
abandon any thereof other than land or interests in land (other than
leases), if in the good faith opinion of the Board of Directors of the
relevant Pledgor (as evidenced by a Board Resolution if it involves
Collateral having a Fair Market Value in excess of the lesser of $100,000
or 1% of the aggregate principal amount of the outstanding Securities)
such Collateral is no longer useful in the conduct of such Pledgor's
business, and the Fair Market Value and utility of the Collateral as an
entirety, and the security for the Securities, will not thereby be
impaired;
(vii) grant leases or subleases having a Fair Market Value in excess
of $500,000 in respect of any Real Property in the event that the relevant
Pledgor determines, in its reasonable business judgment, that such Real
Property is no longer useful in the conduct of such Pledgor's business and
that such lease or sublease would not be reasonably likely to have an
adverse affect on the value of the property subject thereto; provided,
however, that any such lease or sublease shall by its terms be subject and
subordinate to the Lien, and otherwise comply with the provisions, of the
Mortgage affecting such Real Property.
(b) Notwithstanding the provisions of clause (a) of this Section
11.3, Section 11.4 or 11.5, as applicable, so long as no Event of Default shall
have occurred and be continuing, and subject to the applicable provisions of
Section 4.13, the Pledgors may, without any requirement or consent by the
Collateral Agent or the Trustee, sell or otherwise dispose of the Closed
Facilities, the Specialty
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Steel Assets or the Released Mortgaged Property; provided, however, that (1) in
the reasonable opinion of the Board of Directors of such Pledgor, any such
release could not reasonably be expected to have an adverse effect the practical
utilization of the other Collateral, if any, used in connection with or located
adjacent to such Closed Facilities, Specialty Steel Assets or the Released
Mortgaged Property, (2) all representations and warranties set forth in any
Security Document (including, without limitation, those specifically relating to
such release) shall continue to be true and correct in all material respects as
of the date of such release and (3) such Pledgor shall comply with Section
11.4(f) to the extent the same is applicable to such release.
(c) in the event that a Pledgor has sold, exchanged, or otherwise
disposed of or proposes to sell, exchange or otherwise dispose of any portion of
the Collateral which under the provisions of this Section 11.3 may be sold,
exchanged or otherwise disposed of by such Pledgor without any release or
consent of the Trustee or the Collateral Agent, and such Pledgor requests the
Trustee or the Collateral Agent to furnish a written disclaimer, release or
quitclaim of any interest in such property under any of the Security Documents,
the Trustee and the Collateral Agent shall promptly execute such an instrument
(in recordable form, where appropriate) upon delivery to the Trustee and the
Collateral Agent of (i) an Officers' Certificate by such Pledgor reciting the
sale, exchange or other disposition made or proposed to be made and describing
in reasonable detail the property affected thereby, and stating that such
property is property which by the provisions of this Section 11.3 may be sold,
exchanged or otherwise disposed of or dealt with by such Pledgor without any
release or consent of the Trustee or the Collateral Agent and (ii) an Opinion of
Counsel stating that the sale, exchange or other disposition made or proposed to
be made was duly taken by such Pledgor in conformity with a designated
subsection of Section 11.3(a) or Section 11.3(b), as applicable, and that the
execution of such written disclaimer, release or quitclaim is appropriate under
this Section 11.3.
Any disposition of Collateral made in strict compliance with the
provisions of this Section 11.3 shall be deemed not to impair the Security
Interests in contravention of the provisions of this Indenture.
SECTION 11.4. Release of Collateral.
In addition to their rights under Section 11.3, the Pledgors shall
have the right, at any time and from time to time, to sell, exchange or
otherwise dispose of any of the Collateral (other than Trust Moneys (but not
other than Trust Moneys constituting Net Cash Proceeds from an Asset Sale),
which Trust Moneys are subject to release from the Lien of the Security
Documents as provided under Article XII or upon substituting Substitute
Collateral as provided under the provisions of Section 11.5), upon compliance
with the requirements and conditions of this Section 11.4, and the Trustee shall
promptly instruct the Collateral Agent to promptly release the same from the
Lien of any of the Security Documents upon receipt by the Trustee and the
Collateral Agent (other than in the case of Section 11.4(d) below) of a Release
Notice requesting such release and describing the property to be so released,
together with delivery of the following:
(a) If the property to be released has a book value of at least
$10,000,000, a Board Resolution of the applicable Pledgor requesting such
release and authorizing an application to the Trustee and the Collateral
Agent therefor.
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(b) An Officers' Certificate of the applicable Pledgor dated not
more than 30 days prior to the date of the application for such release,
and signed also, in the case of the following clauses (ii) and (iv), by an
Independent Appraiser or, if such property consists of securities, by an
Independent Financial Advisor, in each case stating in substance as
follows:
(i) that, in the opinion of the signers, the security afforded
by the Security Documents will not be impaired by such release in
contravention of the provisions of the Indenture, and that either
(1) other property (including, in the case of a Permitted Related
Acquisition, the property so acquired) is to be substituted as
Substitute Collateral in accordance with the provisions of Section
11.5 or (2) the Collateral to be released is not Net Cash Proceeds
from an Asset Sale and is not being replaced by comparable property,
has a book value of less than $1.0 million and is not necessary for
the operation of the remaining property of the Company and the
Restricted Subsidiaries or in the conduct of the business of the
Company and the Restricted Subsidiaries as conducted immediately
prior thereto or (3) the Collateral to be released is Trust Moneys
representing Net Cash Proceeds from an Asset Sale that are not
required, or cannot be required through the passage of time or
otherwise, to be used to purchase Securities under Section 4.13 or
(4) the Collateral to be released is being released in connection
with an Asset Sale of such Collateral and the Net Proceeds from such
Asset Sale are being delivered to the Collateral Agent (if required
by Section 4.13) in accordance with, and to the extent required by,
the provisions of clause (ii) of Section 11.4(d) or (5) the
Collateral to be released represents Specialty Steel Assets or
Closed Facilities, subject to an Asset Sale;
(ii) except in the case of a release referred to in Section
11.4(b)(i)(2), 11.4(b)(i)(3) or 11.4(b)(i)(5), that the applicable
Pledgor has either disposed of or will dispose of the Collateral so
to be released in compliance with all applicable terms of this
Indenture and for a consideration representing, in the opinion of
the signers, its Fair Market Value, which consideration may, subject
to any other provision of this Indenture, consist of any one or more
of the following: (A) cash or Cash Equivalents, (B) obligations
secured by a purchase money Lien upon the property so to be released
and (C) any other property or assets that in each case, upon
acquisition thereof by the applicable Pledgor, would be subject to
the Lien of the Security Documents (except as provided in clause
(ii) of Section 11.4(d)), and subject to no Lien other than Liens
which, under the applicable provisions of the Security Documents and
Intercreditor Agreements relating thereto, are permitted to be
superior to the Lien of the Collateral Agent for the benefit of the
Trustee and the holders of the Securities therein, all of such
consideration to be briefly described in the certificate;
(iii) that no Default has occurred and is continuing;
(iv) the Fair Market Value, in the opinion of the signers, of
the property to be released at the date of such application for
release; provided that it shall not be necessary under this clause
(iv) to state the Fair Market Value of any property whose
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Fair Market Value is certified in a certificate of an Independent
Appraiser or Independent Financial Advisor under Section 11.4(c);
and
(v) that all conditions precedent herein, the Security
Documents and the Intercreditor Agreements relating to the release
of the Collateral in question have been complied with.
(c) Other than in connection with an Asset Sale involving Specialty
Steel Assets or Closed Facilities, if (i) the Fair Market Value of the
property to be released and of all other property released from the Lien
of the Security Documents since the commencement of the then current
calendar year is 10% or more of the aggregate principal amount of the
Securities outstanding on the date of the application and (ii) the Fair
Market Value of the Collateral to be so released is at least $25,000 (or
such greater amount not to exceed $1.0 million permitted by the Trust
Indenture Act) and at least 1% of the aggregate principal amount of the
Securities outstanding on the date of the application, a certificate of an
Independent Appraiser or, if such property consists of securities, a
certificate of an Independent Financial Advisor stating (1) the then Fair
Market Value, in the opinion of the signer, of the property to be
released; and (2) that such release, in the opinion of the signer, will
not impair the Security Interests under any of the Security Documents in
contravention of their terms.
(d) Except in the case of any release of the Specialty Steel Assets
or the Closed Facilities, either (i) possession of the Substitute
Collateral (if and to the extent the Substitute Collateral consists of
property the possession of which is necessary for the perfection by the
Collateral Agent of a Lien thereon) and all documents required by the
provisions of Section 11.5 or (ii) the Net Proceeds from any Asset Sale
involving Collateral (excluding any Net Cash Proceeds from any Asset Sale
which are not required, or cannot be required through the passage of time
or otherwise, to be used to purchase or redeem Securities under Section
4.13) or, if the Collateral so to be released is subject to a Prior Lien
permitted by the Security Documents (other than a Prior Lien in favor of a
Secured Creditor), a certificate of the trustee, mortgagee or other holder
of such Prior Lien permitted by the Security Documents that it has
received such Net Proceeds and has been irrevocably authorized by the
Company to pay over to the Collateral Agent any balance of such Net
Proceeds remaining after the discharge of such Indebtedness secured by
such Prior Lien permitted by the Security Documents; and, if any property
other than cash, Cash Equivalents or obligations is included in such Net
Proceeds, such instruments of conveyance, assignment and transfer, if any,
as may be necessary, in the Opinion of Counsel, to subject to the Lien of
the Security Documents all the right, title and interest of the applicable
Pledgor in and to such property. "Net Proceeds" shall mean any cash, Cash
Equivalents, obligations or other property received on the sale, transfer,
exchange or other disposition of Collateral to be released, less a
proportionate share of (i) brokerage commissions and other reasonable fees
and expenses related to such transaction and (ii) any provision for
Federal, state or local taxes payable as a result of such sale, transfer,
exchange or other disposition.
(e) One or more Opinions of Counsel which, when considered
collectively, shall be substantially to the effect (i) that any obligation
included in the consideration for any property
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so to be released and to be received by the Collateral Agent or the
Trustee, as the case may be, pursuant to Section 11.4(d) is a valid and
binding obligation enforceable in accordance with its terms, subject to
such customary exceptions regarding equitable principles and creditors'
rights generally as shall be reasonably acceptable to the Trustee in its
sole judgment, and is effectively pledged under the Security Documents,
(ii) that any Lien granted by a purchaser to secure a purchase money
obligation is a fully perfected first priority Lien and such instrument
granting such Lien is enforceable in accordance with its terms, (iii)
either (x) that such instruments of conveyance, assignment and transfer as
have been or are then delivered to the Collateral Agent are sufficient to
subject to the Lien of the Security Documents all the right, title and
interest of the applicable Pledgor in and to any property, other than
cash, Cash Equivalents and obligations, that is included in the
consideration for the Collateral so to be released and to be received by
the Collateral Agent or the Trustee, as the case may be, pursuant to
Section 11.4(d), subject to no Lien other than Liens of the type permitted
on Collateral under the provisions of Section 4.11 or (y) that no
instruments of conveyance, assignment or transfer are necessary for such
purpose, (iv) that the applicable Pledgor has corporate or other
equivalent power to own all property included in the consideration for
such release, (v) in case any part of the money or obligations referred to
in Section 11.4(d) has been deposited with a trustee or other holder of
any Prior Lien permitted by the Security Documents, that the Collateral to
be released, or a specified portion thereof, is or immediately before such
release was subject to such Prior Lien and that such deposit is required
by such Prior Lien and (vi) that all conditions precedent provided in this
Indenture, the Security Documents and the Intercreditor Agreements
relating to the release of such Collateral have been complied with;
provided that in the case of clauses (i) and (ii) above, such Opinion of
Counsel may be subject to such qualifications as to Liens which may be
imposed as a matter of law or such assumptions as to the actual knowledge
of any person as may be reasonably acceptable to the Trustee and the
Collateral Agent.
(f) If the Collateral to be released is only a portion of a discrete
parcel of Real Property, evidence that a title company shall have
committed to issue an endorsement to the title insurance policy relating
to the affected Mortgaged Property (or, if the parcel to be released is
located in Canada, a title Opinion of Counsel in form and substance
acceptable to the Collateral Agent) confirming that after such release,
the perfected Lien of the applicable Mortgage and the priority thereof
continues unimpaired upon the remaining Mortgaged Property subject only to
those Liens permitted by the applicable Mortgage.
In connection with any release, the applicable Pledgor shall (i)
execute, deliver and record or file and obtain such instruments as the Trustee
or the Collateral Agent may reasonably require, including, without limitation,
amendments to the Security Documents and (ii) deliver to the Trustee and the
Collateral Agent such evidence of the satisfaction of the applicable provisions
of this Indenture, the Intercreditor Agreements and the Security Documents as
the Trustee or the Collateral Agent may reasonably require.
The applicable Pledgor shall exercise its rights under this Section
11.4 by delivery to the Trustee and the Collateral Agent of a notice (each, a
"Release Notice"), which shall (i) refer to this Section 11.4, (ii) contain all
the resolutions, certificates, opinions, title insurance endorsements, Sur-
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veys and such other documents and statements as are required pursuant to this
Section 11.4 (including, without limitation, the Officers' Certificate required
pursuant to Section 11.4(b)), (iii) describe with particularity the items of
property proposed to be covered by the release and (iv) be accompanied by a
counterpart of the instruments proposed to give effect to the release fully
executed and acknowledged (if applicable) by all parties thereto other than the
Collateral Agent and the Trustee and in form for execution by the Collateral
Agent and the Trustee. Upon such compliance, the applicable Pledgor shall direct
the Collateral Agent in writing to execute, acknowledge (if applicable) and
deliver to such Pledgor such counterpart within 10 Business Days after receipt
by the Trustee and the Collateral Agent of a Release Notice and the satisfaction
of the requirements of this Section 11.4.
Notwithstanding the foregoing provisions of this Section 11.4, the
Company and the other Pledgors may obtain a release of (i) Available Amounts
required to purchase Securities pursuant to an Asset Sale Offer on an Asset Sale
Payment Date by directing the Collateral Agent in writing to cause to be applied
such Available Amounts to such purchase in accordance with Section 4.13 and
Article XII and (ii) any Closed Facility by directing the Collateral Agent in
writing in connection with any disposition, scrapping, dismantling or
abandonment thereof following the discontinuance of operations thereat, in each
case, without complying with paragraphs 11.4(a) through 11.4(e).
In case an Event of Default shall have occurred and be continuing,
the Company and the other Pledgors, while in possession of the Collateral (other
than cash, Cash Equivalents, securities and other personal property held by, or
required to be deposited or pledged with, the Collateral Agent or the Trustee
hereunder or under any Security Document or the Principal Intercreditor
Agreement or with the trustee, mortgagee or other holder of a Prior Lien
permitted by the Security Documents), may do any of the things enumerated in
this Section 11.4 only if the Trustee, in its discretion, or the holders of a
majority in aggregate principal amount of the Securities outstanding, by
appropriate action of such holders, shall consent to such action, in which event
any certificate filed under this Section 11.4 shall omit the statement to the
effect that no Event of Default has occurred and is continuing.
All cash or Cash Equivalents received by the Collateral Agent
pursuant to this Section 11.4 shall be held by the Collateral Agent for the
benefit of the Trustee and the holders of the Securities, as Trust Moneys
subject to application as provided in this Section 11.4 (in the case of any Net
Cash Proceeds from Asset Sales) and the Intercreditor Agreements or in Article
XII. All purchase money and other obligations received by the Collateral Agent
pursuant to this Section 11.4 shall be held by the Collateral Agent for the
benefit of the Trustee and the holders of the Securities, as Collateral.
Any releases of Collateral made in strict compliance with the
provisions of this Section 11.4 shall be deemed not to impair the Security
Interests created by the Security Documents in favor of the Collateral Agent on
behalf of the Trustee for the benefit of the holders of the Securities, in
contravention of the provisions of this Indenture.
SECTION 11.5. Substitute Collateral.
The Company or any other Pledgor may, at its option, obtain a
release of any of the Collateral (excluding the Capital Stock of the Company or
of any of the Restricted Subsidiaries but
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including (x) any Trust Moneys (other than Trust Moneys representing Net Cash
Proceeds which are required or may, through the passage of time or otherwise,
possibly be required to be used to purchase or redeem Securities pursuant to
Section 4.13) and (y) any Trust Moneys representing Net Cash Proceeds to be
applied to a Permitted Related Acquisition) by subjecting other property related
to or used in the principal businesses of the Company and the Restricted
Subsidiaries, if such substitute property (the "Substitute Collateral") has a
Fair Market Value equal to or greater than the Collateral to be released, to the
Lien of any Security Document or a similar instrument in place of and in
exchange for any of the Collateral to be released upon presentation to the
Collateral Agent and the Trustee of, among other things, the following
documents:
(a) an application of the applicable Pledgor requesting such
substitution of Substitute Collateral and describing the property to be so
released and the property to be substituted therefor;
(b) the resolutions, certificates, opinions and other statements
required by the provisions of Section 11.4, as applicable, in respect of
any of the Collateral to be released;
(c) an Officers' Certificate of the applicable Pledgor also signed
by an Independent Appraiser or, if the property to be released consists of
securities, by an Independent Financial Advisor stating in substance the
Fair Market Value, in the opinion of the signers, of the Substitute
Collateral;
(d) an instrument or instruments in recordable form sufficient for
the Lien of the Security Documents to cover the Substitute Collateral;
(e) in the case of Substitute Collateral which constitutes personal
property:
(1) an Opinion of Counsel stating that the Lien of the
Security Documents constitutes a direct and valid and perfected Lien
on such Substitute Collateral;
(2) an Officers' Certificate of the Company stating that any
specific exceptions to such Lien are Liens of the character which
were permitted to be Prior Liens under the Security Documents with
respect to the Collateral being replaced by such Substitute
Collateral; and
(3) evidence of payment or a closing statement indicating
payments to be made by the applicable Pledgor of all filing fees,
recording charges, transfer taxes and other costs and expenses,
including reasonable legal fees and disbursements of counsel for the
Collateral Agent and the Trustee (and any local counsel) that may be
incurred to validly and effectively subject such personal property
to the Lien of any applicable Security Document to perfect such
Liens;
(f) in the case of Substitute Collateral which constitutes Real
Property:
(1) a policy of title insurance (or a commitment to issue
title insurance) insuring that the Lien of the Security Documents
constitutes a direct and valid and per-
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fected mortgage Lien on such Substitute Collateral (subject to no
Liens other than Liens which were permitted under the Security
Documents with respect to the Collateral being replaced by such
Substitute Collateral) in an aggregate amount equal to the Fair
Market Value of such Substitute Collateral and containing such
endorsements and other opinions as contemplated by Section
11.2(b)(ii) of this Indenture or, in the event such Substitute
Collateral is located in Canada, a title Opinion of Counsel
acceptable in form and substance to the Collateral Agent;
(2) an Officers' Certificate of the Company stating that any
specific exceptions to such title insurance or title opinion are
Liens permitted to be on Collateral pursuant to the provisions of
Section 4.11 or Prior Liens;
(3) a Survey with respect to such Real Property;
(4) a policy or certificate of insurance as required by any
Mortgage relating to such Real Property, which policy or certificate
shall bear mortgagee endorsements of the character required by such
Mortgage;
(5) evidence of payment or a closing statement indicating
payments to be made by the applicable Pledgor of all title premiums,
recording charges, transfer taxes and other costs and expenses
including reasonable legal fees and disbursements of counsel for the
Collateral Agent and the Trustee (and any local counsel) that may be
incurred to validly and effectively subject such Real Property to
the Lien of any applicable Security Document to perfect such Lien;
(6) copies of all Leases (as defined in the Mortgages), all of
which Leases shall be in conformance with any applicable provisions
of the Security Documents;
(7) an Officers' Certificate of the Company stating that there
has been issued and is in effect a valid and proper certificate of
occupancy or local or foreign equivalent, if required by the local
or foreign codes or ordinances for the use then being made of such
Real Property and that there is not outstanding any citation,
violation or similar notice indicating that such Real Property
contains conditions which are not in compliance with local or
foreign codes or ordinances relating to building or fire safety or
structural soundness; and
(8) such consents, approvals, amendments, supplements,
estoppels, tenant subordination agreements or other instruments as
shall be necessary in order for the owner or holder of the fee
interest to grant the Lien contemplated by the Mortgage with respect
to such Real Property; and
(g) Opinion(s) of Counsel in each jurisdiction in which such
Substitute Collateral is located substantially in the form of the local
counsel opinions delivered on the Issue Date and otherwise in form and
substance satisfactory to the Trustee and the Collateral Agent with
re-
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spect to the documents executed and delivered by the applicable Pledgor
and the Substitute Collateral encumbered thereby.
Whenever the provisions of this Indenture require a determination of
the Secured Creditors' relative priorities in property or assets which are to be
substituted as Collateral for property or assets being released which are (x)
comprised of more than one Category of Collateral and (y) any particular Class
of Secured Creditors has a priority claim under the terms of such Intercreditor
Agreement with respect to one such Category of Collateral that is different from
any other such Category of Collateral, the Company or any other Pledgor may rely
upon an opinion of an Independent Appraiser or, to the extent the relevant
property or assets consists, in whole or in part, of securities, an Independent
Financial Advisor, to value the Collateral to be released and the property or
assets to be substituted, determine the relative Fair Market Values of the
different Categories of the Collateral to be released and use that as a basis
for allocating priorities (which shall be accomplished through percentage
allocations) in the property or assets to be substituted; provided that, if the
foregoing is impractical to accomplish the intended purposes, in the opinion of
counsel to the Company or such Independent Appraiser or Independent Financial
Advisor, then no substitution shall be permitted pursuant to clause (i)(A) of
Section 11.5(d). In determining relative Fair Market Values pursuant to this
paragraph, the Independent Financial Advisor and/or Independent Appraiser shall
make its determination of the Fair Market Value of each Category of Collateral
to be released assuming each such Category of Collateral was separate and
unrelated to any other Category of Collateral being released. The percentage
determinations referred to in clause (i)(A) of Section 11.5(d) shall be made as
follows: The Trustee and the holders of the Securities shall have an aggregate
interest of 100% in the Substitute Collateral which shall be allocated, by
percentage, among the various priorities in the Substitute Collateral on a basis
that is intended to reflect the priorities of the Trustee and the holders of the
Securities in the Collateral being released. The percentage interest of the
Trustee and the holders of the Securities assigned to any particular priority
level shall be obtained by dividing the Fair Market Value of all Categories of
Collateral being released in which the Trustee and holders of the Securities are
entitled to that particular priority under the terms of the applicable
Intercreditor Agreement by the Fair Market Value of all of the Collateral being
released.
SECTION 11.6. New Bar Mill.
The applicable Pledgor shall, subject to any prior Liens in
accordance with subsection (vii) of the definition of Permitted Collateral
Liens, grant a Lien in favor of the Collateral Agent on all the property and
assets constituting the New Bar Mill, whether then-owned or after-acquired,
other than inventory, accounts and other items or types of property of the
character excluded by the Security Documents. In connection with the granting of
such Lien, the applicable Pledgor shall comply with Sections 11.5(d), (e), (f)
and (g) as if the New Bar Mill constituted "Substitute Collateral" under such
Sections.
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SECTION 11.7. [Intentionally Omitted]
SECTION 11.8. Eminent Domain and Other Governmental Takings.
Should any of the Collateral be taken by eminent domain or be sold
pursuant to the exercise by the United States of America or any state,
municipality or other domestic or foreign governmental authority of any right
which it may then have to purchase, or to designate a purchaser or to order a
sale of, all or any part of the Collateral, the Trustee shall cause the
Collateral Agent to release the property so taken or purchased, but only upon
receipt by the Trustee and the Collateral Agent of the following:
(a) an Officers' Certificate of the Company stating that such
property has been taken by eminent domain and the amount of the award
therefor, or that such property has been sold pursuant to a right vested
in the United States of America, or a state, municipality or other
domestic or foreign governmental authority to purchase, or to designate a
purchaser, or order a sale of such property and the amount of the proceeds
of such sale, and that all conditions precedent herein provided for
relating to such release have been complied with;
(b) the award for such property or the proceeds of such sale (net of
the costs of obtaining such award or proceeds, including reasonable fees
of counsel), to be held as Trust Moneys subject to the disposition thereof
pursuant to Article XII; provided, however, that, in lieu of all or any
part of such award or proceeds, the applicable Pledgor shall have the
right to deliver to the Trustee and the Collateral Agent a certificate of
the trustee, mortgagee or other holder of a Prior Lien on all or any part
of the property to be released, stating that such award or proceeds (net
of the costs of obtaining such award or proceeds, including reasonable
fees of counsel), or a specified portion thereof, has been deposited with
such trustee, mortgagee or other holder pursuant to the requirements of
such Prior Lien, in which case the balance of the award, if any, shall be
delivered to the Collateral Agent; and
(c) an Opinion of Counsel substantially to the effect:
(1) that such property has been taken by eminent domain, or
has been sold pursuant to the exercise of a right vested in the
United States of America or a state, municipality or other domestic
or foreign governmental authority to purchase, or to designate a
purchaser or order a sale of, such property;
(2) in the case of any taking by eminent domain, that the
award for the property so taken has become final or that the Board
of Directors of the applicable Pledgor has determined that an appeal
from such award is not advisable in the interests of the Company or
any other Pledgor, as applicable, or the holders of the Securities;
(3) in the case of any such sale, that the amount of the
proceeds of the property so sold is not less than the amount to
which the applicable Pledgor is legally en-
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titled under the terms of such right to purchase or designate a
purchaser, or under the order or orders directing such sale, as the
case may be;
(4) in case, pursuant to Section 11.8(b), the award for such
property or the proceeds of such sale (net of the costs of obtaining
such award or proceeds, including reasonable fees of counsel), or a
specified portion thereof, shall be certified to have been deposited
with the trustee, mortgagee or other holder of a Prior Lien, that
the property to be released, or a specified portion thereof, is or
immediately before such taking or purchase was subject to such Prior
Lien, and that such deposit is required by such Prior Lien; and
(5) that the instrument or the instruments and the award or
proceeds of such sale which have been or are therewith delivered to
and deposited with the Trustee and/or the Collateral Agent conform
in all material respects to the requirements of this Indenture and
the applicable Security Documents and that, upon the basis of such
application, the Collateral Agent and the Trustee are permitted by
the terms hereof and of the Security Documents to execute and
deliver the release requested, and that all conditions precedent
herein provided for relating to such release have been complied
with.
In any proceedings for the taking or purchase or sale of any part of
the Collateral, by eminent domain or by virtue of any such right to purchase or
designate a purchaser or to order a sale, the Collateral Agent and the Trustee
may be represented by counsel who may be counsel for the Company.
All cash or Cash Equivalents received by the Collateral Agent
pursuant to this Section 11.8 shall be held by the Collateral Agent as Trust
Moneys under Article XII subject to application as therein provided. All
purchase money and other obligations received by the Collateral Agent pursuant
to this Section 11.8 shall be held by the Collateral Agent as Collateral subject
to application as provided in Section 11.13.
SECTION 11.9. Trust Indenture Act Requirements.
The release of any Collateral, whether pursuant to this Article XI
or Article XII, from the Lien of any of the Security Documents or the release
of, in whole or in part, the Liens created by any of the Security Documents,
will not be deemed to impair the Security Interests in contravention of the
provisions hereof if and to the extent the Collateral or Liens are released
pursuant to the applicable Security Documents and pursuant to the terms hereof.
The Trustee and each of the holders of the Securities acknowledge that a release
of Collateral or Liens strictly in accordance with the terms of the Security
Documents and the terms hereof will not be deemed for any purpose to be an
impairment of the Security Interests in contravention of the terms of this
Indenture. To the extent applicable, without limitation, the Pledgors and each
obligor on the Securities shall cause TIA Section 314(d) relating to the release
of property or securities from the Liens hereof and of the Security Documents to
be complied with. Any certificate or opinion required by TIA Section 314(d) may
be made by an officer of the
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appropriate Pledgor, except in cases in which TIA Section 314(d) requires that
such certificate or opinion be made by an independent person.
SECTION 11.10. Suits To Protect the Collateral.
Subject to the provisions of the Security Documents and the
Intercreditor Agreements, the Trustee and the Collateral Agent shall have power
to institute and to maintain such suits and proceedings as they may deem
expedient to prevent any impairment of the Collateral by any acts which may be
unlawful or in violation of any of the Security Documents or this Indenture, and
such suits and proceedings as the Trustee and the Collateral Agent may deem
expedient to preserve or protect their interests and the interests of the
Trustee and the holders of the Securities in the Collateral (including power to
institute and maintain suits or proceedings to restrain the enforcement of or
compliance with any legislative or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the Security
Interests or be prejudicial to the interests of the holders of the Securities,
the Trustee or the Collateral Agent).
SECTION 11.11. Purchaser Protected.
In no event shall any purchaser in good faith of any property
purported to be released hereunder be bound to ascertain the authority of the
Trustee or Collateral Agent to execute the release or to inquire as to the
satisfaction of any conditions required by the provisions hereof for the
exercise of such authority or to see to the application of any consideration
given by such purchaser or other transferee; nor shall any purchaser or other
transferee of any property or rights permitted by this Article XI to be sold be
under obligation to ascertain or inquire into the authority of the Company or
any other Pledgor, as applicable, to make any such sale or other transfer.
SECTION 11.12. Powers Exercisable by Receiver or Trustee.
In case the Collateral shall be in the possession of a receiver or
trustee, lawfully appointed, the powers conferred in this Article XI upon the
Company or any other Pledgor, as applicable, with respect to the release, sale
or other disposition of such property may be exercised by such receiver or
trustee, and an instrument signed by such receiver or trustee shall be deemed
the equivalent of any similar instrument of the Company or any other Pledgor, as
applicable, or of any officer or officers thereof required by the provisions of
this Article XI.
SECTION 11.13. Disposition of Obligations Received.
All purchase money or other obligations received by the Collateral
Agent or the Trustee under this Article XI shall be held by the Collateral Agent
or the Trustee, as the case may be, as a part of the Collateral. Upon payment in
cash or Cash Equivalents by or on behalf of the Company or the obligor thereof
to the Collateral Agent or the Trustee of the entire unpaid principal amount of
any such obligation, to the extent not constituting Net Cash Proceeds from an
Asset Sale which may possibly be required, through the passage of time or
otherwise, to be used to purchase Securities pursuant to Section 4.13, the
Trustee shall promptly release and transfer, or cause the Collat-
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eral Agent to promptly release and transfer, such obligation and any mortgage
securing the same upon receipt of any documentation that the Trustee and
Collateral Agent may reasonably require. Any cash or Cash Equivalents received
by the Collateral Agent or the Trustee in respect of the principal of any such
obligations shall be held by the Collateral Agent or the Trustee, as the case
may be, as Trust Moneys under Article XII subject to application as therein
provided. Unless and until the Securities are accelerated, pursuant to Section
6.2, all interest and other income on any such obligations, when received by the
Collateral Agent or the Trustee, shall be paid to the Company from time to time
in accordance with Section 12.8. If the Securities have been accelerated
pursuant to Section 6.2, any such interest or other income not theretofore paid,
when collected by the Collateral Agent or the Trustee, shall be applied by the
Collateral Agent or the Trustee, as the case may be, in accordance with Section
6.10.
SECTION 11.14. Determinations Relating to Collateral.
In the event (i) the Collateral Agent or the Trustee shall receive
any written request from the Company or any other Pledgor under any Security
Document for consent or approval with respect to any matter or thing relating to
any Collateral or the Company's or any other Pledgor's obligations with respect
thereto or (ii) there shall be due to or from the Collateral Agent or the
Trustee under the provisions of any Security Document any performance or the
delivery of any instrument or (iii) the Collateral Agent or the Trustee shall
become aware of any nonperformance by the Company or any other Pledgor of any
covenant or any breach of any representation or warranty of the Company or any
other Pledgor set forth in any Security Document, then, in each such event, the
Collateral Agent and the Trustee shall be entitled to hire experts, consultants,
agents and attorneys to advise the Collateral Agent and the Trustee on the
manner in which the Collateral Agent or the Trustee, as the case may be, should
respond to such request or render any requested performance or response to such
nonperformance or breach (the reasonable expenses of which shall be reimbursed
to the Collateral Agent and the Trustee pursuant to Section 7.7). The Collateral
Agent shall be fully protected in the taking of any action recommended or
approved by any such expert, consultant, agent or attorney or agreed to by a
majority of holders of the Securities pursuant to Section 6.5.
SECTION 11.15. Renewal and Refunding.
Nothing in this Article XI shall prevent (a) the renewal or
extension, without impairment of the Security Interests, at the same or at a
lower or higher rate of interest, of any of the obligations or Indebtedness of
any Person included in the Collateral or (b) the issue in substitution for any
such obligations or Indebtedness of other obligations or Indebtedness of such
Person for equivalent amounts and of substantially equal or superior rank as to
security, if any; provided, however, that every such obligation or Indebtedness
as so renewed or extended shall continue to be subject to the Lien of the
Security Documents and every substituted obligation of Indebtedness and the
evidence thereof shall be deposited and pledged with the Collateral Agent.
SECTION 11.16. Release upon Termination of the Company's
Obligations.
In the event that the Company delivers an Officers' Certificate
certifying that its obligations under this Indenture have been satisfied and
discharged by complying with the provisions of
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Article VIII, the Collateral Agent and the Trustee shall (i) execute and deliver
such releases, termination statements and other instruments (in recordable form,
where appropriate) as the Company or any other Pledgor, as applicable, may
reasonably request evidencing the termination of the Security Interests created
by the Security Documents and (ii) not be deemed to hold the Security Interests
for the benefit of the Trustee and the holders of the Securities.
ARTICLE XII
APPLICATION OF TRUST MONEYS
SECTION 12.1. Trust Moneys.
All Trust Moneys shall be held by the Collateral Agent or the
Trustee, as the case may be, for the benefit of the Trustee and the holders of
Securities as a part of the Collateral in accordance with the provisions of this
Indenture and the Intercreditor Agreements and, upon any entry upon or sale or
other disposition of the Collateral or any part thereof pursuant to any of the
Security Documents, said Trust Moneys shall be applied in accordance with
Section 6.10 and the Intercreditor Agreements; but, prior to any such entry,
sale or other disposition, all or any part of the Trust Moneys may be withdrawn,
and shall be released, paid or applied by the Collateral Agent and the Trustee,
from time to time as provided in Sections 12.2 through 12.6, inclusive, and the
Intercreditor Agreements.
SECTION 12.2. Retirement of Securities.
The Trustee shall apply Trust Moneys from time to time to the
payment of the principal of and interest on any Securities, when due or to the
redemption thereof or the purchase thereof upon tender or in the open market or
at private sale or upon any exchange or in any one or more of such ways,
including, without limitation, pursuant to an Asset Sale Offer under Section
4.13 or a Change of Control Offer under Section 4.15 as the Company shall
request in writing, upon receipt by the Trustee of the following:
(a) Board Resolutions of the Company directing the application
pursuant to this Section 12.2 of a specified amount of Trust Moneys and,
in case any such moneys are to be applied to payment, designating the
Securities so to be paid and, in case any such moneys are to be applied to
the purchase of Securities, prescribing the method of purchase, the price
or prices to be paid and the maximum principal amount of Securities to be
purchased and any other provisions of this Indenture governing such
purchase;
(b) cash in the maximum amount of the accrued interest, if any,
required to be paid in connection with any such purchase, which cash shall
be held by the Trustee in trust for such purpose;
(c) an Officers' Certificate of the Company, dated not more than
five Business Days prior to the date of the relevant application stating
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(i) that no Default or Event of Default exists unless such
Default or Event of Default would be cured thereby; and
(ii) that all conditions precedent and covenants herein
provided for relating to such application of Trust Moneys have been
complied with; and
(d) an Opinion of Counsel stating that the documents and the cash or
Cash Equivalents, if any, which have been or are therewith delivered to
and deposited with the Trustee conform in all material respects to the
requirements of this Indenture and that all conditions precedent herein
provided for relating to such application of Trust Moneys have been
complied with.
Upon compliance with the foregoing provisions of this Section, the
Trustee shall apply Trust Moneys as directed and specified by such Board
Resolution, up to, but not exceeding, the principal amount of the Securities so
paid or purchased, using the cash deposited pursuant to paragraph (b) of this
Section 12.2, to the extent necessary, to pay any accrued interest required in
connection with such purchase.
A Board Resolution expressed to be irrevocable directing the
application of Trust Moneys under this Section 12.2 to the payment of the
principal of particular Securities shall for all purposes of this Indenture be
deemed the equivalent of the deposit of money with the Trustee in trust for such
purpose. Such Trust Moneys and any cash deposited with the Trustee pursuant to
paragraph (b) of this Section 12.2 for the payment of accrued interest shall
not, after compliance with the foregoing provisions of this Section, be deemed
to be part of the Collateral or Trust Moneys.
SECTION 12.3. Withdrawals of Insurance Proceeds and Condemnation
Awards.
To the extent that any Trust Moneys consist of either (a) the
proceeds of insurance upon any part of the Collateral or (b) any award for or
the proceeds of any of the Collateral being taken by eminent domain or sold
pursuant to the exercise by the United States of America or any state,
municipality or other governmental authority of any right which it may then have
to purchase, or to designate a purchaser or to order a sale of any part of the
Collateral, such Trust Moneys may be withdrawn by the Company or any Guarantor,
as applicable, and shall be paid by the Collateral Agent upon a request by the
Company or the applicable Guarantor by the proper officer or officers of the
Company or the applicable Guarantor to reimburse the Company or the applicable
Guarantor for expenditures made, or to pay costs incurred, by the Company or the
applicable Guarantor to repair, rebuild or replace the property destroyed,
damaged or taken, upon receipt by the Trustee and the Collateral Agent of the
following:
(a) an Officers' Certificate of the Company or the applicable
Guarantor dated not more than 30 days prior to the date of the application
for the withdrawal and payment of such Trust Moneys and (if required by
the TIA) signed also, in the case of the following clauses (i), (iv) and
(vi), by an Independent Appraiser or Independent Financial Advisor,
setting forth:
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(i) that expenditures have been made, or costs incurred, by
the Company or the applicable Guarantor in a specified amount for
the purpose of making certain repairs, rebuildings and replacements
of the Collateral, which shall be briefly described, and stating the
Fair Market Value thereof to the Company or the applicable Guarantor
at the date of the acquisition thereof by the Company or the
applicable Guarantor, except that it shall not be necessary under
this clause (i) to state the fair value of any such repairs,
rebuildings or replacements that are separately described pursuant
to clause (vi) of this paragraph (a) and whose Fair Market Value is
stated in the Independent Appraiser's or Independent Financial
Advisor's certificate under paragraph (b) of this Section 12.3;
(ii) that no part of such expenditures in any previous or then
pending application, has been or is being made the basis for the
withdrawal of any Trust Moneys pursuant to this Section 12.03;
(iii) that no part of such expenditures or costs has been paid
out of either the proceeds of insurance upon any part of the
Collateral not required to be paid to the Collateral Agent under the
relevant Mortgage or any award for or the proceeds from any of the
Collateral being taken not required to be paid to the Collateral
Agent under Section 11.05, as the case may be;
(iv) that there is no outstanding Indebtedness, other than
costs for which payment is being requested, known to the Company or
the applicable Guarantor, after due inquiry, for the purchase price
or construction of such repairs, rebuildings or replacements, or for
labor, wages, materials or supplies in connection with the making
thereof, which, if unpaid, might become the basis of a vendor's,
mechanics', laborers' materialmen's, statutory or other similar Lien
upon any of such repairs, rebuildings or replacement, which Lien
might, in the opinion of the signers of such certificate, materially
impair the security afforded by such repairs, rebuildings or
replacement;
(v) that the property to be repaired, rebuilt or replaced is
necessary or desirable in the conduct of the Company's or the
applicable Guarantor's business;
(vi) whether any part of such repairs, rebuildings or
replacements within six months before the date of acquisition
thereof by the Company or the applicable Guarantor, has been used or
operated by others than the Company or the applicable Guarantor in a
business similar to that in which such property has been or is to be
used or operated by the Company or the applicable Guarantor, and
whether the Fair Market Value to the Company or the applicable
Guarantor, at the date of such acquisition, of such part of such
repairs, rebuildings or replacement is at least $25,000 and 1% of
the aggregate principal amount of the outstanding Securities; and,
if all of such facts are present, such part of said repairs,
rebuildings or replacements shall be separately described, and it
shall be stated that an Independent Appraiser's or Independent
Financial Advisor's certificate as to the Fair Market Value to the
Company or the ap-
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plicable Guarantor of such separately described repairs, rebuildings
or replacements will be furnished under paragraph (b) of this
Section 12.3;
(vii) that no Default or Event of Default shall have occurred
and be continuing; and
(viii) that all conditions precedent herein provided for
relating to such withdrawal and payment have been complied with.
(b) In case any part of such repairs, rebuildings or replacements is
separately described pursuant to the foregoing clause (vi) of paragraph
(a) of this Section 12.03, a certificate of an Independent Appraiser or
Independent Financial Advisor (if required by the TIA) stating the Fair
Market Value to the Company or the applicable Guarantor, in such
Independent Appraiser's or Independent Financial Advisor's opinion, of
such separately described repairs, rebuildings or replacements at the date
of the acquisition thereof by the Company or the applicable Guarantor.
(c) (i) In case any part of such repairs, rebuildings or
replacements constitutes Real Property:
(1) with respect to any such repairs, rebuildings or
replacements that are not encompassed within or are not erected upon
Mortgaged Property, an instrument or instruments in recordable form
sufficient for the Lien of this Indenture and any Mortgage to cover
such repairs, rebuildings or replacements which, if such repairs,
rebuildings or replacements include leasehold or easement interests,
shall include normal and customary provisions with respect thereto
and evidence of the filing of all such documents as may be necessary
to perfect such Liens;
(2) a policy of title insurance (or a commitment to issue
title insurance) insuring that the Lien of this Indenture and any
Mortgage (other than the Mortgage executed and delivered in respect
of the Mortgaged Property located in Canada) constitutes a direct
and valid and perfected mortgage Lien on such repairs, rebuildings
or replacements (subject to no Prior Liens other than Prior Liens
which were permitted with respect to the Collateral repaired,
rebuilt or replaced) in an aggregate amount equal to the Fair Market
Value of such repairs, rebuildings or replacements, together with
such endorsements and other opinions as are contemplated by Section
11.2(b)(ii), or with respect to any such repairs, rebuildings or
replacements that are encompassed within or are erected upon
Mortgaged Property (other than Mortgaged Property located in Canada)
an endorsement to the title insurance policy issued pursuant to
Section 11.02(b)(ii) regarding the affected Mortgaged Property
confirming that such repairs, rebuildings or replacements are
encumbered by the Lien of the applicable Mortgage (subject to no
Prior Liens other than Prior Liens which were permitted under the
Mortgage with respect to the Collateral repaired, rebuilt or
replaced) or, with respect to any such repairs, rebuildings or
replacements that are encompassed
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within or erected upon Mortgaged Property located in Canada, a title
Opinion of Counsel in form and substance satisfactory to the
Collateral Agent;
(3) in the event such repairs, rebuildings or replacements
have a Fair Market Value in excess of $250,000, a Survey with
respect thereto; and
(4) evidence of payment or a closing statement indicating
payments to be made by the Company or the applicable Guarantor of
all title premiums, recording charges, transfer taxes and other
costs and expenses, including reasonable legal fees and
disbursements of counsel for the Collateral Agent (and any local
counsel), that may be incurred to validly and effectively subject
such repairs, rebuildings or replacements to the Lien of any
applicable Security Document to perfect such Lien; and
(ii) in case any part of such repairs, rebuildings or replacements
constitutes personal property interests:
(1) an instrument in recordable form sufficient for the Lien
of any applicable Security Document to cover such repairs,
rebuildings or replacements; and
(2) evidence of payment or a closing statement indicating
payments to be made by the Company or the applicable Guarantor of
all filing fees, recording charges, transfer taxes and other costs
and expenses, including reasonable legal fees and disbursements of
counsel for the Collateral Agent (and any local counsel), that may
be incurred to validly and effectively subject such repairs,
rebuildings or replacements to the Lien of any Security Document.
(d) An Opinion of Counsel substantially stating:
(i) that the instruments that have been or are therewith
delivered to the Collateral Agent conform in all material respects
to the requirements of this Indenture and any other applicable
Security Document, and that, upon the basis of such request of the
Company or the applicable Guarantor and the accompanying documents
specified in this Section 12.3, all conditions precedent herein
provided for relating to such withdrawal and payment have been
complied with, and the Trust Moneys whose withdrawal is then
requested may be lawfully paid over under this Section 12.3; and
(ii) that all of the Company's or the applicable Guarantor's
right, title and interest in and to said repairs, rebuildings or
replacements, or combination thereof, are then subject to the Lien
of any of the Security Documents.
Upon compliance with the foregoing provisions of this Section 12.3,
the Trustee shall cause the Collateral Agent to pay on the written request of
the Company an amount of Trust Moneys of the character aforesaid equal to the
amount of the expenditures or costs stated in the Officers' Certificate required
by clause (i) of paragraph (a) of this Section 12.3, or the Fair Market Value to
the Company of such repairs, rebuildings and replacements stated in such
Officers' Certificate (and in
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such Independent Appraiser's or Independent Financial Advisor's certificate, if
required by paragraph (b) of this Section 12.3), whichever is less; provided,
however, that notwithstanding the above, so long as no Default or Event of
Default shall have occurred and be continuing, in the event that any insurance
proceeds or award for such property or proceeds of such sale does not exceed the
lesser of $25,000 or 1% of the principal amount of the outstanding Securities,
and, in the good faith estimate of the Company or the applicable Guarantor, such
destruction or damage resulting in such insurance proceeds or such taking or
sale resulting in such award does not detrimentally affect the value or use of
the applicable Collateral in any material respect, upon delivery to the Trustee
and the Collateral Agent of an Officers' Certificate of the Company or the
applicable Guarantor to such effect, the Trustee shall cause the Collateral
Agent to release to the Company or the applicable Guarantor such insurance
proceeds or award for such property or proceeds of such sale, free of the Lien
hereof and of the applicable Security Documents; the Company shall take all
steps necessary to notify the condemning authority of such assignment.
SECTION 12.4. Withdrawal of Trust Moneys for Reinvestment.
To the extent that any Trust Moneys consist of Net Cash Proceeds
received by the Collateral Agent pursuant to Section 4.13 and the Company or any
Guarantor, as applicable, intends to reinvest such Net Cash Proceeds in a manner
that would constitute a Permitted Related Acquisition, such Trust Moneys may be
withdrawn by the Company or any Guarantor, as applicable, and shall be paid by
the Collateral Agent upon a written request by the Company by the proper officer
or officers of the Company or any Guarantor, as applicable, to reimburse the
Company or any Guarantor, as applicable, for expenditures made or to pay costs
incurred by the Company or any Guarantor, as applicable, in connection with such
Permitted Related Acquisition, upon receipt by the Trustee and the Collateral
Agent of the following:
(a) An Officer's Certificate of the Company, dated not more than 30
days prior to the date of the application for the withdrawal and payment
of such Trust Moneys, stating in substance as follows:
(i) that the Trust Moneys to be released constitute Net Cash
Proceeds from an Asset Sale;
(ii) setting forth with particularity the investment to be
made with such Trust Moneys;
(iii) that the release of the Trust Moneys complies with all
applicable terms of this Indenture;
(iv) that there is no Default or Event of Default (both before
and after giving effect to the Permitted Related Acquisition)
continuing; and
(v) that all conditions precedent herein provided for relating
to the release of the Trust Moneys in question have been provided.
<PAGE>
-112-
(b) If the Permitted Related Acquisition to be made is an investment
in Real Property, the Company shall also deliver to the Trustee and the
Collateral Agent:
(i) an instrument or instruments in recordable form sufficient
for the Lien of any Mortgage to cover such Real Property which, if
the Real Property is a leasehold or easement interest, shall include
normal and customary provisions with respect thereto and evidence of
the filing of all such financing statements and other instruments as
may be necessary to perfect such Liens;
(ii) a policy of title insurance (or a commitment to issue
title insurance) insuring that the Lien of this Indenture and any
Mortgage (other than the Mortgage executed and delivered in respect
of the Mortgaged Property located in Canada) constitutes a direct
and valid and perfected mortgage Lien on such Real Property (subject
to no Prior Liens other than Prior Liens which were permitted with
respect to the Collateral which was the subject of the Asset Sale)
in an aggregate amount equal to the Fair Market Value of the Real
Property, together with an Officers' Certificate stating that any
specific exceptions to such title insurance are Permitted Collateral
Liens, together with such endorsements and other opinions as are
contemplated by Section 11.2(b)(ii) or, if such Real Property shall
be located in Canada, a title Opinion of Counsel in form and
substance satisfactory to the Collateral Agent; and
(iii) evidence of payment or a closing statement indicating
payments to be made by the Company or the appropriate Guarantor of
all title premiums, recording charges, transfer taxes and other
costs and expenses, including reasonable legal fees and
disbursements of one counsel for the Trustee (and any local
counsel), that may be incurred to validly and effectively subject
the Real Property to the Lien of any applicable Security Document to
perfect such Lien.
(c) if the Permitted Related Acquisition is a personal property
interest, the Company or the appropriate Guarantor shall deliver to the
Trustee and the Collateral Agent:
(i) an instrument in recordable form, if necessary, sufficient
for the Lien of any applicable Security Document to cover such
personal property interest; and
(ii) evidence of payment or a closing statement indicating
payments to be made by the Company or the appropriate Guarantor of
all filing fees, recording charges, transfer taxes and other costs
and expenses, including reasonable legal fees and disbursements of
one counsel for the Trustee (and any local counsel), that may be
incurred to validly and effectively subject the Permitted Related
Acquisition to the Lien of any Security Document.
(d) An Opinion of Counsel stating that the documents that have been
or are therewith delivered to the Trustee and the Collateral Agent conform
in all material respects to the requirements of this Indenture and that
all conditions precedent herein relating to such application of Trust
Moneys have been complied with.
<PAGE>
-113-
SECTION 12.5. Powers Exercisable Notwithstanding Event of Default.
In case an Event of Default shall have occurred and shall be
continuing, the Company or any Guarantor, as applicable, while in possession of
Collateral (other than cash, Cash Equivalents, securities and other personal
property held by, or required to be deposited or pledged with, the Collateral
Agent or the Trustee hereunder or under the Security Documents or with the
trustee, mortgagee or other holder of a Prior Lien), may do any of the things
enumerated in Sections 12.2, 12.3 and 12.4 if the holders of a majority in
aggregate principal amount of the Securities outstanding, by appropriate action
of such holders, shall consent to such action, in which event any certificate
filed under any of such Sections shall omit the statement to the effect that no
Event of Default has occurred and is continuing. This Section 12.05 shall not
apply, however, during the continuance of an Event of Default of the type
specified in Section 6.1(a) or (b).
SECTION 12.6. Powers Exercisable by Collateral Agent or Receiver.
In case the Collateral (other than any cash, Cash Equivalents,
securities and other personal property held by, or required to be deposited or
pledged with, the Collateral Agent or the Trustee hereunder or under the
Security Documents or with the trustee, mortgagee or other holder of a Prior
Lien) shall be in the possession of a receiver or trustee lawfully appointed,
the powers hereinbefore in this Article XII conferred upon the Company and any
Guarantor, as applicable, with respect to the withdrawal or application of Trust
Moneys may be exercised by such receiver or trustee, in which case a certificate
signed by such receiver or trustee shall be deemed the equivalent of any
Officers' Certificate required by this Article XII. If the Collateral Agent or
the Trustee shall be in possession of any of the Collateral hereunder or under
any of the Security Documents, such powers may be exercised by the Collateral
Agent or the Trustee, in its discretion.
SECTION 12.7. Disposition of Securities Retired.
All Securities received by the Trustee and for whose purchase Trust
Moneys are applied under this Article XII, if not otherwise cancelled, shall be
promptly delivered to the Trustee for cancellation and destruction unless the
Trustee shall be otherwise directed in writing by the Company. Upon destruction
of any Securities, the Trustee shall promptly issue a certificate of destruction
to the Company.
SECTION 12.8. Investment of Trust Moneys.
All or any part of any Trust Moneys held by the Collateral Agent or
the Trustee hereunder (except such as may be held for the account of any
particular Securities) shall from time to time be invested or reinvested by the
Collateral Agent or the Trustee in any Cash Equivalents pursuant to the written
direction of the Company which shall specify the Cash Equivalents in which such
Trust Moneys shall be invested. Unless an Event of Default occurs and is
continuing, any interest on such Cash Equivalents (in excess of any accrued
interest paid at the time of purchase) which may be received by the Collateral
Agent or the Trustee shall be forthwith paid promptly to the Company. Such Cash
Equivalents shall be held by the Collateral Agent or the Trustee, as the case
may be, as a
<PAGE>
-114-
part of the Collateral, subject to the same provisions hereof as the cash used
by it to purchase such Cash Equivalents.
Neither the Collateral Agent nor the Trustee shall be liable or
responsible for any loss resulting from such investments or sales except only
for its own grossly negligent action, its own grossly negligent failure to act
or its own willful misconduct in complying with this Section 12.8.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
SECTION 13.2. Notices.
Any notice or communication shall be sufficiently given if in
writing and delivered in Person or mailed by first-class mail addressed as
follows:
(a) if to the Issuers or the Guarantors:
c/o REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
3770 Embassy Parkway
Akron, OH 44333
Attention: Vice President-Finance
(b) if to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, NY 10036
Re: Republic Technologies International, LLC
Attention: Cynthia Chaney
(c) if to the Collateral Agent:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, NY 10036
Re: Republic Technologies International, LLC
Attention: Cynthia Chaney
<PAGE>
-115-
Each of the Company, the Guarantors, the Trustee and the Collateral
Agent by notice to the other may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication mailed to a Securityholder, including
any notice delivered in connection with TIA Section 310(b), TIA Section 313(c),
TIA Section 314(a) and TIA Section 315(b), shall be mailed to him, first-class
postage prepaid, at his address as it appears on the registration books of the
Registrar and shall be sufficiently given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. Except for a notice to the Trustee or the Collateral Agent,
which is deemed given only when received, if a notice or communication is mailed
in the manner provided above, it is duly given, whether or not the addressee
receives it.
SECTION 13.3. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Guarantors the Trustee, the Registrar, the
Collateral Agent and any other Person shall have the protection of TIA Section
312(c).
SECTION 13.4. Certificate and Opinion of Counsel as to Conditions
Precedent.
Upon any request or application by the Issuers to the Trustee or the
Collateral Agent to take any action under this Indenture, the Issuers shall
furnish to the Trustee or the Collateral Agent, as applicable, at the request of
the Trustee or the Collateral Agent, as applicable, (a) an Officers' Certificate
in form and substance satisfactory to the Trustee stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with, (b) an Opinion of
Counsel in form and substance satisfactory to the Trustee or the Collateral
Agent, as applicable, stating that, in the opinion of counsel, all such
conditions have been complied with and (c) where applicable, a certificate or
opinion by an independent certified public accountant satisfactory to the
Trustee or the Collateral Agent, as applicable, that complies with TIA Section
314(c).
SECTION 13.5. Statements Required in Certificate and Opinion of
Counsel.
Each certificate and Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate has read
such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate are based; and
<PAGE>
-116-
(c) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 13.6. Rules by Trustee, Paying Agent, Registrar, Collateral
Agent.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Securityholders.
The Paying Agent, Collateral Agent or Registrar may make reasonable rules for
its functions.
SECTION 13.7. Legal Holidays.
If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 13.8. Governing Law.
The internal laws of the State of New York shall govern this
Indenture, the Securities and the Guarantee.
SECTION 13.9. No Recourse Against Others.
A trustee, director, officer, employee, stockholder or beneficiary,
as such, of the Issuers or the Guarantors shall not have any liability for any
obligations of the Issuers or the Guarantors under the Securities or this
Indenture or the Guarantees or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Securityholder by accepting a
Security waives and releases all such liability.
SECTION 13.10. Successors.
All agreements of the Issuers and the Guarantors in this Indenture
and the Securities and the Guarantees shall bind their respective successors.
All agreements of the Trustee and the Collateral Agent in this Indenture shall
bind its successor.
SECTION 13.11. Duplicate Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.12. Severability.
In case any provision in this Indenture or in the Securities or the
Guarantees shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby, and a Holder shall have no claim therefor against any party
hereto.
<PAGE>
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SECTION 13.13. Table of Contents, Headings, Etc.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, and are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC,
as Issuer
By: ______________________________________
Name:
Title:
RTI CAPITAL CORP.,
as Issuer
By: ______________________________________
Name:
Title:
REPUBLIC TECHNOLOGIES INTERNATIONAL
HOLDINGS, LLC,
as Guarantor
By: ______________________________________
Name:
Title:
S-1
<PAGE>
NIMISHILLEN & TUSCARAWAS, LLC,
as Guarantor
By: ______________________________________
Name:
Title:
BLISS & LAUGHLIN, LLC,
as Guarantor
By: ______________________________________
Name:
Title:
CANADIAN DRAWN STEEL COMPANY INC.,
as Guarantor
By: ______________________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By: ______________________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Collateral Agent
By: ______________________________________
Name:
Title:
S-2
<PAGE>
EXHIBIT A-1
[FORM OF SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY OTHER
STATE OR JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR ANY
AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED AND REMAINS EFFECTIVE UNDER THE SECURITIES ACT,
(C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF, AND
OTHERWISE IN COMPLIANCE WITH, REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS' AND THE TRUSTEE'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO THE ISSUERS AND THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
A-1-1
<PAGE>
THE NOTE COMPRISING A PART OF THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE
DISCOUNT WITHIN THE MEANING OF SECTION 1273(A) OF THE INTERNAL REVENUE CODE OF
1986. THIS ISSUE PRICE IS $878.98 FOR EACH $1,000 OF STATED PRINCIPAL AMOUNT.
THE ORIGINAL ISSUE DISCOUNT IS $121.02 FOR EACH $1,000 OF STATED PRINCIPAL
AMOUNT. THE ISSUE DATE IS AUGUST 13, 1999. THE YIELD TO MATURITY IS 16.25%
COMPOUNDED SEMIANNUALLY. ORIGINAL ISSUE DISCOUNT WILL BE ALLOCATED BASED ON
ACCRUAL PERIODS ENDING ON EACH DATE ON WHICH AN INTEREST PAYMENT IS DUE AND THE
360 DAYS PER YEAR CONVENTION.
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
RTI CAPITAL CORP.
No. $
CUSIP No.
13 3/4% SENIOR SECURED NOTE DUE 2009
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC and RTI CAPITAL CORP.
jointly and severally promise to pay Cede & Co. or registered assigns the
principal sum of Dollars on July 15, 2009.
Interest Payment Dates: January 15 and July 15 of each year and at maturity
Record Dates: January 1 and July 1 of each year and 15 days prior to maturity
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By: ____________________________________
By: ____________________________________
RTI CAPITAL CORP.
By: ____________________________________
By: ____________________________________
Dated:
A-1-2
<PAGE>
Certificate of Authentication
This is one of the 13 3/4% Senior Secured Notes Due 2009 referred to
in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By: ____________________________________
Authorized Signatory
A-1-3
<PAGE>
(REVERSE OF SECURITY)
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
RTI CAPITAL CORP.
13 3/4% SENIOR SECURED NOTE DUE 2009, SERIES A
1. Interest. REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a Delaware
limited liability company (the "Company"), and RTI CAPITAL CORP., a Delaware
corporation (together with the Company, the "Issuers"), jointly and severally
promise to pay, until the principal hereof is paid or made available for
payment, interest on the principal amount set forth on the reverse side hereof
at a rate of 13.750% per annum (the "Initial Interest Rate"). Interest on this
Security will accrue from and including the most recent date to which interest
has been paid or, if no interest has been paid, from and including the date of
issuance through but excluding the date on which interest is paid. Interest
shall be payable in arrears on each January 15, July 15 and at the stated
maturity, commencing January 15, 2000. Interest will be computed on the basis of
a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by this
Security plus 2% per annum and on overdue installments of interest (without
regard to any applicable grace periods) to the extent lawful.
2. Registration Rights. Pursuant to the Notes Exchange and
Registration Rights Agreement by and among the Issuers, the Guarantors and the
Initial Purchasers, the Issuers will be obligated to consummate an exchange
offer pursuant to which the Holder of this Security shall have the right to
exchange this Security for 13 3/4% Senior Secured Notes Due 2009, Series B, of
the Issuers (herein called the "Exchange Securities"), which have been
registered under the Securities Act, in like principal amount and having
identical terms as the Securities (except for this paragraph and terms related
to transfer restrictions no longer applicable by virtue of such registration and
terms relating to the payment of liquidated damages). The Holders of Securities
shall be entitled to receive certain payments of liquidated damages in the event
such exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Notes Exchange and
Registration Rights Agreement.
3. Method of Payment. The Issuers will pay interest on the
Securities to the Persons who are registered Holders at the close of business on
the January 1 or July 1 next preceding the interest payment date and the date of
maturity. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Issuers will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Interest may be paid by wire transfer or check mailed to the
person entitled thereto as shown on the Registrar for the Securities.
4. Paying Agent and Registrar. Initially, United States Trust
Company of New York (the "Trustee") will act as Paying Agent and Registrar. The
Issuers may change any Paying
A-1-4
<PAGE>
Agent, Registrar or co-Registrar without notice. Neither of the Issuers nor any
of their respective Affiliates may act as Paying Agent, Registrar or
co-Registrar.
5. Indenture and Guarantees. The Issuers have issued the Securities
under an Indenture dated as of August 13, 1999 (the "Indenture") among the
Issuers, the Guarantors, the Trustee and the Collateral Agent. This Security is
one of an issue of 13 3/4% Senior Secured Notes Due 2009 of the Issuers issued,
or to be issued, under the Indenture. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb), as amended
from time to time ("TIA"). The Securities are subject to all such terms, and
Holders are referred to the Indenture and the TIA for a statement of them.
Capitalized and certain other terms used herein and not otherwise defined have
the meanings set forth in the Indenture. The Securities are senior secured
obligations of the Issuers limited in aggregate principal amount to
$425,000,000. Payment on each Security is guaranteed on a senior secured basis
by the Guarantors in accordance with the terms of Article X of the Indenture.
The Indenture limits, among other things, the incurrence of Indebtedness by the
Issuers and the Restricted Subsidiaries; the creation of Liens by the Issuers
and the Restricted Subsidiaries; purchases, redemptions, and other acquisitions
or retirements of Capital Stock of the Company; transactions by the Company and
the Restricted Subsidiaries with their respective Affiliates; and the ability of
the Company or any of the Restricted Subsidiaries to merge with or into another
entity. The limitations are subject to a number of important qualifications and
exceptions.
6. Redemption.
(a) The Securities will be redeemable, in whole or in part, at the
option of the Issuers, at any time on or after July 15, 2004, at the redemption
prices (expressed as percentages of principal amount) set forth below, plus
accrued and unpaid interest and liquidated damages, if any, to the redemption
date, if redeemed during the 12-month period beginning on of the years indicated
below:
Year Percentage
---- ----------
July 15, 2004.......................... 106.875%
July 15, 2005.......................... 105.156%
July 15, 2006.......................... 103.438%
July 15, 2007.......................... 101.719%
July 15, 2008 and thereafter........... 100.000%
(b) In addition, at any time and from time to time prior to July 15,
2002, the Issuers may, at their option, following one or more Public Equity
Offerings redeem up to an aggregate of 35% of the principal amount of Securities
originally issued from the Holders, on a pro rata basis, at a redemption price
equal to 113.750% of the principal amount thereof, plus accrued and unpaid
interest and liquidated damages, if any, to the date of redemption; provided at
least 65% aggregate principal amount of Securities would remain outstanding
immediately after giving effect to any such redemption; provided, further, that
if the Public Equity Offering is by Parent Guarantor, RTI or any other direct or
indirect parent company of the Company, the net proceeds thereof shall have been
contributed to the Company or used to buy Capital Stock (other than Disqualified
Capital Stock) of the Company
A-1-5
<PAGE>
on or prior to the date of redemption. Notice of any such redemption must be
mailed to Holders no later than 60 days after the applicable Public Equity
Offering.
7. Notice of Redemption. Notice of redemption will be mailed by
first-class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Securities to be redeemed at his registered
address. On and after the Redemption Date, unless the Issuers default in making
the redemption payment, interest ceases to accrue on the Securities or portions
thereof called for redemption.
8. Offers To Purchase. Sections 4.13 and 4.15 of the Indenture
provide that after an Asset Sale or upon the occurrence of a Change of Control,
subject to certain exceptions contained therein, the Issuers shall make an offer
to purchase certain amounts of Securities in accordance with the procedures set
forth in the Indenture.
9. Security Documents. In order to secure the due and punctual
payment of the principal of and interest on the Securities and all other amounts
payable by the Issuers under the Indenture and the Securities when and as the
same shall be due and payable, whether at maturity, by acceleration or
otherwise, according to the terms of the Securities and the Indenture, the
Pledgors have granted and, subject to the terms of the Indenture, will grant
Liens on the Collateral to the Collateral Agent for the benefit of the Secured
Creditors pursuant to the Indenture and the Security Documents. The Securities
will be secured by Liens on the Collateral that are subject only to certain
permitted encumbrances, which shall include, among other things, an equal and
ratable Lien on the Pledged Securities to secure Indebtedness under the New
Credit Facility.
Each Holder, by accepting a Security, agrees to all of the terms and
provisions of the Security Documents, as the same may be amended from time to
time pursuant to the respective provisions thereof and the Indenture.
The Trustee and each Holder acknowledge that a release of any of the
Collateral or any Lien strictly in accordance with the terms and provisions of
any of the Security Documents and the terms and provisions of the Indenture will
not be deemed for any purpose to be an impairment of the security under the
Indenture.
10. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Securities in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay to it any
taxes and fees required by law or permitted by the Indenture. The Registrar need
not transfer or exchange any Securities or portion of a Security selected for
redemption, or transfer or exchange any Securities for a period of 15 days
before a selection of Securities to be redeemed.
11. Persons Deemed Owners. The registered Holder of a Security may
be treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal, premium,
if any, or interest remains unclaimed for two years, the Trustee or Paying Agent
will pay the money back to
A-1-6
<PAGE>
the Issuers at their request. After that, Holders entitled to the money must
look to the Issuers for payment as general creditors unless an "abandoned
property" law designates another Person.
13. Amendment, Supplement, Waiver. From time to time, the Issuers
and the Guarantors, when authorized by Board Resolutions of their respective
Boards of Directors, and the Trustee may, without the consent of the Holders of
any outstanding Securities, amend, waive or supplement (or, if applicable,
authorize the Collateral Agent to amend, waive or supplement) the Indenture, the
Securities, the Guarantees, the Security Documents and/or the Intercreditor
Agreements for certain specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act, releasing certain
Collateral described in the Indenture, acquiring a Lien on certain new property
described in the Indenture or making any other change that does not adversely
affect the rights of any holder of Securities. Other amendments and
modifications of the Indenture, the Securities, the Guarantees, the Security
Documents and the Intercreditor Agreements may be made by the Issuers, the
Guarantors, the Trustee and, if applicable, the Collateral Agent with the
consent of the Holders of not less than a majority of the aggregate principal
amount of the outstanding Securities, subject to certain exceptions requiring
the consent of the Holders of the particular Securities to be affected and
certain exceptions requiring the consent of the Holders of 95% of the aggregate
principal amount of outstanding Securities.
14. Successor Corporation. When a successor corporation assumes all
the obligations of its predecessor under the Securities and the Indenture and
the transaction complies with the terms of Article V of the Indenture, the
predecessor corporation will be released from those obligations.
15. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default with respect to an Issuer or any
Guarantor specified in clauses (k) and (l) of Section 6.1 of the Indenture)
occurs and is continuing, then the Holders of at least 25% in aggregate
principal amount of the outstanding Securities may, by written notice, and the
Trustee upon the request of the Holders of not less than 25% in aggregate
principal amount of the outstanding Securities shall, declare the principal of,
premium, if any, and accrued and unpaid interest on, all the Securities to be
due and payable immediately. Upon any such declaration such principal shall
become due and payable immediately. If an Event of Default specified in clause
(k) or (l) of Section 6.1 of the Indenture with respect to an Issuer or any
Guarantor occurs and is continuing, then the principal of, premium, if any, and
accrued and unpaid interest on, all the Securities shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Holder.
After a declaration of acceleration under Section 6.2 of the
Indenture, but before a judgment or decree for payment of the money due has been
obtained by the Trustee and before any foreclosure (whether pursuant to judicial
proceedings or otherwise), or the taking of ownership in lieu of foreclosure,
upon any Collateral by the Collateral Agent (on behalf of the Trustee or
Holders), by the Trustee or at the direction of the Holders, the Holders of not
less than a majority in aggregate principal amount of outstanding Securities, by
written notice to the Issuers and the Trustee, may rescind such declaration if
(a) the Issuers have paid or deposited with the Trustee or the Collateral Agent
a sum sufficient to pay (i) all sums paid or advanced by the Trustee or the
Collateral Agent un-
A-1-7
<PAGE>
der the Indenture, the Security Documents and the Intercreditor Agreements and
the reasonable compensation, expenses, disbursements and advances of the Trustee
and the Collateral Agent and their respective agents and counsel, (ii) all
overdue interest on all Securities, (iii) the principal of and premium, if any,
on any Securities which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Securities, and (iv)
to the extent that payment of such interest is lawful, interest upon overdue
interest and overdue principal at the rate borne by the Securities which has
become due otherwise than by such declaration of acceleration; (b) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction; and (c) all Events of Default, other than the
non-payment of principal of, premium, if any, and interest on the Securities
that have become due solely by such declaration of acceleration, have been cured
or waived. Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture, the Guarantees, the Security Documents or the
Securities. Subject to certain limitations, Holders of at least a majority in
aggregate principal amount of the then outstanding Securities may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing default (except a default in payment of
principal, premium, if any, or interest) if it determines that withholding
notice is in their interests. The Issuers must furnish an annual compliance
certificate to the Trustee.
By acceptance of the benefits of the Indenture and the Security
Documents each Holder confirms that the Collateral Agent is authorized to
execute and deliver and perform its obligations under the Intercreditor
Agreements and the remedies set forth in the Indenture shall be subject to the
terms of such Intercreditor Agreements.
16. Trustee Dealings with Issuers. Subject to certain limitations
imposed by the TIA, the Trustee, in its individual or any other capacity, may
make loans to, accept deposits from, and perform services for the Issuers or
their respective Affiliates, and may otherwise deal with the Issuers or their
respective Affiliates, as if it were not Trustee.
17. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of an Issuer or a Guarantor shall not have any liability
for any obligations of an Issuer or a Guarantor under the Securities or the
Indenture or the Guarantees or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Securities.
18. Discharge. The Issuers' and each Guarantor's obligations
pursuant to the Indenture and the Guarantees will be discharged, except for
obligations pursuant to certain sections thereof, subject to the terms of the
Indenture, upon the payment of all the Securities or upon the irrevocable
deposit with the Trustee of money and/or U.S. Government Obligations sufficient
to pay when due principal of, premium, if any, and interest on the Securities to
maturity or redemption, as the case may be.
19. Definitions. Capitalized terms used but not defined herein have
the meanings ascribed to them in the Indenture.
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<PAGE>
20. Authentication. This Security shall not be valid until the
Trustee signs the certificate of authentication on the other side of this
Security.
21. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
22. CUSIP. Pursuant to the recommendations promulgated by the
Committee on Uniform Security Identification Procedures the Company has caused
CUSIP numbers to be printed on the Securities and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
A-1-9
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
________________________________________________________________________________
(Insert assignee's social security or tax ID number)____________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code) and irrevocably appoint
________________________________________________________________________________
agent to transfer this Security on the books of the Issuers. The agent may
substitute another to act for such agent.
In connection with any transfer of this Security occurring prior to
the date which is the earlier of (i) the date of the declaration by the
Securities and Exchange Commission of the effectiveness of a registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
covering resales of this Security (which effectiveness shall not have been
suspended or terminated at the date of the transfer) and (ii) the Resale
Restriction Termination Date, the undersigned confirms that it has not utilized
any general solicitation or general advertising in connection with the transfer
and that:
[Check One]
[ ] (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act provided by
Rule 144A thereunder.
or
[ ] (b) this Security is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Security and the Indenture.
If none of the foregoing boxes is checked, the Trustee shall not be obligated to
register this Security in the name of any person other than the Holder hereof
unless and until the conditions to any such transfer of registration set forth
herein, in the applicable sections of the Indenture shall have been satisfied.
A-1-10
<PAGE>
________________________________________________________________________________
Date:____________________ Your signature:_____________________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature Guarantee:____________________________________________________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuers as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:__________________ _____________________________________________
NOTICE: To be executed by
an executive officer
A-1-11
<PAGE>
EXHIBIT A-2
THE NOTE COMPRISING A PART OF THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE
DISCOUNT WITHIN THE MEANING OF SECTION 1273(A) OF THE INTERNAL REVENUE CODE OF
1986. THIS ISSUE PRICE IS $878.98 FOR EACH $1,000 OF STATED PRINCIPAL AMOUNT.
THE ORIGINAL ISSUE DISCOUNT IS $121.02 FOR EACH $1,000 OF STATED PRINCIPAL
AMOUNT. THE ISSUE DATE IS AUGUST 13, 1999. THE YIELD TO MATURITY IS 16.25%
COMPOUNDED SEMIANNUALLY. ORIGINAL ISSUE DISCOUNT WILL BE ALLOCATED BASED ON
ACCRUAL PERIODS ENDING ON EACH DATE ON WHICH AN INTEREST PAYMENT IS DUE AND THE
360 DAYS PER YEAR CONVENTION.
[FORM OF SECURITY]
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
RTI CAPITAL CORP.
No. $
CUSIP No.
13 3/4% SENIOR SECURED NOTE DUE 2009
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC and RTI CAPITAL CORP.
promise to pay Cede & Co. or registered assigns the principal sum of
Dollars on July 15, 2009.
Interest Payment Dates: January 15 and July 15 of each year and at maturity
Record Dates: January 1 and July 1 of each year and 15 days prior to maturity
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By: ____________________________________
By: ____________________________________
RTI CAPITAL CORP.
By: ____________________________________
A-2-1
<PAGE>
By: ____________________________________
Dated:
A-2-2
<PAGE>
Certificate of Authentication
This is one of the 13 3/4% Senior Secured Notes Due 2009 referred to
in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By: ____________________________________
Authorized Signatory
A-2-3
<PAGE>
(REVERSE OF SECURITY)
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
RTI CAPITAL CORP.
13 3/4% SENIOR SECURED NOTE DUE 2009, SERIES B
1. Interest. REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a Delaware
limited liability company (the "Company"), and RTI CAPITAL CORP., a Delaware
corporation (together with the Company, the "Issuers"), jointly and severally
promise to pay, until the principal hereof is paid or made available for
payment, interest on the principal amount set forth on the reverse side hereof
at a rate of 13.750% per annum (the "Initial Interest Rate"). Interest on this
Security will accrue from and including the most recent date to which interest
has been paid or, if no interest has been paid, from and including the date of
issuance through but excluding the date on which interest is paid. Interest
shall be payable in arrears on each January 15, each July 15, and at the stated
maturity, commencing January 15, 2000. Interest will be computed on the basis of
a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by this
Security plus 2% per annum and on overdue installments of interest (without
regard to any applicable grace periods) to the extent lawful.
2. Method of Payment. The Issuers will pay interest on the
Securities to the Persons who are registered Holders at the close of business on
the January 1 or July 1 next preceding the interest payment date and the date of
maturity. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Issuers will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Interest may be paid by wire transfer or check mailed to the
person entitled thereto as shown on the Registrar for the Securities.
3. Paying Agent and Registrar. Initially, United States Trust
Company of New York (the "Trustee") will act as Paying Agent and Registrar. The
Issuers may change any Paying Agent, Registrar or co-Registrar without notice.
Neither of the Issuers nor any of their respective Affiliates may act as Paying
Agent, Registrar or co-Registrar.
4. Indenture and Guarantees. The Issuers have issued the Securities
under an Indenture dated as of August 13, 1999 (the "Indenture") among the
Issuers, the Guarantors, the Trustee and the Collateral Agent. This Security is
one of an issue of 13 3/4% Senior Secured Notes Due 2009 of the Issuers issued,
or to be issued, under the Indenture. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb), as
amended from time to time ("TIA"). The Securities are subject to all such terms,
and Holders are referred to the Indenture and the TIA for a statement of them.
Capitalized and certain other terms used herein and not otherwise defined have
the meanings set forth in the Indenture. The Securities are senior secured
obligations of the Issuers limited in aggregate principal amount to
$425,000,000. Payment on each Security is guaranteed on a senior se-
A-2-4
<PAGE>
cured basis by the Guarantors in accordance with the terms of Article X of the
Indenture. The Indenture limits, among other things, the incurrence of
Indebtedness by the Issuers and the Restricted Subsidiaries; the creation of
Liens by the Issuers and the Restricted Subsidiaries; purchases, redemptions,
and other acquisitions or retirements of Capital Stock of the Company;
transactions by the Company and the Restricted Subsidiaries with their
respective Affiliates; and the ability of the Company or any of the Restricted
Subsidiaries to merge with or into another entity. The limitations are subject
to a number of important qualifications and exceptions.
5. Redemption.
(a) The Securities will be redeemable, in whole or in part, at the
option of the Issuers, at any time on or after July 15, 2004, at the redemption
prices (expressed as percentages of principal amount) set forth below, plus
accrued and unpaid interest and liquidated damages, if any, to the redemption
date, if redeemed during the 12-month period beginning on of the years indicated
below:
Year Percentage
---- ----------
July 15, 2004.......................... 106.875%
July 15, 2005.......................... 105.156%
July 15, 2006.......................... 103.438%
July 15, 2007.......................... 101.719%
July 15, 2008 and thereafter........... 100.000%
(b) In addition, at any time and from time to time prior to July 15,
2002, the Issuers may, at their option, following one or more Public Equity
Offerings redeem up to an aggregate of 35% of the principal amount of Securities
originally issued from the Holders, on a pro rata basis, at a redemption price
equal to 113.750% of the principal amount thereof, plus accrued and unpaid
interest and liquidated damages, if any, to the date of redemption; provided at
least 65% aggregate principal amount of Securities would remain outstanding
immediately after giving effect to any such redemption; provided, further, that
if the Public Equity Offering is by Parent Guarantor, RTI or any other direct or
indirect parent company of the Company, the net proceeds thereof shall have been
contributed to the Company or used to buy Capital Stock (other than Disqualified
Capital Stock) of the Company on or prior to the date of redemption. Notice of
any such redemption must be mailed to Holders no later than 60 days after the
applicable Public Equity Offering.
6. Notice of Redemption. Notice of redemption will be mailed by
first-class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Securities to be redeemed at his registered
address. On and after the Redemption Date, unless the Issuers default in making
the redemption payment, interest ceases to accrue on the Securities or portions
thereof called for redemption.
7. Offers To Purchase. Sections 4.13 and 4.15 of the Indenture
provide that after an Asset Sale or upon the occurrence of a Change of Control,
subject to certain exceptions contained therein, the Issuers shall make an offer
to purchase certain amounts of Securities in accordance with the procedures set
forth in the Indenture.
A-2-5
<PAGE>
8. Security Documents. In order to secure the due and punctual
payment of the principal of and interest on the Securities and all other amounts
payable by the Issuers under the Indenture and the Securities when and as the
same shall be due and payable, whether at maturity, by acceleration or
otherwise, according to the terms of the Securities and the Indenture, the
Pledgors have granted and, subject to the terms of the Indenture, will grant
Liens on the Collateral to the Collateral Agent for the benefit of the Secured
Creditors pursuant to the Indenture and the Security Documents. The Securities
will be secured by Liens on the Collateral that are subject only to certain
permitted encumbrances, which shall include, among other things, an equal and
ratable Lien on the Pledged Securities to secure Indebtedness under the New
Credit Facility.
Each Holder, by accepting a Security, agrees to all of the terms and
provisions of the Security Documents, as the same may be amended from time to
time pursuant to the respective provisions thereof and the Indenture.
The Trustee and each Holder acknowledge that a release of any of the
Collateral or any Lien strictly in accordance with the terms and provisions of
any of the Security Documents and the terms and provisions of the Indenture will
not be deemed for any purpose to be an impairment of the security under the
Indenture.
9. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Securities in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay to it any
taxes and fees required by law or permitted by the Indenture. The Registrar need
not transfer or exchange any Securities or portion of a Security selected for
redemption, or transfer or exchange any Securities for a period of 15 days
before a selection of Securities to be redeemed.
10. Persons Deemed Owners. The registered Holder of a Security may
be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal, premium,
if any, or interest remains unclaimed for two years, the Trustee or Paying Agent
will pay the money back to the Issuers at their request. After that, Holders
entitled to the money must look to the Issuers for payment as general creditors
unless an "abandoned property" law designates another Person.
12. Amendment, Supplement, Waiver. From time to time, the Issuers
and the Guarantors, when authorized by Board Resolutions of their respective
Boards of Directors, and the Trustee may, without the consent of the Holders of
any outstanding Securities, amend, waive or supplement (or, if applicable,
authorize the Collateral Agent to amend, waive or supplement) the Indenture, the
Securities, the Guarantees, the Security Documents and/or the Intercreditor
Agreements for certain specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act, releasing certain
Collateral described in the Indenture, acquiring a Lien on certain new property
described in the Indenture or making any other change that does not adversely
affect the rights of any holder of Securities. Other amendments and
modifications of the Indenture, the Securities, the Guarantees, the Security
Documents and the Intercreditor Agreements may be made by the Issuers, the
A-2-6
<PAGE>
Guarantors, the Trustee and, if applicable, the Collateral Agent with the
consent of the Holders of not less than a majority of the aggregate principal
amount of the outstanding Securities, subject to certain exceptions requiring
the consent of the Holders of the particular Securities to be affected and
certain exceptions requiring the consent of the Holders of 95% of the aggregate
principal amount of outstanding Securities.
13. Successor Corporation. When a successor corporation assumes all
the obligations of its predecessor under the Securities and the Indenture and
the transaction complies with the terms of Article V of the Indenture, the
predecessor corporation will be released from those obligations.
14. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default with respect to an Issuer or any
Guarantor specified in clauses (k) and (l) of Section 6.1 of the Indenture)
occurs and is continuing, then the Holders of at least 25% in aggregate
principal amount of the outstanding Securities may, by written notice, and the
Trustee upon the request of the Holders of not less than 25% in aggregate
principal amount of the outstanding Securities shall, declare the principal of,
premium, if any, and accrued and unpaid interest on, all the Securities to be
due and payable immediately. Upon any such declaration such principal shall
become due and payable immediately. If an Event of Default specified in clause
(k) or (l) of Section 6.1 of the Indenture with respect to an Issuer or any
Guarantor occurs and is continuing, then the principal of, premium, if any, and
accrued and unpaid interest on, all the Securities shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Holder.
After a declaration of acceleration under Section 6.2 of the
Indenture, but before a judgment or decree for payment of the money due has been
obtained by the Trustee and before any foreclosure (whether pursuant to judicial
proceedings or otherwise), or the taking of ownership in lieu of foreclosure,
upon any Collateral by the Collateral Agent (on behalf of the Trustee or
Holders), by the Trustee or at the direction of the Holders, the Holders of not
less than a majority in aggregate principal amount of outstanding Securities, by
written notice to the Issuers and the Trustee, may rescind such declaration if
(a) the Issuers have paid or deposited with the Trustee or the Collateral Agent
a sum sufficient to pay (i) all sums paid or advanced by the Trustee or the
Collateral Agent under the Indenture, the Security Documents and the
Intercreditor Agreements and the reasonable compensation, expenses,
disbursements and advances of the Trustee and the Collateral Agent and their
respective agents and counsel, (ii) all overdue interest on all Securities,
(iii) the principal of and premium, if any, on any Securities which have become
due otherwise than by such declaration of acceleration and interest thereon at
the rate borne by the Securities, and (iv) to the extent that payment of such
interest is lawful, interest upon overdue interest and overdue principal at the
rate borne by the Securities which has become due otherwise than by such
declaration of acceleration; (b) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction; and (c) all Events of
Default, other than the non-payment of principal of, premium, if any, and
interest on the Securities that have become due solely by such declaration of
acceleration, have been cured or waived. Holders may not enforce the Indenture
or the Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture, the Guarantee,
the Security Documents or the Securities. Subject to certain limitations,
Holders at least of a majority in aggregate principal amount of the then
outstanding Securities may direct the Trustee in its exercise of any trust
A-2-7
<PAGE>
or power. The Trustee may withhold from Holders notice of any continuing default
(except a default in payment of principal, premium, if any, or interest) if it
determines that withholding notice is in their interests. The Issuers must
furnish an annual compliance certificate to the Trustee.
By acceptance of the benefits of the Indenture and the Security
Documents each Holder confirms that the Collateral Agent is authorized to
execute and deliver and perform its obligations under the Intercreditor
Agreements and the remedies set forth in the Indenture shall be subject to the
terms of such Intercreditor Agreements.
15. Trustee Dealings with Issuers. Subject to certain limitations
imposed by the TIA the Trustee, in its individual or any other capacity, may
make loans to, accept deposits from, and perform services for the Issuers or
their respective Affiliates, and may otherwise deal with the Issuers or their
respective Affiliates, as if it were not Trustee.
16. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of an Issuer or a Guarantor shall not have any liability
for any obligations of an Issuer or a Guarantor under the Securities or the
Indenture or the Guarantee or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issue of the Securities.
17. Discharge. The Issuers' and each Guarantor's obligations
pursuant to the Indenture and the Guarantees will be discharged, except for
obligations pursuant to certain sections thereof, subject to the terms of the
Indenture, upon the payment of all the Securities or upon the irrevocable
deposit with the Trustee of money and/or U.S. Government Obligations sufficient
to pay when due principal of, premium, if any, and interest on the Securities to
maturity or redemption, as the case may be.
18. Authentication. This Security shall not be valid until the
Trustee signs the certificate of authentication on the other side of this
Security.
19. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. Definitions. Capitalized terms used but not defined herein have
the meanings ascribed to them in the Indenture.
21. CUSIP. Pursuant to the recommendations promulgated by the
Committee on Uniform Security Identification Procedures the Company has caused
CUSIP numbers to be printed on the Securities and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
A-2-8
<PAGE>
A-2-9
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
________________________________________________________________________________
(Insert assignee's social security or tax ID number)____________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code) and irrevocably appoint
________________________________________________________________________________
agent to transfer this Security on the books of the Issuers. The agent may
substitute another to act for such agent.
________________________________________________________________________________
Date:____________________ Your signature:____________________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature Guarantee:____________________________________________________________
A-2-10
<PAGE>
EXHIBIT B
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder shall bear
a legend (which would be in addition to any other legends required in the case
of a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE
FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY
A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
B-1
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
Republic Technologies International, LLC
RTI Capital Corp.
c/o Republic Technologies International, LLC
3770 Embassy Parkway
Akron, OH 44333
Ladies and Gentlemen:
In connection with our proposed purchase of $ aggregate principal
amount of the 13 3/4% Senior Secured Notes due 2009 (the "Securities") of
Republic Technologies International, LLC and RTI Capital Corp. (the "Issuers"),
we confirm that:
1. We understand that the Securities have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and, unless
so registered, may not be sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any investor account
for which we are purchasing Securities to offer, sell or otherwise
transfer such Securities prior to (x) the date which is two years (or such
shorter period of time as permitted by Rule 144 under the Securities Act)
after the later of the date of original issue of the Securities being
acquired or any predecessor to such Securities or the last date on which
the Issuers or any affiliate of either of the Issuers was the owner of the
Securities being acquired or any predecessor of such Securities or (y)
such later date, if any, as may be required by any subsequent change in
applicable law (the "Resale Restriction Termination Date") only (a) to the
Issuers, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) so long as the Securities are
eligible for resale pursuant to Rule 144A under the Securities Act, to a
person we reasonably believe is a "qualified institutional buyer" under
Rule 144A (a "QIB") that purchases for its own account or for the account
of a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) pursuant to offers and sales that occur outside
the United States to "foreign purchasers" (as defined below) in offshore
transactions meeting the requirements of Rule 904 of Regulation S under
the Securities Act, (e) to an institutional "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act (an "Institutional Accredited Investor") that is purchasing
for its own account or for the account of such an institutional
"accredited investor" in each case in a minimum principal amount of the
Securities of $250,000, for investment purposes and not with a view to or
for offer or sale in connection with any distribution in violation of the
Securities Act or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, in each case in
accordance with applicable securities laws of any state of the United
States or any other applicable juris-
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<PAGE>
diction, subject, in each of the foregoing cases, to any requirement of
law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and to
compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Securities is
proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Trustee,
which shall provide, among other things, that the transferee is an
Accredited Investor within the meaning of subparagraph (a)(1), (2), (3) or
(7) of Rule 501 under the Securities Act and that it is acquiring such
Securities for investment purposes and not for distribution in violation
of the Securities Act. Each purchaser acknowledges that the Issuers, the
Trustee and the Transfer Agent and Registrar reserve the right prior to
any offer, sale or other transfer prior to the Resale Restriction
Termination Date of the Securities pursuant to clause (d), (e) or (f)
above to require the delivery of an opinion of counsel, certification
and/or other information satisfactory to the Issuers and the Trustee.
2. We are an Institutional Accredited Investor or a QIB purchasing
Securities for our own account or for the account of one or more
Institutional Accredited Investors, and we are acquiring the Securities
for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act or
the securities laws of any state of the United States and we have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment in the Securities for
an indefinite period.
3. We are acquiring the Securities purchased by us for our own
account or for one or more accounts as to each of which we exercise sole
investment discretion and we and any such account are (a) a QIB, aware
that the sale is being made in reliance on Rule 144A under the Securities
Act, (b) an Institutional Accredited Investor, or (c) a person other than
a U.S. person ("foreign purchasers"), which term shall include dealers or
other professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an estate or
trust) in offshore transactions meeting the requirements of Rules 903 and
904 of Regulation S under the Securities Act.
4. We have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such questions
of representatives of the Issuers and receive answers thereto, as we deem
necessary in order to verify the information contained in the Offering
Memorandum.
5. We are not purchasing the Securities for or on behalf of, and
will not transfer the Securities to, any pension or welfare plan (as
defined in Section 3 of ERISA), except as may be permitted under ERISA.
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<PAGE>
6. In the event that we purchase any Securities, we will acquire
Securities having an outstanding principal amount of at least $250,000 for
our own account and $250,000 for each account for which we are acting.
We understand that the Trustee and the Registrar will not be
required to accept for registration of transfer any Securities acquired by us,
except upon presentation of evidence satisfactory to the Issuers and the Trustee
that the foregoing restrictions on transfer have been complied with. We further
understand that the Securities purchased by us will be in the form of definitive
physical certificates and that such certificates will bear a legend reflecting
the substance of the first paragraph of this letter. We further agree to provide
to any person acquiring any of the Securities from us a notice advising such
person that transfers of such Securities are restricted as stated herein and
that certificates representing such Securities will bear a legend to that
effect.
We represent that you, the Issuers, the Trustee and others are
entitled to rely upon the truth and accuracy of our acknowledgments,
representations and agreements set forth herein, and we agree to notify you
promptly in writing if any of our acknowledgments, representations or agreements
herein cease to be accurate and complete. You are also irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
We represent to you that we have full power to make the foregoing
acknowledgments, representations and agreements on our own behalf and on behalf
of any investor account for which we are acting as fiduciary agent.
As used herein, the terms "offshore transaction," "United States"
and "U.S. person" have the respective meanings given to them in Regulation S
under the Securities Act.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
(Name of Purchaser)
By: ______________________________________
Date: ______________________________________
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<PAGE>
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name:______________________________
Address: __________________________
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<PAGE>
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
_____________________, ____
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036
Attention: Corporate Trust Department
Re: Republic Technologies International, LLC and
RTI Capital Corp. (the "Issuers") 13 3/4% Senior
Secured Notes Due 2009 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $ aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities;
(6) if the circumstances set forth in Rule 904(c) under the
Securities Act are applicable, we have complied with the additional
conditions therein, including (if applicable)
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<PAGE>
sending a confirmation or other notice stating that the Securities may be
offered and sold during the restricted period specified in Rule 903(c)(2)
or (3), as applicable, in accordance with the provisions of Regulation S;
pursuant to registration of the Securities under the Securities Act; or
pursuant to an available exemption from the registration requirements
under the Securities Act; and
(7) if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) are applicable thereto, we confirm that such
sale has been made in accordance with such provisions.
You and the Issuers are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:___________________________
Authorized Signature
D-2
<PAGE>
NOTES EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
Dated as of August 13, 1999
by and among
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
RTI CAPITAL CORP.
and
THE GUARANTORS
named herein
and
THE INITIAL PURCHASERS
named herein
------------------------------
$425,000,000
13 3/4% SENIOR SECURED NOTES DUE 2009
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions............................................................1
2. Exchange Offer Registration............................................4
3. Shelf Registration.....................................................7
4. Liquidated Damages.....................................................8
5. Underwritten Registrations.............................................9
6. Shelf Registration Procedures.........................................10
7. Registration Expenses.................................................15
8. Indemnification.......................................................15
9. Miscellaneous.........................................................18
(a) No Inconsistent Agreements.....................................18
(b) Amendments and Waivers.........................................18
(c) Notices........................................................18
(d) Successors and Assigns.........................................19
(e) Counterparts...................................................19
(f) Headings.......................................................19
(g) Governing Law..................................................19
(h) Severability...................................................19
(i) Joint and Several Obligations..................................20
(j) Securities Held by the Issuers or Their Affiliates.............20
Annex A
Annex B
Annex C
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<PAGE>
NOTES EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
This Notes Exchange and Registration Rights Agreement (the
"Agreement") is made and entered into as of August 13, 1999, by and among
Republic Technologies International, LLC, a Delaware limited liability
corporation ("Republic Technologies"), RTI Capital Corp., a Delaware corporation
(together with REPUBLIC TECHNOLOGIES, the "Companies"), the guarantors whose
signatures appear on the execution pages of this Agreement (the "Guarantors")
and the Initial Purchasers (as defined below). The Companies and the Guarantors
are hereinafter collectively referred to as the "Issuers".
This Agreement is entered into in connection with the Purchase
Agreement dated August 13, 1999 (the "Purchase Agreement") among Republic
Technologies International, Inc. ("Parent"), the Companies, the Guarantors and
Chase Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and
BancBoston Robertson Stephens Inc. (the "Initial Purchasers"). Pursuant to the
terms of the Purchase Agreement, the Initial Purchasers have agreed to purchase
425,000 Units consisting of $425,000,000 aggregate principal amount of 13 3/4%
Senior Secured Notes due 2009 of the Companies (the "Notes") and 425,000
Warrants to purchase an aggregate of 822,386 shares of Class D common stock of
Parent. The Guarantors will fully and unconditionally guarantee (the
"Guarantees") on a joint and several basis all of the Companies' obligations
under the Notes and the Indenture (as defined below), subject to the terms of
the Indenture and, unless the context otherwise requires, any reference to the
"Notes" herein includes a reference to the related Guarantees. The Guarantee of
CDSC is subject to the limitations set forth in Section 10.10 of the Indenture.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Purchase Agreement.
In order to induce the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Initial
Purchasers thereunder, the Issuers have agreed to provide the registration
rights set forth in this Agreement for the benefit of the Holders (as defined
below) and their direct and indirect transferees and assigns.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Advice: See the last paragraph of Section 6.
Agreement: See the first introductory paragraph to this Agreement.
Business Day: Any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of New York, New York or is a day on which
banking institutions therein located are authorized or required by law or other
governmental action to close.
Companies: See the first introductory paragraph to this Agreement.
DTC: See Section 6(j).
<PAGE>
Event Date: See Section 4(c).
Exchange Effectiveness Date: 210 days after the Issue Date.
Exchange Effectiveness Period: See Section 2.
Exchange Filing Date: 90 days after the Issue Date.
Exchange Notes: See Section 2. Unless the context otherwise
requires, any reference to the "Exchange Notes" herein includes a reference to
the related Guarantees.
Exchange Offer Consummation Date: 240 days after the Issue Date.
Exchange Offer Registration: See Section 2.
Exchange Registration Statement: See Section 2.
Exchanging Dealer: See Section 2.
Guarantees: See the second introductory paragraph to this Agreement.
Guarantors: See the first introductory paragraph to this Agreement.
Holders: The registered holders (including the Initial Purchasers)
of the Notes, the Exchange Notes, and the Private Exchange Notes.
Holders' Information: See Section 3(c).
Indemnified Person: See Section 8(c).
Indemnifying Person: See Section 8(c).
Indenture: The Indenture to be entered into by and among the
Companies, the Guarantors and an indenture trustee, pursuant to which the Notes
will be issued, as amended or supplemented from time to time in accordance with
the terms thereof.
Inspectors: See Section 6(p).
Initial Purchasers: See the second introductory paragraph to this
Agreement.
Issue Date: The Closing Date under the Purchase Agreement.
Issuers: See the first introductory paragraph to this Agreement.
Losses: See Section 8.
NASD: See Section 6(n).
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<PAGE>
Notes: The $425,000,000 aggregate principal amount of 13 3/4% Senior
Secured Notes of the Companies being issued pursuant to the Indenture as
required by the Purchase Agreement. Unless the context otherwise requires, any
reference to the "Notes" herein includes a reference to the related Guarantees.
Participant: See Section 8(a).
Private Exchange: See Section 2.
Private Exchange Notes: See Section 2. Unless the context otherwise
requires, any reference to the "Private Exchange Notes" herein includes a
reference to the related Guarantees.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Transfer Restricted Securities covered by such Registration Statement,
and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph to this
Agreement.
Registration Expenses: See Section 8(a).
Registration Statement: Any registration statement filed or required
to be filed with the SEC pursuant to the provisions of this Agreement, including
the Prospectus, amendments and supplements to such registration statement,
including post-effective amendments, all exhibits and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933 as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Effectiveness Date: 150 days after the Shelf Filing Date.
Shelf Filing Date: 90 days after the obligation to file a Shelf
Registration Statement arises.
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<PAGE>
Shelf Notice: See Section 3(a).
Shelf Registration: See Section 3(b).
Shelf Termination Date: See Section 3(b).
Subsequent Shelf Registration: See Section 3(c).
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Securities: The Notes upon original issuance
thereof and at all times subsequent thereto, until in the case of any such Note
(i) a Registration Statement covering such Note has been declared effective and
such Note has been disposed of in accordance with such effective Registration
Statement, (ii) it is sold in compliance with Rule 144 or may be sold pursuant
to Rule 144(k), (iii) it shall have been otherwise transferred and a new
certificate for any such Note not bearing a legend restricting further transfer
shall have been delivered by the Companies, or (iv) it ceases to be outstanding.
"Transfer Restricted Securities" shall also include Private Exchange Securities,
unless the context otherwise requires.
Trustee: The trustee under the Indenture.
underwritten registration or underwritten offering: A registration
in which securities of any of the Issuers are sold to an underwriter for
reoffering to the public.
Withdrawal Election: See Section 4(b).
2. Exchange Offer Registration
The Issuers shall file with the SEC no later than the Exchange
Filing Date, an offer to exchange (the "Exchange Offer Registration") for any
and all of the Transfer Restricted Securities covered by such Exchange Offer
Registration a like aggregate principal amount of debt securities of the
Companies, guaranteed by the Guarantors, which are identical in all material
respects to the Notes (the "Exchange Notes") (and which are entitled to the
benefits of the Indenture or a trust indenture which is identical in all
material respects to the Indenture (other than such changes to the Indenture or
any such identical trust indenture as are necessary to comply with any
requirements of the SEC to effect or maintain the qualification thereof under
the TIA) and which, in either case, has been qualified under the TIA), except
that the Exchange Notes shall have been registered pursuant to an effective
Registration Statement under the Securities Act and shall contain no restrictive
legend thereon or provisions relating to transfer restrictions or the payment of
liquidated damages. The Exchange Offer Registration shall be registered under
the Securities Act on the appropriate form (the "Exchange Registration
Statement") and shall comply with all applicable tender offer rules and
regulations under the Exchange Act.
Each of the Issuers agrees to use its reasonable best efforts to (x)
cause the Exchange Registration Statement to be declared effective under the
Securities Act on or before the Exchange Effectiveness Date; (y) keep the
Exchange Offer Registration open for at least 20 business days (or longer if
required by applicable law) after the date that notice of the Exchange Offer
Registration is mailed to Holders of Transfer Restricted Securities (the
"Exchange Effectiveness Period"); and
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<PAGE>
(z) consummate the Exchange Offer Registration on or prior to the Exchange Offer
Consummation Date. If after such Exchange Registration Statement is initially
declared effective by the SEC, the Exchange Offer Registration or the issuance
of the Exchange Notes thereunder is interfered with by any stop order or
injunction of the SEC or any court, such Exchange Registration Statement shall
be deemed not to have become effective for purposes of this Agreement.
Each Holder of Transfer Restricted Securities who participates in
the Exchange Offer Registration will be required to represent in writing at the
time of the consummation of the Exchange Offer Registration (1) that any
Exchange Notes received by it will be acquired in the ordinary course of its
business, (2) that such Holder of Transfer Restricted Securities has no and will
have no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, and (3) that such Holder of Transfer
Restricted Securities is not an "affiliate" (as defined in Rule 405 under the
Securities Act) of any of the Issuers, or if it is an affiliate, that it will
comply with the registration and prospectus delivery requirements of the
Securities Act, to the extent applicable.
Each Holder of Transfer Restricted Securities who participates in
the Exchange Offer Registration who is not an Exchanging Dealer will also be
required to represent in writing that it is not engaged in, and does not intend
to engage in, the distribution of the Exchange Notes. Each Holder that is a
broker-dealer electing to exchange Notes, acquired for its own account as a
result of market-making activities or other trading activities, for Exchange
Notes (an "Exchanging Dealer") will be required to acknowledge that, pursuant to
current interpretations by the SEC's staff of Section 5 of the Securities Act,
it is required to deliver a Prospectus containing substantially the information
set forth in Annex A hereto in the "Exchange Offer Procedures" section and the
"Purpose of the Exchange Offer" section and in Annex B hereto in the "Plan of
Distribution" section of such Prospectus in connection with a sale of any such
Exchange Notes received by such Exchanging Dealer pursuant to the Exchange Offer
Registration.
If, prior to the consummation of the Exchange Offer Registration,
any Holder holds any Notes acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Exchange Offer
Registration, the Issuers shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Notes in the Exchange Offer
Registration, issue and deliver to any such Holder, in exchange for the Notes
held by such Holder (the "Private Exchange"), a like aggregate principal amount
of debt securities of the Companies (the "Private Exchange Notes"),
unconditionally guaranteed by the Guarantors, that are identical in all material
respects to the Exchange Notes, except for the transfer restrictions relating to
such Private Exchange Notes. The Private Exchange Notes will be issued under the
same indenture as the Exchange Notes to the extent permitted by applicable law,
and the Issuers shall use their reasonable best efforts to cause the Private
Exchange Notes to bear the same CUSIP number as the Exchange Notes.
In connection with the Exchange Offer Registration, the Issuers
shall:
(1) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer
Registration with an address in the Borough of Manhattan, The City of New
York;
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<PAGE>
(3) permit Holders of Notes to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last Business Day on
which the Exchange Offer Registration shall remain open; and
(4) otherwise comply in all material respects with all laws
applicable to the Exchange Offer Registration and obligations hereunder.
As soon as practicable after the close of the Exchange Offer
Registration and any Private Exchange, as the case may be, the Issuers shall:
(1) accept for exchange all Notes tendered and not validly
withdrawn pursuant to the Exchange Offer Registration and any Private
Exchange;
(2) deliver to the Trustee for cancellation all Notes so accepted
for exchange; and
(3) cause the Trustee promptly to authenticate and deliver to each
holder of Notes, Exchange Notes or Private Exchange Notes, as applicable,
equal in principal amount to the Notes of such holder so accepted for
exchange.
The Issuers shall use their reasonable best efforts to keep the
Exchange Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be used by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Notes; provided that (i) in the case where such
Prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the lesser of 180 days and the date on
which all Exchanging Dealers have sold all Exchange Notes held by them and (ii)
the Issuers shall make such Prospectus and any amendment or supplement thereto
available to any broker-dealer for use in connection with any resale of any
Exchange Notes for a period of not less than 90 days after the consummation of
the Exchange Offer Registration.
The Exchange Notes may be issued under (i) the Indenture or (ii) an
indenture identical in all material respects to the Indenture, which in either
event will provide that the holders of the Notes, the Exchange Notes and the
Private Exchange Notes will vote and consent together on all matters as one
class and that none of the Notes, the Exchange Notes and the Private Exchange
Notes will have the right to vote or consent as a separate class on any matter.
Interest on each Exchange Note and Private Exchange Note issued
pursuant to the Exchange Offer Registration and any Private Exchange will accrue
from the last interest payment date on which interest was paid on the Notes
surrendered in exchange therefor or, if no interest has been paid on the Notes,
from the Issue Date.
Notwithstanding any other provisions hereof, the Issuers will ensure
that (i) any Exchange Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Exchange Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any Prospectus forming part of any Exchange Registration Statement, and
any
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<PAGE>
supplement to such Prospectus, does not, as of the consummation of the Exchange
Offer Registration, include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The Issuers shall use their reasonable best efforts (i) to include
substantially the information set forth in Annex A hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in Annex
B hereto in the "Plan of Distribution" section of the Prospectus forming a part
of any Exchange Registration Statement, and (ii) to include substantially the
information set forth in Annex C hereto in the Letter of Transmittal delivered
pursuant to the Exchange Offer Registration; and (iii) if requested by any
Initial Purchaser, to include substantially the information required by Items
507 or 508 of Regulation S-K, as applicable, in the Prospectus forming a part of
the Exchange Registration Statement.
In connection with an Exchange Offer, upon delivery of the Transfer
Restricted Securities by such selling Holders to the Issuers (or to such other
Person as directed by the Issuers) in exchange for the Exchange Notes, the
Issuers shall mark, or caused to be marked, on such Transfer Restricted
Securities that such Transfer Restricted Securities are being cancelled in
exchange for the Exchange Notes; in no event shall such Transfer Restricted
Securities be marked as paid or otherwise satisfied. The Issuers shall use
reasonable best efforts to take all other steps reasonably necessary to effect
the registration of the Transfer Restricted Securities covered by the Exchange
Offer Registration Statement.
3. Shelf Registration
(a) Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the SEC's staff, the Issuers are not
permitted to effect the Exchange Offer Registration as contemplated by Section 2
hereof, or (ii) any Initial Purchaser requests a Shelf Registration with respect
to Notes not eligible to be exchanged for Exchange Notes in the Exchange Offer
Registration or with respect to Notes that constitute an unsold allotment in an
initial distribution, or (iii) any applicable law or interpretations do not
permit any Holder to participate in the Exchange Offer Registration and any of
these Holders notifies the Companies of this fact within 30 days of the
consummation of the Exchange Offer Registration, or (iv) any Holder that
participates in the Exchange Offer Registration does not receive freely
transferable Exchange Notes in exchange for tendered Transfer Restricted
Securities and any of these Holders notifies the Companies of this fact within
30 days of the consummation of the Exchange Offer Registration, the Issuers
agree to file with the SEC, a Registration Statement for an offering to be made
on a continuous basis pursuant to Rule 415 covering all of the Transfer
Restricted Securities (the "Shelf Registration"). The Shelf Registration shall
be on Form S-1 or another appropriate form permitting registration of such
Transfer Restricted Securities for resale by Holders in the manner or manners
designated by them (including, without limitation, one or more underwritten
offerings). The Issuers shall not permit any securities other than the Transfer
Restricted Securities to be included in the Shelf Registration or any Subsequent
Shelf Registration. The Issuers shall use their reasonable best efforts to cause
the Shelf Registration to be declared effective under the Securities Act on or
prior to the Shelf Effectiveness Date and to keep such Shelf Registration
continuously effective under the Securities Act until the date which is two
years from the Issue Date (subject to extension pursuant to the last paragraph
of Section 6 and pursuant to Section 10) (the "Shelf Termination Date"), or such
shorter period ending when all
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<PAGE>
Transfer Restricted Securities covered by such Shelf Registration have been sold
in the manner set forth and as contemplated in such Shelf Registration.
(b) Subsequent Shelf Registrations. If a Shelf Registration or any
Subsequent Shelf Registration ceases to be effective for any reason at any time
prior to the Shelf Termination Date (other than because of the sale of all
Transfer Restricted Securities covered by such Shelf Registration in the manner
set forth and as contemplated in such Shelf Registration), the Issuers shall use
their reasonable best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within 45 days of
such cessation of effectiveness amend such Shelf Registration in a manner
reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Transfer Restricted Securities which
were covered by such Shelf Registration that have not been sold in the manner
set forth and as contemplated in such Shelf Registration (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, the Issuers shall
use their reasonable best efforts to cause such Subsequent Shelf Registration to
be declared effective as soon as practicable after such filing and to keep such
Registration Statement continuously effective until the Shelf Termination Date.
As used herein, the term "Shelf Registration" means the Shelf Registrations and
any Subsequent Shelf Registrations.
(c) Supplements and Amendments. Notwithstanding any other provisions
hereof, the Issuers will use their reasonable best efforts to ensure that (i)
any Shelf Registration and any amendment thereto and any Prospectus forming part
thereof and any supplement thereto complies in all material respects with the
Securities Act and the rules and regulations of the SEC thereunder, (ii) any
Shelf Registration and any amendment thereto (in either case, other than with
respect to information included therein in reliance upon or in substantial
conformity with written information furnished to the Issuers by or on behalf of
any Holder specifically for use therein (the "Holders' Information")) does not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (iii) any Prospectus forming part of any Shelf Registration, and
any supplement to such prospectus (in either case, other than with respect to
Holders' Information), does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
4. Liquidated Damages
(a) The parties hereto agree that the Holders of Transfer Restricted
Securities will suffer damages if the Issuers fail to fulfill their obligations
to Holders of Transfer Restricted Securities under Section 2 and/or 3 hereof and
that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, if (i) the Exchange Registration Statement is not filed
with the SEC on or prior to the Exchange Filing Date or the Shelf Registration
is not filed on or prior to Shelf Filing Date, (ii) the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
is not declared effective by the Exchange Effectiveness Date or the Shelf
Effectiveness Date, as the case may be, (iii) the Exchange Offer Registration is
not consummated on or prior to the Exchange Offer Consummation Date (other than
in the event the Issuers file a Shelf Registration), or (iv) the Shelf
Registration is filed and declared effective by the Shelf Effectiveness Date but
shall thereafter cease to be effective (at any time that the Issuers are
obligated to maintain the effectiveness thereof) without being succeeded within
45 days by a post-effective amendment or
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<PAGE>
an additional Registration Statement filed and declared effective by the SEC
(each such event referred to in clauses (i) through (iv), a "Registration
Default"), the Issuers will be obligated to pay liquidated damages to each
Holder of Transfer Restricted Securities affected by such Registration Default,
during the period of one or more such Registration Defaults, at a rate of $.192
per full or partial week per $1,000 amount of Notes constituting Transfer
Restricted Securities until (i) the applicable Registration Statement is filed,
(ii) the Exchange Registration Statement is declared effective or the Shelf
Registration is declared effective, (iii) the Exchange Offer Registration is
consummated or (iv) the Shelf Registration again becomes effective, as the case
may be. Following the cure of all Registration Defaults, the accrual of
liquidated damages will cease. Notwithstanding anything to the contrary in this
Section 3(a), the Issuers shall not be required to pay liquidated damages to a
Holder of Transfer Restricted Securities if such Holder failed to comply with
its obligations to make the representations set forth in the third paragraph of
Section 2 or the second to last paragraph of Section 6.
(b) Notwithstanding the other provisions of this Agreement, the
Companies may issue a notice that the Shelf Registration is unusable pending the
announcement of a material corporate transaction or development or other actions
taken in good faith and for valid business reasons (not including avoidance of
obligations hereunder) and may issue any notice suspending use of the Shelf
Registration required under applicable securities laws to be issued and, in the
event that the aggregate number of days in any consecutive twelve-month period
for which all such notices are issued and effective does not exceed 45 days in
the aggregate, then liquidated damages shall cease to accrue during such period
in which such notices are issued and effective.
(c) The Issuers shall notify the Trustee within one Business Day
after each Registration Default occurs in respect of which liquidated damages is
required to be paid (an "Event Date"). Any amounts of liquidated damages due
pursuant to Section 4(a) will be payable in cash semi-annually on each interest
payment date for the Transfer Restricted Securities (to the Holders of record
entitled to such interest payment), commencing with the first such date
occurring after any such liquidated damages commence to accrue.
(d) The parties hereto agree that the liquidated damages provided
for in this Section 4 constitute a reasonable estimate of the damages that will
be suffered by Holders of Transfer Restricted Securities by reason of the
failure of (i) the Shelf Registration or the Exchange Registration Statement to
be filed, (ii) the Shelf Registration to remain effective, or (iii) the Exchange
Registration Statement to be declared effective and the Exchange Offer
Registration to be consummated, in each case to the extent required by this
Agreement and that such liquidated damages will constitute the sole damage to
which the Holders may be entitled for the foregoing failures absent willful
breach by the Issuers of their obligations under this Agreement.
5. Underwritten Registrations
If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities included in such offering and reasonably
acceptable to the Issuers.
No Holder may participate in any underwritten registration hereunder
unless such Holder (i) agrees to sell such Holder's Transfer Restricted
Securities on the basis reasonably provided
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<PAGE>
in any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, custody agreements, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
6. Shelf Registration Procedures
In connection with the filing of any Shelf Registration Statement,
the Issuers shall as expeditiously as possible:
(a) Before filing any Registration Statement or Prospectus or any
amendments or supplements thereto (not including documents that would be
incorporated or deemed to be incorporated therein by reference), the Issuers
shall furnish the Initial Purchasers, their counsel and the managing
underwriters, if any, promptly, with copies of all such documents proposed to be
filed; provided, however, that the Issuers shall not be required to afford such
persons an opportunity to review a copy of (i) any such document that has not
been materially changed from a copy of such document that such person was
previously furnished to review and (ii) any amendments or supplements to a
Registration Statement or Prospectus which are made solely as a result of any
filing by the Issuers of reports required to be filed pursuant to the Exchange
Act.
(b) Use reasonable best efforts to prepare and file with the SEC
such amendments and post-effective amendments to each Registration Statement as
may be necessary to keep such Registration Statement continuously effective for
the time periods prescribed hereby; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to it with respect to the disposition of all securities covered by
such Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the counsel selected by the selling Holders of Transfer
Restricted Securities, as a group, and the managing underwriters, if any,
promptly (but in any event within two business days after becoming aware
thereof), and, if requested by such person confirm such notice in writing to
such person, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of the issuance by the SEC of any stop order suspending the effectiveness
of such Registration Statement or of any order preventing or suspending the use
of any preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) of the receipt by the Issuers of any notification with respect to
the suspension of the qualification or exemption from qualification of such
Registration Statement or any of the Transfer Restricted Securities for offer or
sale in any jurisdiction, or the initiation or threatening of any proceeding for
such purpose, (iv) of the happening of any event, the existence of any condition
or any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in such Registration Statement,
Prospectus or documents so that, in the case of such Registration Statement, it
will not contain any
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<PAGE>
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, not
misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and (v) of the
Issuers' reasonable determination that a post-effective amendment to such
Registration Statement would be appropriate.
(d) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Transfer Restricted Securities
for sale in any jurisdiction, and, if any such order is issued, to obtain the
withdrawal of any such order at the earliest practicable moment.
(e) If requested by the managing underwriters, if any, or the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities being sold in connection with an underwritten offering, (i) promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, or such Holders reasonably
request to be included therein, (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as practicable
after the Issuers received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment, and (iii) supplement or
make amendments to such Registration Statement; provided, however, that the
Company shall not be required to take any action pursuant to this Section 6(e)
that would in the opinion of counsel for the Issuers, violate applicable law.
(f) Upon written request to the Issuers, furnish to each selling
Holder of Transfer Restricted Securities who so requests in writing, to counsel,
and to each managing underwriter, if any, without charge, one conformed copy of
the Registration Statement and each post-effective amendment thereto, including
financial statements and schedules, and, if requested, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits.
(g) Deliver to each selling Holder of Transfer Restricted
Securities, their counsel, and the underwriters, if any, without charge, as many
copies of each Prospectus (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by reference
therein as such Persons may reasonably request; and, subject to the last
paragraph of this Section 6, each Issuer hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders of Transfer Restricted Securities and the underwriters or agents, if
any, in connection with the offering and sale of the Transfer Restricted
Securities covered by such Prospectus and any amendment or supplement thereto
until such time as the Issuers have notified the Holders to discontinue the use
of such Prospectus.
(h) Prior to any public offering of Transfer Restricted Securities,
to use their reasonable best efforts to register or qualify, and to cooperate
with the selling Holders of Transfer Restricted Securities, the underwriters, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Transfer Restricted Securities for offer and sale under the securities or Blue
Sky laws of such jurisdictions within the United States as any selling Holder,
or the managing underwriters reasonably request in writing; provided that where
Transfer Restricted Securities are offered other than through an underwritten
offering, the Issuers agree to use their reasonable best efforts to cause their
counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 6(h); keep each
such registration or qualification (or exemption therefrom) effective
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<PAGE>
during the period such Registration Statement is required to be kept effective
and do any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the applicable Registration Statement; provided, however,
that no Issuer shall be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or (C) become subject to taxation in any such jurisdiction
where it is not then so subject.
(i) Cooperate with the selling Holders of Transfer Restricted
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with The Depository Trust Company
("DTC"); and enable such Transfer Restricted Securities to be in such
denominations and registered in such names as the managing underwriters, if any,
or selling holders of Transfer Restricted Securities may reasonably request in
writing at least three Business Days prior to any sale of Transfer Restricted
Securities.
(j) Upon the occurrence of any event contemplated by paragraph
6(c)(iv) or 6(c)(v), as promptly as practicable prepare and file with the SEC,
at the joint and several expense of each of the Issuers, a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Transfer Restricted Securities being sold
thereunder, such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(k) Use its best efforts to cause the Transfer Restricted Securities
covered by a Shelf Registration Statement to be rated with the appropriate
rating agencies, if so requested by the Holders of a majority in aggregate
principal amount of Transfer Restricted Securities covered by such Registration
Statement or the managing underwriters, if any.
(l) Prior to the effective date of any Registration Statement
relating to the Transfer Restricted Securities, (i) provide the Trustee with
printed certificates for the Transfer Restricted Securities covered by such
Registration Statement in a form eligible for deposit with DTC and (ii) provide
a CUSIP number(s) for the Transfer Restricted Securities.
(m) Cooperate with each selling Holder of Transfer Restricted
Securities covered by any Registration Statement, and each underwriter, if any,
participating in the disposition of such Transfer Restricted Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
(n) If requested by Holders of a majority in aggregate principal
amount of Transfer Restricted Securities covered by such Registration Statement,
enter into an underwriting agreement in form, scope and substance as is
customary in underwritten offerings and take all such other actions as are
reasonably requested by the managing underwriters in order to expedite or
facilitate the registration or the disposition of such Transfer Restricted
Securities, and in such connection, (i) make such representations and warranties
to the underwriters, with respect to the business of
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<PAGE>
the Issuers and their respective subsidiaries, and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, in form, substance and scope as are customarily
made by issuers to underwriters in underwritten offerings of securities similar
to the Registrable Security, and confirm the same if and when requested; (ii)
use reasonable best efforts to obtain opinions of counsel to the Issuers and
updates thereof in form, scope and substance reasonably satisfactory to the
managing underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by underwriters; (iii) use
reasonable best efforts to obtain "cold comfort" letters and updates thereof in
form and substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the Issuers
(and, if necessary, any other independent certified public accountants of any
subsidiary of the Issuers or business acquired by the Issuers for which
financial statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each of the underwriters such letters
to be in customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings of securities
similar to the Transfer Restricted Securities; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification provisions and
procedures no less favorable than those set forth in Section 8 (or such other
less favorable provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of Transfer Restricted Securities covered by such
Registration Statement and the managing underwriters or agents) with respect to
all parties to be indemnified pursuant to said Section. The above shall be done
at each closing under such underwriting agreement, or as and to the extent
required thereunder.
(o) Make available for inspection by a representative of the selling
Holders of Transfer Restricted Securities, any underwriter participating in any
such disposition of Transfer Restricted Securities, if any, and any attorney or
accountant or other agent retained by any such representative of such selling
Holders or underwriter (collectively, the "Inspectors"), at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Issuers and their
subsidiaries, and use their reasonable best efforts to cause the officers,
directors and employees of the Issuers and their subsidiaries to supply all
information, in each case reasonably requested by any such Inspector in
connection with such Registration Statement; provided, however, that any
information that is designated in writing by the Issuers, in good faith, as
confidential at the time of delivery of such information, shall be kept
confidential by such Inspector unless (i) disclosure of such information is
required by court or administrative order, (ii) other than under the
circumstances contemplated by, and for the time period permitted by, Section 10,
disclosure of such information, in the opinion of counsel to such Inspector, is
necessary to avoid or correct a misstatement or omission of a material fact in
the Registration Statement, Prospectus or any supplement or post-effective
amendment thereto or disclosure is otherwise required by law, or (iii) such
information becomes generally available to the public other than as a result of
a disclosure or failure to safeguard by such Inspector; provided further, that
the foregoing investigation shall be coordinated on behalf of the Holders by one
representative designated by and on behalf of such Holders. Each selling Holder
of such Transfer Restricted Securities will be required to agree that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Issuers unless and until such is made
generally available to the public. Each selling Holder of such Transfer
Restricted Securities will be required to further agree that it will, upon
learning that disclosure of any such information is sought in a court or
administrative tribunal of competent jurisdiction, give notice to the Issuers
and allow the Issuers to undertake appropriate action to prevent disclosure of
the information
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<PAGE>
deemed confidential at its expense and will use reasonable efforts to cooperate
with the Issuers in attempting to prevent such disclosure.
(p) Provide an indenture trustee for the Transfer Restricted
Securities, and cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement relating to the Transfer
Restricted Securities; and in connection therewith, cooperate with the trustee
under any such indenture and the selling holders of the Transfer Restricted
Securities, to effect such changes to such indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute, and use its best efforts to cause such trustee to execute, all
documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the SEC and
make generally available to their securityholders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year), commencing on the first day of the
first fiscal quarter after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(r) Use its reasonable best efforts to take all other steps
reasonably necessary to effect the registration of the Transfer Restricted
Securities covered by a Registration Statement contemplated hereby.
The Companies may require each selling Holder of Transfer Restricted
Securities as to which any registration is being effected to furnish to the
Companies such information regarding such selling Holder and the distribution of
such Transfer Restricted Securities as the Companies may, from time to time,
reasonably request in writing and to otherwise cooperate in the preparation of
the Registration Statement. The Companies may exclude from such registration the
Transfer Restricted Securities of any selling Holder who unreasonably fails to
furnish such information within a reasonable time after receiving such request.
If the identity of a seller of Transfer Restricted Securities is to be disclosed
in a Registration Statement, such selling Holder shall be permitted to include
all information regarding such seller as it shall reasonably request. At any
time during the effectiveness of any Registration Statement with respect to the
Transfer Restricted Securities, any selling Holder becomes aware of any change
materially affecting the accuracy of the information contained in the
Registration Statement or related Prospectus, such Holder will notify the
Companies of such change.
Each Holder, upon receipt of any notice from the Issuers of the
happening of any event of the kind described in Section 6(c), will forthwith
discontinue disposition of such Transfer Restricted Securities covered by such
Registration Statement or Prospectus, until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 6(c), or until
it is advised in writing (the "Advice") by the Issuers that the use of the
applicable Prospectus may be resumed. In the event the Issuers shall give any
such notice, the Shelf Termination Date and the Exchange Effectiveness Period
shall be extended by the number of days during such periods from and including
the date of the giving of such notice to and including the date when each seller
of Transfer Restricted Securities covered by such Registration Statement shall
have received the copies of the supplemented or amended Prospectus contemplated
by Section 6(j) (if an amended or supplemental Prospectus is required) or the
Advice (if no amended or supplemental Prospectus is required).
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<PAGE>
7. Registration Expenses
(a) All fees and expenses, other than underwriters' fees and
expenses, including fees and expenses of their counsel, underwriting discounts
and commissions and transfer taxes, incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers, jointly and
severally, whether or not a Registration Statement is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Transfer Restricted Securities or Exchange,
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Transfer Restricted Securities or Exchange Notes in a form
eligible for deposit with DTC and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriters, if any, or, in respect
of Transfer Restricted Securities, by the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities included in the
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Issuers and reasonable fees and
disbursements of one counsel for the sellers of Transfer Restricted Securities
(subject to the provisions of Section 7(b)), (v) fees and disbursements of all
independent certified public accountants referred to in Section 6(o)(iii)
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) the fees and
expenses of any "qualified independent underwriter" or other independent
appraiser participating in an offering pursuant to Rule 2720 of the Conduct
Rules of the NASD, (vii) rating agency fees, (viii) fees and expenses of all
other Persons retained by the Issuers, (ix) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties) and, (xi) the
expense of any annual audit (collectively, "Registration Expenses").
(b) In connection with any Registration Statement hereunder or any
amendment thereto, the Issuers shall reimburse the Holders of the Transfer
Restricted Securities being registered in such registration for the reasonable
fees and disbursements of not more than one counsel chosen by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities to
be included in such Registration Statement.
8. Indemnification
(a) The Issuers, jointly and severally, agree to indemnify and hold
harmless each Holder of Transfer Restricted Securities covered by a Registration
Statement, the officers and directors of each such person, and each person, if
any, who controls any such person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in such Registration
Statement or any related Prospectus (as amended or supplemented if the Issuers
shall have furnished any amendments or supplements thereto) or any related
preliminary prospectus, or caused by, arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue
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<PAGE>
statement or omission or alleged untrue statement or omission made in reliance
upon and in substantial conformity with information relating to any Participant
furnished to the Issuers in writing by such Participant expressly for use
therein; provided that the Issuers will not be liable to any Participant with
respect to any such untrue statement or omission in any preliminary prospectus
that is corrected in the related Prospectus (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Transfer Restricted Securities or Exchange Notes which are the subject
thereof from such Participant in reliance upon such preliminary prospectus but
was not sent or given a copy of the related Prospectus (as amended or
supplemented) at or prior to the written confirmation of the sale of such
Transfer Restricted Securities or Exchange Notes, as the case may be, to such
person, unless such failure to deliver such Prospectus (as amended or
supplemented) was a result of noncompliance by the Issuers with Section 6 of
this Agreement.
(b) Each Participant and each underwriter, if any, will be required
to agree, severally and not jointly, to indemnify and hold harmless the Issuers,
their respective directors and officers, each person who controls the Issuers
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act and each director, officer, affiliate or agent of persons
controlling the Issuers to the same extent as the foregoing indemnity from the
Issuers to each Participant, but only (i) with reference to information relating
to such Participant or underwriter furnished to the Issuers in writing by or on
behalf of such Participant or underwriter expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus or (ii) with respect to any untrue statement or representation made
by such Participant or underwriter in writing to the Issuers. The liability of
any Participant under this paragraph shall in no event exceed the proceeds
received by such Participant from sales of Transfer Restricted Securities or
Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise (unless and only to the extent that such failure
directly results in an actual loss or compromise of any material rights or
defenses by the Indemnifying Person). In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Person unless (i)
the Indemnifying Person and the Indemnified Person shall have mutually agreed in
writing to the contrary, (ii) the Indemnifying Person has failed within a
reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed at least quarterly. Any such separate firm for the Participants
and such control persons of Participants shall be designated in writing by
Participants who sold a majority in interest of Transfer Restricted Securities
sold by all such Participants in the related registration and any such separate
firm for the Issuers, their directors, officers and such control persons of the
Issuers shall be desig-
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<PAGE>
nated in writing by the Issuers. The Indemnifying Person shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final non-appealable judgment for the
plaintiff, the Indemnifying Person agrees to indemnify any Indemnified Person
from and against any loss or liability by reason of such settlement or judgment.
No Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 8 is unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuers on the one hand
or by the Participants or such other Indemnified Person, as the case may be, on
the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission and any other
equitable considerations appropriate under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Transfer Restricted
Securities or Exchange Notes, as the case may be, exceeds the amount of any
damages that such Participant has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
10(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 8 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
-17-
<PAGE>
9. Miscellaneous
(a) No Inconsistent Agreements. No Issuer has entered, as of the
date hereof, and no Issuer shall enter, after the date of this Agreement, into
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Transfer Restricted Securities in this
Agreement or otherwise conflicts with the provisions hereof. No Issuer has
entered and no Issuer will enter into any agreement with respect to any of its
securities which will grant to any person piggy-back rights with respect to a
Registration Statement.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Issuers have obtained the written consent of
Holders of at least a majority of the then outstanding aggregate principal
amount of Transfer Restricted Securities. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Transfer Restricted
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Transfer Restricted Securities may be given by
Holders of at least a majority in aggregate principal amount of the Transfer
Restricted Securities being sold by such Holders pursuant to such Registration
Statement; provided that the provisions of this sentence may not be amended,
modified or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of the Transfer Restricted Securities, at
the most current address for such Holder reflected in the register
maintained pursuant to the Indenture with a copy in like manner to the
Initial Purchasers as follows:
c/o Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Facsimile No.: (212) 270-0994
Attention: Dan Tredwell
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Jonathan A. Schaffzin, Esq.
(ii) if to the Issuers as follows:
c/o Republic Technologies International, LLC
3370 Embassy Parkway
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<PAGE>
Akron, Ohio 44333-8367
Facsimile No.: 330-670-7037
Attention: Brenda K. Brown
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 455-2502
Attention: John D. Lobrano, Esq.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the person giving the same to the trustee under the
Indenture at the address specified in such Indenture.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO
AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(h) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
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<PAGE>
(i) Joint and Several Obligations. Each of the obligations of the
Issuers under this Agreement shall be joint and several obligations of each of
them.
(j) Securities Held by the Issuers or Their Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Transfer Restricted
Securities is required hereunder, Transfer Restricted Securities held by the
Issuers or their affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
[Signature Page Follows]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
THE COMPANIES:
REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC
By:_________________________________
Name:
Title:
RTI CAPITAL CORP.
By:_________________________________
Name:
Title:
<PAGE>
THE GUARANTORS:
Republic Technologies International
Holdings, LLC
By:_________________________________
Name:
Title:
Nimishillen & Tuscarawas, LLC
By:_________________________________
Name:
Title:
Bliss & Laughlin, LLC
By:_________________________________
Name:
Title:
Canadian Drawn Steel Company, Inc.
By:_________________________________
Name:
Title:
<PAGE>
THE INITIAL PURCHASERS:
CHASE SECURITIES INC.
on behalf of the Holders
of Notes
By:_________________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
on behalf of the Holders
of Notes
By:_________________________________
Name:
Title:
BANCBOSTON ROBERTSON STEPHENS INC.
on behalf of the Holders
of Notes
By:_________________________________
Name:
Title:
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Notes for its own account
in exchange for Notes, where such Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer Registration must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired as a result of market-making
activities or other trading activities. The Issuers has agreed that, for a
period of 180 days after the Expiration Date, they will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until _______________, ___, all dealers
effecting transactions in the Exchange Notes may be required to deliver a
prospectus.
The Issuers will not receive any proceeds from any sale of Exchange
Notes by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer Registration may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Notes. Any broker-dealer that resells Exchange Notes that were received by it
for its own account pursuant to the Exchange Offer Registration and any broker
or dealer that participates in a distribution of such Exchange Notes may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Notes and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of 180 days after the Expiration Date, the Issuers will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Issuers have agreed to pay all expenses
incident to the Exchange Offer Registration (including the expenses of one
counsel for the Holders of the Notes) other than commissions or concessions of
any broker-dealers and will indemnify the Holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
<PAGE>
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
<PAGE>
EXHIBIT 4.5
SECURITY AGREEMENT
SECURITY AGREEMENT (the "Agreement"), dated as of August 13, 1999,
made by REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a Delaware limited liability
company having an office at 3770 Embassy Parkway, Akron, Ohio 44333-8367
("Republic Technologies International"), RTI CAPITAL CORP., a Delaware
corporation having an office at 3770 Embassy Parkway, Akron, Ohio 44333-8367
("RTI Capital"; together with Republic Technologies International, the
"Issuers"), and each of the Guarantors listed on the signature pages hereto or
from time to time party hereto by execution of a joinder agreement
(collectively, the "Guarantors"), as pledgors, assignors and debtors (the
Issuers, together with the Guarantors, in such capacities and together with any
successors in such capacities, the "Pledgors", and each, a "Pledgor") in favor
of UNITED STATES TRUST COMPANY OF NEW YORK, a bank and trust company organized,
validly existing and in good standing under the New York Banking Law, having an
office at 114 West 47th Street, New York, New York 10036, as trustee and
collateral agent pursuant to the Indenture (as hereinafter defined), as pledgee,
assignee and secured party (in such capacity and together with any successors
and assigns in such capacities, the "Collateral Agent").
RECITALS:
A. The Issuers, the Guarantors, and the Collateral Agent have, in
connection with the execution and delivery of this Agreement, entered into a
certain indenture (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Indenture"), dated as of August 13, 1999,
pursuant to which the Issuers are issuing their 13 3/4% senior secured notes due
2009 (the "Senior Secured Notes") in the aggregate principal amount of
$425,000,000. It is contemplated that the Issuers may, after the date hereof,
issue exchange notes pursuant to the Indenture (the "Exchange Notes"; together
with the Senior Secured Notes, the "Notes").
B. Each Pledgor is or will be the legal and/or beneficial owner of
the Pledged Collateral (as hereinafter defined) to be pledged by it hereunder.
C. This Agreement is given by each Pledgor in favor of the
Collateral Agent for its benefit and the benefit of the holders of the Notes
(collectively, the "Secured Parties") to secure the payment and performance of
the Secured Obligations (as hereinafter defined).
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgors and the Collateral Agent hereby agree as follows:
SECTION 1. Definitions. Capitalized terms used herein but not
otherwise defined shall have the meanings assigned to such terms in the
Indenture. The following terms shall have the following meanings. Such
definitions shall be applicable equally to the singular and plural forms of the
terms defined.
<PAGE>
-2-
"Accounts" shall mean, collectively, all "accounts" as such term is
defined in the UCC, and in any event shall include, without limitation, (i) any
and all accounts, accounts receivable and chattel paper and (ii) all general
intangibles, documents and proceeds relating to any of the foregoing. As used in
this definition, "general intangibles", "documents" and "proceeds" shall have
the meanings assigned to such terms under the UCC.
"Acquisition Document Rights" shall mean, collectively, all of the
applicable Pledgor's rights, title and interest in, to and under the Acquisition
Documents including, without limitation, (i) all rights and remedies relating to
monetary damages, including indemnification rights and remedies, and claims for
damages or other relief pursuant to or in respect of the Acquisition Documents,
(ii) all rights and remedies relating to monetary damages, including
indemnification rights and remedies, and claims for monetary damages under or in
respect of the agreements, documents and instruments referred to in the
Acquisition Documents or related thereto and (iii) all proceeds, collections,
recoveries and rights of subrogation with respect to the foregoing.
"Acquisition Documents" shall mean, collectively, the following
agreements, each as amended, amended and restated, supplemented, extended,
renewed, replaced or otherwise modified from time to time: (i) that certain
contribution agreement dated as of December 22, 1993 and amended by amendment
no. 1 to contribution agreement, dated as of January __, 1994, amendment no. 2
to contribution agreement, dated as of January 7, 1994, amendment no. 3 to
contribution agreement, dated as of June 7, 1994, amendment no. 4 to
contribution agreement, dated as of June 29, 1994, and amendment no. 5 to
contribution agreement, dated as of September 21, 1994 (the "Contribution
Agreement") by and between Bethlehem Steel Corporation ("Bethlehem") and Bar
Technologies Inc. ("BarTech"), and all documents, agreements and other
instruments then or at any time thereafter executed and/or delivered in
connection therewith or related thereto, (ii) that certain amended and restated
agreement and plan of merger, dated as of October 18, 1995, by and among
BarTech, B&L Acquisition Corporation and Bliss & Laughlin Industries Inc., and
all documents, agreements and other instruments executed and/or delivered in
connection therewith or related thereto, and (iii) that certain master
restructuring agreement among RES Holding, BarTech, Republic Engineered Steels,
Inc., USX RTI Holdings, Inc., Kobe RTI Holdings, Inc. and USS/Kobe Steel
Company, and all documents, agreements and other instruments executed and/or
delivered in connection therewith or related thereto.
"CAST-ROLL Facility" means (i) all now owned or after acquired real
property and Equipment of Republic Technologies International used in connection
with the facility commonly known as the "CAST-ROLL Facility" and located at 3707
Georgetown Road, N.E., Canton, Ohio, and used primarily in connection with
Republic Technologies International's business and operations at such location,
(ii) all existing buildings, structures and other improvements located or
erected thereon, (iii) all fixtures attached thereto, (iv) all permits,
licenses, franchises, certificates, consents, approvals and authorizations
furnished in respect of the real property and improvements located thereon
including, without limitation, building permits, certificates of occupancy and
environmental certificates, (v) all leases, licenses and occupancy and
concession agreements in respect of the real property and improvements located
thereon and all rents, receipts, fees and other amounts payable thereunder, and
(vi) all general intangibles, documents and proceeds (as each such term is
defined in the UCC) relating to the foregoing.
"Collateral Account Funds" shall mean, collectively, all of the
funds from time to time on deposit in the Collateral Accounts held by Collateral
Agent on behalf of the Secured Parties; all investments of such funds
(including, without limitation, Cash Equivalents and Trust Moneys) and all
certificates and instruments from time to time representing or evidencing such
investments; all notes, certificates of deposit, checks and other instruments
from time to time hereafter delivered to or otherwise possessed by the
Collateral Agent for or on behalf of any applicable Pledgor in substitution for,
or in addition to, any or all of the Pledged Collateral; and all
<PAGE>
-3-
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the items constituting Pledged Collateral.
"Collateral Accounts" shall mean the collateral accounts established
and maintained by the Collateral Agent on behalf of the Secured Parties in
accordance with the provisions of the Intercreditor Agreement.
"Documents" shall mean, collectively, all "documents", as such term
is defined in the UCC, relating to any of the Pledged Collateral or the New Bar
Mill and shall also include, without limitation, any and all lists, books,
records, ledgers, printouts, computer programs, computer disks or tape files,
computer runs and other computer prepared information, files (whether in printed
form or stored electronically), tapes and other papers or materials containing
information relating to any of the Pledged Collateral or the New Bar Mill.
"Equipment" shall mean, collectively, all "equipment", as such term
is defined in the UCC, of the applicable Pledgor, and shall specifically
include, without limitation, (i) all machinery, facilities, installations,
apparatus, equipment, office machinery, electronic data processing equipment,
computers and computer hardware and software (whether owned or licensed), all
indoor or outdoor furniture, tools, materials, automotive equipment, motor
vehicles, manufacturing, storage and handling equipment, overhead cranes,
cutting and bending machines and other equipment for the fabrication of steel
bars, rods and wire products, furnaces, electric arc furnaces, ladle arc
furnaces, bloom reheating furnaces, vacuum degassers, billet mills, reheat
furnaces, rolling mills, blooming mills, cold finishing mills, hot rolled bar
mills, conveyors, coilers, cooling beds, continuous casters, molds, automated
process control equipment and all other equipment of any kind or nature and
owned by the applicable Pledgor or in which the applicable Pledgor may have any
interest (but only to the extent of such interest), (ii) all modifications,
renewals, improvements, alterations, repairs, substitutions, attachments,
additions, accessions and other property now or hereafter affixed thereto or
used in connection therewith and (iii) all replacements and all parts therefor.
In no event shall "Equipment" include any Excluded Collateral.
"Excluded Collateral" shall mean, collectively, (i) Inventory, (ii)
Accounts, (iii) the Pledged Interests, (iv) real property, fixtures, machinery
and equipment located in Cartersville, Bartow County, Georgia and all general
intangibles, documents and proceeds (as each such term is defined in the UCC) to
the extent relating thereto, (v) the CAST-ROLL Facility, (vi) all after-acquired
real property, fixtures, machinery and equipment other than the New Bar Mill and
the New Bar Mill Equipment and (vii) Intellectual Property.
"Intangibles" shall mean, collectively, all "general intangibles",
as such term is defined in the UCC, relating to any of the Pledged Collateral or
the New Bar Mill and, in any event, shall include, without limitation, any and
all Supply Contracts, contract rights, goodwill (other than goodwill relating to
intellectual property), descriptions, name plates, claims, choses-in-action,
causes of action, catalogs, confidential information, consulting agreements,
engineering contracts, and such other assets which relate to the goodwill (other
than goodwill relating to intellectual property) of the business of the
applicable Pledgor and rights to refund or indemnification to the extent the
foregoing relate to Pledged Collateral or the New Bar Mill, deposits and deposit
accounts, letters of credit, documents, instruments, chattel paper, bankers'
acceptances and guarantees, and income tax refunds to the extent relating to
Pledged Collateral or the New Bar Mill, claims for tax or other refunds against
any city, county or state or federal government, or any agency or authority or
other subdivision thereof relating to Pledged Collateral, corporate or other
business records relating to Pledged Collateral or the New Bar Mill and all
other general intangibles of every kind and description relating to Pledged
Collateral or the New Bar Mill.
"Intellectual Property" shall mean (i) all patents, copyrights,
trademarks or licenses of any Pledgor, (ii) all rights and privileges relating
thereto and (iii) all general intangibles, documents and proceeds
<PAGE>
-4-
relating to the foregoing. As used in this definition, "general intangibles",
"documents" and "proceeds" shall have the meaning assigned to such terms under
the UCC.
"Intercreditor Agreement" means that certain amended and restated
intercreditor and subordination agreement (as amended, amended and restated,
supplemented or otherwise modified from time to time), dated as of August 13,
1999, by and among the Collateral Agent, United States Trust Company of New
York, as Trustee, the Pennsylvania Lenders (as defined therein), BankBoston,
N.A., as Agent (as defined therein), those parties which in the future become
Government Lenders and/or Notes Refinancing Lenders and/or New Bar Mill Lenders
(each as defined therein), the Pledgors, and each of the other parties from time
to time made party thereto.
"Inventory" shall mean, collectively, (i) all "inventory" (as such
term is defined in the UCC) of the applicable Pledgor wherever located and, in
any event shall include, without limitation, all raw materials, work in progress
and finished goods and (ii) all general intangibles, documents and proceeds
relating to any of the foregoing. As used in this definition, "general
intangibles", "documents" and "proceeds" shall have the meanings assigned to
such terms under the UCC.
"Miscellaneous Collateral" shall mean all existing property and
assets of the applicable Pledgor, whether tangible or intangible, fixed or
liquid, other than (i) Pledged Collateral (excluding Pledged Collateral of the
type described in clause (vii) of Section 2 of this Agreement) and (ii) Excluded
Collateral.
"New Bar Mill" means the business and operations of the Pledgors at
the new large size bar mill and related quality verification line and shipping
center and heat treatment center to be acquired and/or constructed by the
Pledgors.
"New Bar Mill Equipment" means all now owned or after-acquired
Equipment located at and used primarily in connection with the New Bar Mill.
"Pledged Collateral" shall have the meaning assigned to such term
pursuant to Section 2 of this Agreement.
"Pledged Interests" shall have the meaning assigned to such term
under the Intercreditor Agreement.
"Prior Liens" shall mean, collectively, the Liens described in
Schedule A annexed hereto.
"Proceeds" shall have the meaning assigned to the term "proceeds"
under the UCC and, in any event, shall include, without limitation, any and all
(i) proceeds of any insurance (except payments made to a Person that is not a
party to this Agreement), indemnity, warranty, guarantee or claim payable to the
Collateral Agent or to any Pledgor from time to time with respect to any of the
Pledged Collateral, (ii) payments (in any form whatsoever) made or due and
payable to any Pledgor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Pledged Collateral by any governmental authority (or any person acting under
color of a governmental authority), (iii) products of the Pledged Collateral and
(iv) other amounts from time to time paid or payable under or in connection with
any of the Pledged Collateral.
"Secured Obligations" shall have the meaning assigned to such term
pursuant to Section 3 of this Agreement.
<PAGE>
-5-
"Supply Contracts" shall mean, collectively, any and all supply,
sale, service, performance and equipment or property lease contracts, agreements
and grants (whether written or oral or third party or intercompany), and any
other document (whether written or oral) between such Pledgor and third parties,
and all assignments, amendments, restatements, supplements, extensions,
renewals, replacements or modifications thereof, including, without limitation,
(i) that certain Round Supply Agreement, dated as of August __, 1999, among
Republic Technologies International, Newtube, USX Corporation ("USX") and U.S.
Steel Group, (ii) that certain Coke Supply Agreement, dated as of August __,
1999, between Republic Technologies International and U.S. Steel Group, (iii)
that certain Pellet Supply Agreement, dated as of August __, 1999, between
Republic Technologies International and U.S. Steel Group, (iv) that certain
Transition Services Agreement and certain related agreements between Republic
Technologies International and USX, (v) that certain Tubular Utilities agreement
and certain related agreements between Republic Technologies International and
Newtube and (vi) that certain Technology Transfer Agreement among Republic
Technologies International and Kobe Steel, Ltd. and one of its affiliates.
"UCC" shall mean the Uniform Commercial Code as in effect in any
applicable jurisdiction.
SECTION 2. Pledge. As collateral security for the payment and
performance when due of all the Secured Obligations, each Pledgor hereby
pledges, assigns, transfers and grants to the Collateral Agent for its benefit
and the benefit of the Secured Parties, a security interest in and to and pledge
of all of the right, title and interest of such Pledgor in, to and under the
following property, now existing or, in the case of only the property described
in (vii) below and any other Pledged Collateral relating to the New Bar Mill
hereafter arising or acquired from time to time (collectively, the "Pledged
Collateral"):
(i) all Equipment;
(ii) all Intangibles;
(iii) all Documents;
(iv) the Acquisition Document Rights;
(v) the Collateral Accounts and all Collateral Account
Funds;
(vi) all Miscellaneous Collateral;
(vii) New Bar Mill Equipment; and
(viii) all Proceeds of any of the foregoing.
Notwithstanding the foregoing, the Pledged Collateral shall not
include existing property or assets of Pledgor in accordance with clause (q) of
the definition of Permitted Liens; provided, however, that at such time as such
property or asset is no longer subject to such Lien or security interest, such
property or asset shall (without any act or delivery by any Person) constitute
Pledged Collateral hereunder.
SECTION 3. Secured Obligations. This Agreement secures, and the
Pledged Collateral is collateral security for, the payment and performance in
full when due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the filing of a petition in bankruptcy or
the operation of the automatic stay under Section 362(a) of the Bankruptcy Code,
11 U.S.C. ss. 362(a)), of (i) all obligations of the Issuers now or hereafter
existing under or in respect of the Indenture and the Notes (including, without
limitation, the obligations of the Issuers to pay principal of, premium, if any,
and interest on the Notes when due and payable) and all other charges, fees,
expenses, commissions, reimbursements, premiums, indemnities and all other
amounts due or to become due under or in connection with the Indenture and the
Notes, (ii) all obligations of the Guarantors now or hereafter existing
<PAGE>
-6-
under or in respect of the Indenture and the Notes (including, without
limitation, the obligations of each Guarantor to pay principal of, premium, if
any, and interest on the Notes when due and payable) and all other charges,
fees, expenses, commissions, reimbursements, premiums, indemnities and all other
amounts due or to become due under or in connection with the Indentures and the
Notes and (iii) without duplication of the amounts described in clauses (i) and
(ii), all obligations, indebtedness and liabilities of the Pledgors now existing
or hereafter arising under or in respect of this Agreement or any other Security
Document, including, without limitation, with respect to all charges, fees,
expenses, commissions, reimbursements, premiums, indemnities and other payments
related to or in respect of the obligations contained in this Agreement or any
other Security Document (the obligations described in clauses (i), (ii) and
(iii) of this Section 3, collectively, the "Secured Obligations").
SECTION 4. No Release. Nothing set forth in this Agreement shall
relieve any Pledgor from the performance of any term, covenant, condition or
agreement on such Pledgor's part to be performed or observed under or in respect
of any of the Pledged Collateral or from any liability to any Person under or in
respect of any Pledged Collateral or shall impose any obligation on the
Collateral Agent or any other Secured Party to perform or observe any such term,
covenant, condition or agreement on such Pledgor's part to be so performed or
observed or shall impose any liability on the Collateral Agent or any other
Secured Party for any act or omission on the part of such Pledgor relating
thereto or for any breach of any representation or warranty on the part of such
Pledgor contained in this Agreement, or under or in respect of the Pledged
Collateral or made in connection herewith or therewith. The obligations of each
Pledgor contained in this Section 4 shall survive the termination of this
Agreement and the discharge of such Pledgor's other obligations under this
Agreement, the Indenture, the Notes and the other Security Documents.
SECTION 5. Supplements; Further Assurances. Each Pledgor agrees
that, at any time and from time to time, it shall execute and file and refile
such financing statements, continuation statements, amendments thereto and other
similar documents (including, without limitation, this Agreement) in such
offices required or permitted by law in order to perfect, protect and preserve
the rights and interests granted to the Collateral Agent hereunder (including,
without limitation, any such action with respect to the Pledged Collateral
relating to the New Bar Mill). Without limiting each Pledgor's obligation to
make such filings, each Pledgor hereby authorizes the Collateral Agent and
appoints the Collateral Agent as its attorney-in-fact to file such financing
statements, continuation statements, amendments thereto and other similar
documents without the signature of such Pledgor to the fullest extent permitted
by applicable law, and such Pledgor agrees to do such further acts and things,
and to execute and deliver to the Collateral Agent such additional assignments,
agreements, powers and instruments, as the Collateral Agent may require to carry
into effect the purposes of this Agreement or to assure and confirm unto the
Collateral Agent its rights, powers and remedies hereunder. All of the foregoing
shall be at the sole cost and expense of each Pledgor.
SECTION 6. Representations, Warranties and Covenants. Each Pledgor
represents, warrants and covenants as follows:
(a) Necessary Filings. The filings, registrations and recordings
described in Schedule B constitute the only filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted by such Pledgor to the Collateral Agent pursuant to
this Agreement in respect of the Pledged Collateral. All such filings,
registrations and recordings shall be delivered to the Collateral Agent on or
prior to the date hereof or as soon as thereafter as reasonably practicable.
Upon the proper filing of all such
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filings, registrations and recordings, the Lien granted to the Collateral Agent
for the benefit of the Secured Parties pursuant to this Agreement will
constitute a perfected Lien superior and prior to the rights of all other
Persons therein other than the holders of (i) Prior Liens and (ii) Liens of the
type described in clause (v) of Section 8 of this Agreement to the extent
permitted thereby to be superior to the Lien granted to the Collateral Agent
hereunder.
(b) No Liens. Each Pledgor is as of the date hereof, and, as to the
Pledged Collateral acquired by it from time to time after the date hereof, each
Pledgor will be, the owner of all the Pledged Collateral pledged by it hereunder
free from any Lien on a first priority basis or other right, title or interest
of any Person other than (i) Prior Liens, (ii) the Lien granted to the
Collateral Agent pursuant to this Agreement, (iii) as to each category or type
of Pledged Collateral, the Liens described in Section 4.2 of the Intercreditor
Agreement, which are subject and subordinate to the Lien granted to the
Collateral Agent pursuant to this Agreement, in such category or type of Pledged
Collateral and refinancings thereof to the extent permitted under the Indenture
and the Intercreditor Agreement (collectively, the "Subordinate Intercreditor
Liens") and (iv) the other Liens permitted pursuant to Section 8 of this
Agreement. Each Pledgor shall defend the Pledged Collateral against all claims
and demands of all Persons at any time claiming any interest therein adverse to
the Collateral Agent or any other Secured Party.
(c) Other Financing Statements. There is no filed financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) covering or purporting to cover any interest of any kind in
the Pledged Collateral other than the financing statements or similar statements
or instruments filed in respect of (i) Prior Liens, (ii) this Agreement, (iii)
Subordinate Intercreditor Liens and (iv) the other Liens permitted pursuant to
Section 8 of this Agreement. So long as the Secured Obligations remain unpaid,
no Pledgor shall execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Pledged Collateral,
except financing statements filed or to be filed in respect of (i) Prior Liens,
(ii) this Agreement, (iii) Subordinate Intercreditor Liens and (iv) the other
Liens permitted pursuant to Section 8 of this Agreement.
(d) Chief Executive Office; Change of Name. The chief executive
office of such Pledgor is located at the address indicated next to its name in
Schedule C annexed hereto. Such Pledgor shall not move its chief executive
office, except to such new location as such Pledgor may establish in accordance
with the last sentence of this subsection 6(d). Such Pledgor shall not establish
a new location for its chief executive office nor shall it change its name until
(i) it shall have given the Collateral Agent not less than thirty (30) days'
prior written notice of its intention so to do, clearly describing such new
location or name and providing such other information in connection therewith as
the Collateral Agent may reasonably request and (ii) with respect to such new
location or name, such Pledgor shall have taken all action reasonably
satisfactory to the Collateral Agent to maintain the perfection and priority of
the security interest of the Collateral Agent for the benefit of the Secured
Parties in the Pledged Collateral intended to be granted hereby, including,
without limitation, obtaining waivers of landlord's or warehouseman's liens with
respect to such new location.
(e) Location of Equipment. All Equipment held on the date hereof by
such Pledgor is located at the locations shown in Schedule D annexed hereto. All
Equipment now held or, with respect to the New Bar Mill Equipment, subsequently
acquired, shall be kept at one or more of the locations shown in Schedule D
annexed hereto, or such new location as such Pledgor may establish if (i) it
shall have given to the Collateral Agent at least thirty (30) days' prior
written notice of its intention so to do, clearly describing such new location
and providing such other information in connection therewith as the Collateral
Agent may reasonably request, and (ii) with respect to such new location, such
Pledgor shall have taken all action reasonably satisfactory to the Collateral
Agent to maintain the perfection and priority of the security interest of the
Collateral Agent for the benefit of the Secured Parties in the Pledged
Collateral intended to be granted hereby, including, without
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limitation, using commercially reasonable efforts to obtain waivers of
landlord's or warehouseman's liens with respect to such new location.
(f) Authorization; Enforceability. Such Pledgor has the requisite
organizational power, authority and legal right to pledge and grant a security
interest in all the Pledged Collateral pledged by it pursuant to this Agreement,
and this Agreement constitutes the legal, valid and binding obligation of such
Pledgor, enforceable against such Pledgor in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(g) No Consents. Except for (i) the filings, registrations and
recordings contemplated in subsection 6(a) and (ii) those consents,
authorizations, approvals or other actions, notices or filings which have been
previously taken, obtained or made, no consent of any party (including, without
limitation, equityholders or creditors of such Pledgor) and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body or other Person is required either
(A) for the pledge by such Pledgor of the Pledged Collateral pledged by it
pursuant to this Agreement or for the execution, delivery or performance of this
Agreement by such Pledgor, (B) except as may be provided in the Intercreditor
Agreement, for the exercise by the Collateral Agent of the rights provided for
in this Agreement or (C) except as may be provided in the Intercreditor
Agreement, for the exercise by the Collateral Agent of the remedies in respect
of the Pledged Collateral pursuant to this Agreement.
(h) Pledged Collateral. All information set forth herein (including,
without limitation, the information set forth in the Schedules annexed hereto)
relating to the Pledged Collateral is accurate and complete in all material
respects.
(i) Acquisition Documents. Such Pledgor shall perform and comply
with the terms and conditions of all Acquisition Documents. Such Pledgor shall
not without the consent of the Collateral Agent (i) cancel or terminate any of
the Acquisition Documents or consent to or accept any cancellation or
termination thereof, (ii) amend, supplement or otherwise modify any of the
Acquisition Documents in any material respect (in each case as in effect on the
date hereof), (iii) waive any default under or breach of any of the Acquisition
Documents or waive, fail to enforce, forgive or release any right, interest, or
entitlement of any kind, howsoever arising, under or in respect of such
Acquisition Documents or, vary or agree to the variation of any of the
provisions of any of such Acquisition Documents or of the performance of any
other Person under any of such Acquisition Documents, or (iv) petition, request
or take any other legal or administrative action which seeks, or may be
expected, to rescind, terminate or suspend, any of the Acquisition Documents or
amend or modify any thereof. Such Pledgor shall notify the Collateral Agent in
the event it receives any notice or communication with respect to the
Acquisition Documents including, without limitation, notices of default, and
shall forward promptly copies of any such notices or communications to the
Collateral Agent.
SECTION 7. Provisions Concerning All Pledged Collateral.
(a) Insurance. Each Pledgor shall at all times keep the Equipment
insured in favor of Collateral Agent, at the applicable Pledgors' own expense,
against fire, theft and all other risks to which the Pledged Collateral may be
subject, in such amounts and with such deductibles as from time to time would be
maintained by a reasonably prudent operator of businesses similar to the
business of the applicable Pledgor. Each policy or certificates with respect to
such insurance shall be endorsed to the Collateral Agent's reasonable
satisfaction for the benefit of the Collateral Agent (including, without
limitation, by naming the Collateral Agent as an additional named insured or
loss payee as its interest may appear) and such policy or certificate shall be
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delivered to the Collateral Agent. Each such policy shall state that it cannot
be cancelled without thirty (30) days' prior written notice to the Collateral
Agent. At least thirty (30) days prior to the expiration of any such policy of
insurance, the applicable Pledgor shall deliver to the Collateral Agent an
extension or renewal policy or an insurance certificate evidencing renewal or
extension of such policy. If the applicable Pledgor shall fail to insure such
Pledged Collateral to the Collateral Agent's reasonable satisfaction or if the
applicable Pledgor shall fail to so endorse and deposit, or to extend or renew,
all such insurance policies or certificates with respect thereto, the Collateral
Agent shall have the right (but shall be under no obligation), to advance funds
to procure or renew or extend such insurance and the applicable Pledgor agrees
to reimburse the Collateral Agent for any and all costs and expenses thereof,
with interest on all such funds from the date advanced at the rate per annum
(the "Default Rate") equal to the highest rate then payable under the Notes.
Within five (5) Business Days after making any such advance, the Collateral
Agent shall endeavor to give the applicable Pledgor written notice of the amount
and purpose of such advance; provided, however, that failure to give such notice
will not relieve the applicable Pledgor of its obligations to make such
reimbursement to the Collateral Agent. Any proceeds of insurance in respect of
the Pledged Collateral are hereby assigned to the Collateral Agent. Subject to
the provisions of the Intercreditor Agreement, in case of any loss or damage to
any of the Pledged Collateral, all proceeds of insurance maintained by the
applicable Pledgor shall be paid to the Collateral Agent as Trust Moneys
pursuant to Article Twelve of the Indenture and shall be subject to retention
and disbursement by the Collateral Agent in accordance with the terms of the
Indenture.
(b) Further Actions. Each Pledgor shall, at its sole cost and
expense, make, execute, endorse, acknowledge, file and/or deliver to the
Collateral Agent from time to time such lists, descriptions and designations of
the Pledged Collateral pledged by it, copies of warehouse receipts, receipts in
the nature of warehouse receipts, bills of lading, documents of title, vouchers,
invoices and schedules relating to such Pledged Collateral.
(c) Notation on Books and Records. Each Pledgor shall place on its
books and records with respect to the Pledged Collateral pledged by it a
notation stating that the Collateral Agent has a security interest therein.
SECTION 8. Transfers and Other Liens. Except as permitted by the
Indenture (including, without limitation, Section 11.3(b) thereof), no Pledgor
shall sell, convey, assign or otherwise dispose of, or grant any option with
respect to, any of the Pledged Collateral. No Pledgor shall create or permit to
exist any Lien upon or with respect to any of the Pledged Collateral other than
(i) Prior Liens, (ii) the Lien granted to the Collateral Agent pursuant to this
Agreement, (iii) Subordinate Intercreditor Liens, (iv) Liens of the type
described in clauses (iii), (iv) and (vii) of the definition of Permitted
Collateral Liens and refinancings thereof to the extent permitted under the
Indenture and the Intercreditor Agreement and (v) Liens of the type described in
clauses` (b), (c), (h), (i), (n) and (q) of the definition of Permitted Liens;
provided, however, that each of the Liens permitted by this clause (v) of this
Section 8 shall in all respects be subject and subordinate in priority to the
Lien of this Agreement except to the extent that the law or regulation creating
or authorizing such Lien provides that such Lien must be superior to the Lien of
this Agreement.
SECTION 9. Reasonable Care. The Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equivalent to that which the Collateral Agent, in its individual
capacity, accords its own property, it being understood that the Collateral
Agent shall not have responsibility for taking any necessary steps to preserve
rights against any Person with respect to any Pledged Collateral.
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SECTION 10. Remedies Upon Event of Default.
(a) Obtaining Possession of the Pledged Collateral. If an Event of
Default shall have occurred and be continuing, then and in every such case, the
Collateral Agent may, but shall not be obligated to, in addition to any other
action permitted by law (and not limited in any manner to the remedies contained
in the Notes and the Indenture) take one or more of the following actions, in
accordance with the terms of, and at the times, if any, specified in the
Indenture:
(i) personally, or by agents or attorneys, immediately take
possession of the Pledged Collateral or any part thereof, from any Pledgor
or any other Person who then has possession of any part thereof with or
without notice or process of law (to the fullest extent permitted by law),
and for that purpose may enter upon any Pledgor's premises where any of
the Pledged Collateral is located and remove such Pledged Collateral and
use in connection with such removal any and all services, supplies, aids
and other facilities of any such Pledgor as reasonably necessary to effect
such removal;
(ii) sell, assign or otherwise liquidate, or direct any
Pledgor to sell, assign or otherwise liquidate, any or all investments
made in whole or in part with the Pledged Collateral pledged by it or any
part thereof, and take possession of the proceeds of any such sale,
assignment or liquidation; and
(iii) take possession of the Pledged Collateral or any part
thereof, by directing any Pledgor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral
Agent, in which event the applicable Pledgor shall at its own expense: (x)
forthwith cause the Pledged Collateral pledged by it to be moved to the
place or places so designated by the Collateral Agent and there delivered
to the Collateral Agent; (y) store and keep any Pledged Collateral so
delivered to the Collateral Agent at such place or places pending further
action by the Collateral Agent and (z) while the Pledged Collateral shall
be so stored and kept, provide such guards and maintenance services as
shall be necessary to protect the same and to preserve and maintain them
in good condition. Each Pledgor's obligation to deliver the Pledged
Collateral is of the essence of this Agreement. Upon application to a
court of equity having jurisdiction, the Collateral Agent shall be
entitled to a decree requiring specific performance by the applicable
Pledgor of such obligation.
(b) Disposition of the Pledged Collateral. Upon the occurrence and
during the continuance of an Event of Default, the Collateral Agent may,
in accordance with the terms of, and at the times, if any, specified in
the Indenture, exercise in respect of the Pledged Collateral, in addition
to the other rights and remedies provided for herein or otherwise
available to it, without notice except as specified below or as otherwise
required by law, sell the Pledged Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange, broker's board or
at any of the Collateral Agent's offices or elsewhere, for cash, on credit
or for future delivery, and at such price or prices and upon such other
terms as the Collateral Agent may deem commercially reasonable. The
Collateral Agent or any Secured Party may bid for and be the purchaser of
any or all of the Pledged Collateral at any such sale and shall be
entitled, for the purpose of bidding and making settlement or payment of
the purchase price for all or any portion of the Pledged Collateral sold
at such sale, to deliver any outstanding Note or claims for interest
thereon in lieu of cash, which Note or claims for interest thereon shall
be applied to the payment of such purchase price. In the event that the
amount payable in respect of the purchase price of the Pledged Collateral
purchased at any such sale shall be less than the amount due on such Note,
such Note shall be returned to the Secured Party after being appropriately
stamped to show partial payment. Each purchaser at any such sale shall
acquire the property sold absolutely free from any claim or right on the
part of the applicable Pledgor, and the applicable Pledgor hereby waives,
to the fullest extent permitted by law, all rights of redemption, stay or
appraisal hereafter enacted. The Collateral Agent shall not be obligated
to make any sale of Pledged Collateral regardless of notice of sale having
been given. The Collateral Agent may
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adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Each Pledgor hereby waives, to
the fullest extent permitted by law, any claims against the Collateral Agent
arising by reason of the fact that the price at which any Pledged Collateral may
have been sold at such a private sale was less than the price which might have
been obtained at a public sale, even if the Collateral Agent accepts the first
offer received and does not offer such Pledged Collateral to more than one
offeree. Each Pledgor agrees that, to the extent notice of sale shall be
required by law, five (5) days' notice from the Collateral Agent of the time and
place of any public sale or of the time after which a private sale or other
intended disposition is to take place shall be commercially reasonable
notification of such matters. No notification need be given to any Pledgor if
such Pledgor has signed, after the occurrence of an Event of Default, a
statement renouncing or modifying any right to notification of sale or other
intended disposition.
(c) Remedies Under UCC. In addition to the rights and remedies
provided in this Agreement or otherwise available to it, the Collateral Agent
shall have all the rights and remedies of a secured party under the UCC.
(d) Waiver of Claims. Except as otherwise provided herein, each
Pledgor hereby waives, to the fullest extent permitted by applicable law, notice
or judicial hearing in connection with the Collateral Agent's taking possession
or the Collateral Agent's disposition of any of the Pledged Collateral,
including, without limitation, any and all prior notice and hearing for any
prejudgment remedy or remedies and any such right which the applicable Pledgor
would otherwise have under law, and the applicable Pledgor hereby further
waives, to the fullest extent permitted by applicable law: (i) all damages
occasioned by such taking of possession; (ii) all other requirements as to the
time, place and terms of sale or other requirements with respect to the
enforcement of the Collateral Agent's rights hereunder and (iii) all rights of
redemption, appraisal, valuation, stay, extension or moratorium now or hereafter
in force under any applicable law. Any sale of, or the grant of options to
purchase, or any other realization upon, any Pledged Collateral shall operate to
divest all right, title, interest, claim and demand, either at law or in equity,
of the applicable Pledgor therein and thereto, and shall be a perpetual bar both
at law and in equity against the applicable Pledgor and against any and all
Persons claiming or attempting to claim the Pledged Collateral so sold, optioned
or realized upon, or any part thereof, from, through or under the applicable
Pledgor.
(e) Certain Sales of Pledged Collateral. Each Pledgor recognizes
that, by reason of certain prohibitions contained in law, rules, regulations or
orders of any foreign governmental authority, the Collateral Agent may be
compelled, with respect to any sale of all or any part of the Pledged
Collateral, to limit purchasers to those who meet the requirements of such
foreign governmental authority. Each Pledgor acknowledges that any such sales
may be at prices and on terms less favorable to the Collateral Agent than those
obtainable through a public sale without such restrictions, and, notwithstanding
such circumstances, agrees that any such restricted sale shall be deemed to have
been made in a commercially reasonable manner.
SECTION 11. Application of Proceeds. The proceeds received by the
Collateral Agent in respect of any sale of, collection from or other realization
upon all or any part of the Pledged Collateral pursuant to the exercise by the
Collateral Agent of its remedies as a secured creditor as provided in Section 10
hereof shall be applied, together with any other sums then held by the
Collateral Agent pursuant to this Agreement, promptly by the Collateral Agent in
the manner set forth in the Indenture and/or the Intercreditor Agreement.
SECTION 12. Expenses. Each Pledgor will upon demand pay to the
Collateral Agent the amount of any and all expenses, including the reasonable
fees and expenses of its counsel (including, without limitation, any local
counsel) and the allocated costs of the Collateral Agent's internal counsel and
the fees and expenses of any experts and agents which the Collateral Agent may
incur in connection with (i) the collection of
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the Secured Obligations, (ii) the enforcement and administration of this
Agreement, (iii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Pledged Collateral, (iv) the
exercise or enforcement of any of the rights of the Collateral Agent or any
Secured Party hereunder or (v) the failure by any Pledgor to perform or observe
any of the provisions hereof. All amounts payable by each Pledgor under this
Section 12 shall be due upon demand and shall be part of the Secured
Obligations. Each Pledgor's obligations under this Section 12 shall survive the
termination of this Agreement and the discharge of each such Pledgor's other
obligations hereunder.
SECTION 13. No Waiver; Cumulative Remedies.
(a) No failure on the part of the Collateral Agent to exercise, no
course of dealing with respect to, and no delay on the part of the Collateral
Agent in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law.
(b) In the event the Collateral Agent shall have instituted any
proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Collateral Agent, then and in every such case, each Pledgor, the
Collateral Agent and each holder of any of the Secured Obligations shall be
restored to their respective former positions and rights hereunder with respect
to the Pledged Collateral, and all rights, remedies and powers of the Collateral
Agent and the Secured Parties shall continue as if no such proceeding had been
instituted.
SECTION 14. Collateral Agent. The Collateral Agent has been
appointed as collateral agent pursuant to the Indenture and/or the Intercreditor
Agreement. The actions of the Collateral Agent hereunder are subject to the
provisions of the Indenture and/or the Intercreditor Agreement. The Collateral
Agent shall have the right hereunder to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or refrain from
taking action (including, without limitation, the release or substitution of
Pledged Collateral), in accordance with this Agreement, the Indenture and the
Intercreditor Agreement. The Collateral Agent may resign and a successor
Collateral Agent may be appointed in the manner provided in the Indenture and/or
the Intercreditor Agreement. Upon the acceptance of any appointment as the
Collateral Agent by a successor Collateral Agent, that successor Collateral
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent under this Agreement, and
the retiring Collateral Agent shall thereupon be discharged from its duties and
obligations under this Agreement. After any retiring Collateral Agent's
resignation, the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement while it was
the Collateral Agent.
SECTION 15. Collateral Agent May Perform; Collateral Agent Appointed
Attorney-in-Fact. If any Pledgor shall fail to do any act or thing that it has
covenanted to do hereunder or if any warranty on the part of any such Pledgor
contained herein shall be breached and if such failure or breach shall
constitute an Event of Default, the Collateral Agent or any Secured Party may
(but shall not be obligated to) do the same or cause it to be done or remedy any
such breach, and may expend funds for such purpose. Any and all amounts so
expended by the Collateral Agent or such Secured Party shall be paid by the
applicable Pledgor within five Business Days after demand therefor, with
interest at the Default Rate during the period from and including the date on
which such funds were so expended to the date of repayment. Each Pledgor's
obligations under this Section 15 shall survive the termination of this
Agreement and the discharge of each Pledgor's other obligations under this
Agreement. Each Pledgor hereby appoints the Collateral Agent its
attorney-in-fact with an interest, with full authority in the place and stead of
the applicable Pledgor and in the name of the applicable Pledgor, or
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otherwise, from time to time in the Collateral Agent's discretion, to take any
action and to execute any instrument consistent with the terms of this
Agreement, the Indenture and the Intercreditor Agreement which the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement. The foregoing grant of authority is a power of attorney coupled with
an interest and such appointment shall be irrevocable for the term of this
Agreement. Each Pledgor hereby ratifies all that such attorney shall lawfully do
or cause to be done by virtue and in accordance with the terms hereof.
SECTION 16. Notices. Unless otherwise provided herein any notice or
other communication herein required or permitted to be given shall be given in
the manner and at the address set forth in the Indenture, or as to any party at
such other address as shall be designated by such party in a written notice to
the other party complying as to delivery with the terms of this Section 16. All
such notices and other communications shall be deemed to have been given when
delivered in person, or received by telecopy or telex; or one (1) Business Day
after delivery to the office of such overnight courier service; or five (5)
Business Days after deposit in the United States mail, registered or certified,
with postage prepaid and properly addressed; provided, however, that notices to
the Collateral Agent shall not be effective until received by the Collateral
Agent.
SECTION 17. Continuing Security Interest; Assignment. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(i) be binding upon the Pledgors, their respective successors and assigns and
(ii) inure, together with the rights and remedies of the Collateral Agent
hereunder, to the benefit of the Collateral Agent and the other Secured Parties
and each of their respective successors, transferees and assigns. No other
Persons (including, without limitation, any other creditor of the Pledgors)
shall have any interest herein or any right or benefit with respect hereto.
Without limiting the generality of the foregoing clause (ii), any Secured Party
may assign or otherwise transfer any Note held by it secured by this Agreement
to any other Person, and such other Person shall thereupon become vested with
all the benefits in respect thereof granted to such Secured Party, herein or
otherwise, subject however, to the provisions of the Indenture. To the extent an
affiliate of the Issuers from time to time after the initial date of this
Agreement is required under the Indenture to pledge any assets to the Collateral
Agent for the benefit of the Secured Parties, such affiliate may become a party
hereto upon execution and delivery to the Collateral Agent of a joinder
agreement substantially in the form attached hereto as Exhibit 1, and upon such
execution and delivery shall be deemed to be a "Pledgor" for all purposes
hereunder.
SECTION 18. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
PROPERTY ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
SECTION 19. CONSENT TO JURISDICTION AND ANY SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH PLEDGOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT. EACH PLEDGOR DESIGNATES AND APPOINTS CT CORPORATION SYSTEM,
WITH AN ADDRESS AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011 AND SUCH OTHER
PERSONS AS MAY HEREAFTER BE SELECTED BY THE APPLICABLE PLEDGOR IRREVOCABLY
AGREEING IN WRITING TO SO SERVE, AS ITS AGENT
<PAGE>
-14-
TO RECEIVE ON ITS BEHALF, SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY
SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE APPLICABLE PLEDGOR TO
BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF SUCH PROCESS SO
SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE APPLICABLE PLEDGOR AT ITS
ADDRESS PROVIDED FOR IN SECTION 16 HEREOF EXCEPT THAT UNLESS OTHERWISE PROVIDED
BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY
OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY THE APPLICABLE PLEDGOR REFUSES
TO RECEIVE AND FORWARD SUCH SERVICE, THE APPLICABLE PLEDGOR HEREBY AGREES THAT
SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE COLLATERAL AGENT TO BRING PROCEEDINGS AGAINST ANY PLEDGOR
IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 20. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 21. Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same Agreement.
SECTION 22. Headings. The Section headings used in this Agreement
are for convenience of reference only and shall not affect the construction of
this Agreement.
SECTION 23. Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state or federal,
that are applicable to the transaction of which this Agreement is a part. All
agreements between each Pledgor and the Collateral Agent, whether now existing
or hereafter arising and whether oral or written, are hereby expressly limited
so that in no contingency or event whatsoever shall the amount paid or agreed to
be paid by the Pledgors for the use, forbearance or detention of the money to be
loaned or advanced under the Indenture or any related document, or for the
payment or performance of any covenant or obligation contained herein or in the
Indenture, exceeds the maximum amount permissible under applicable federal or
state usury laws. If under any circumstances whatsoever fulfillment of any such
provision, at the time performance of such provision shall be due, shall involve
exceeding the limit of validity prescribed by law, then the obligation to be
fulfilled shall be reduced to the limit of such validity. If under any
circumstances any Pledgor shall have paid an amount deemed interest by
applicable law, which would exceed the highest lawful rate, such amount that
would be excessive interest under applicable usury laws shall be applied to the
reduction of the principal amount owing in respect of the Secured Obligations
and not to the payment of interest, or if such excessive interest exceeds the
unpaid balance of principal and any other amounts due hereunder, the excess
shall be refunded to the applicable Pledgor. All sums paid or agreed to be paid
for the use, forbearance or detention of the principal under any extension of
credit or advancement of funds by United States Trust Company of New York, as
trustee or collateral agent, shall, to the extent permitted by applicable law,
and to the extent necessary to preclude exceeding the limit of validity
prescribed by law, be amortized, prorated, allocated and spread from the date of
this Agreement until payment in full of the Secured Obligations so that the
actual rate of interest on account of such principal amounts is uniform
throughout the term hereof.
<PAGE>
IN WITNESS WHEREOF, the Pledgors have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC,
as Pledgor
By:________________________________________
Name:
Title:
RTI CAPITAL CORP.,
By:_________________________________________
Name:
Title:
NIMISHILLEN & TUSCARAWAS, LLC,
as Pledgor
By:_________________________________________
Name:
Title:
BLISS & LAUGHLIN, LLC,
as Pledgor
By:_________________________________________
Name:
Title:
<PAGE>
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Collateral Agent
By:_________________________________________
Name:
Title:
<PAGE>
EXHIBIT 4.6
================================================================================
MORTGAGE, ASSIGNMENT OF LEASES,
SECURITY AGREEMENT AND FIXTURE FILING
BY
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC,
Mortgagor,
TO
UNITED STATES TRUST COMPANY OF NEW YORK,
Mortgagee;
Securing Principal Indebtedness of: $425,000,000;
Relating to Premises in:
Dated as of: August 13, 1999
================================================================================
After recording,
please return to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Jonathan Schaffzin, Esq.
This instrument secures, inter alia, obligations
which may provide for a variable rate of interest.
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION.............................................................. 1
RECITALS.................................................................. 1
GRANTING CLAUSES.......................................................... 2
COVENANTS................................................................. 6
ARTICLE I WARRANTIES, REPRESENTATIONS AND COVENANTS OF MORTGAGOR ..... 4
SECTION 1.1. Payment and Performance............................... 4
SECTION 1.2. Authority and Validity................................ 4
SECTION 1.3. Good Title............................................ 4
SECTION 1.4. Recording Documentation To Assure Security Interest;..
Fees and Expenses 5
SECTION 1.5. Payment of Taxes, Insurance Premiums, Assessments;
Compliance with Law and Insurance Requirements 6
SECTION 1.6. Certain Tax Law Changes............................... 8
SECTION 1.7. Required Insurance Policies........................... 8
SECTION 1.8. Failure To Make Certain Payments...................... 10
SECTION 1.9. Inspection............................................ 10
SECTION 1.10. Mortgagor To Maintain Improvements.................... 10
SECTION 1.11. Mortgagor's Obligations with Respect to Leases........ 11
SECTION 1.12. Transfer Restrictions................................. 12
SECTION 1.13. Destruction; Condemnation............................. 13
SECTION 1.14. Alterations........................................... 14
SECTION 1.15. Hazardous Material.................................... 14
SECTION 1.16. Asbestos.............................................. 15
SECTION 1.17. Books and Records; Reports............................ 16
SECTION 1.18. No Claims Against Mortgagee........................... 16
SECTION 1.19. Utility Services...................................... 16
ARTICLE II ASSIGNMENT OF RENTS; SECURITY AGREEMENT....................... 16
SECTION 2.1. Assignment of Leases, Rents, Issues and Profits....... 16
SECTION 2.2. Security Interest in Personal Property................ 18
ARTICLE III EVENTS OF DEFAULT AND REMEDIES............................... 19
SECTION 3.1. Remedies in Case of an Event of Default............... 19
SECTION 3.2. Sale of Mortgaged Property If Event of Default Occurs;
Proceeds of Sale 19
SECTION 3.3. Additional Remedies in Case of an Event of Default.... 20
SECTION 3.4. Legal Proceedings After an Event of Default........... 21
SECTION 3.5. Remedies Not Exclusive................................ 22
i
<PAGE>
Page
----
ARTICLE IV CERTAIN DEFINITIONS........................................... 22
ARTICLE V MISCELLANEOUS.................................................. 24
SECTION 5.1. Severability.......................................... 24
SECTION 5.2. Notices............................................... 24
SECTION 5.3. Covenants To Run with the Land........................ 24
SECTION 5.4. Captions; Gender and Number........................... 24
SECTION 5.5. Limitation on Interest Payable........................ 24
SECTION 5.6. Indemnification; Reimbursement........................ 24
SECTION 5.7. Choice of Law......................................... 25
SECTION 5.8. Changes in Writing.................................... 25
SECTION 5.9. No Merger............................................. 25
SECTION 5.10. Concerning Mortgagee.................................. 25
SECTION 5.11. Mortgagee's Right To Sever Indebtedness............... 26
SECTION 5.12. Waiver of Stay........................................ 27
SECTION 5.13. No Credit for Payment of Taxes or Impositions......... 27
SECTION 5.14. Stamp and Other Taxes................................. 27
SECTION 5.15. Estoppel Certificates................................. 27
SECTION 5.16. Additional Security................................... 27
SECTION 5.17. Release............................................... 28
SECTION 5.18. Expenses of Collection................................ 28
SIGNATURE PAGE
SCHEDULE A LEGAL DESCRIPTION
SCHEDULE B PRIOR LIENS
ii
<PAGE>
MORTGAGE, ASSIGNMENT OF LEASES,
SECURITY AGREEMENT AND FIXTURE FILING
MORTGAGE, ASSIGNMENT OF LEASES, SECURITY AGREEMENT AND FIXTURE
FILING ("Mortgage"), dated as of August __, 1999 made by [REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC, a Delaware limited liability company having an office at
3770 Embassy Parkway, Akron, Ohio 44333-8367], as mortgagor, assignor and debtor
(together with any successors or assigns, "Mortgagor"), in favor of UNITED
STATES TRUST COMPANY OF NEW YORK, a bank and trust company organized, validly
existing and in good standing under the New York Banking Law having an office at
114 West 47th Street, New York, New York 10036, as trustee and collateral agent
pursuant to the Indenture (as hereinafter defined), as mortgagee, assignee and
secured party (in such capacity and together with any successors or assigns in
such capacity, "Mortgagee").
R E C I T A L S :
1. Mortgagor is the owner of the land described in Schedule A
annexed hereto and made a part hereof and all the improvements situated thereon.
2. Republic Technologies International LLC ("Republic Technologies
International"), RTI Capital Corp. ("Republic Capital"; together with Republic
Technologies International, the "Issuers"), Mortgagor, Mortgagee and certain
other affiliates of the Issuers have, in connection with the execution and
delivery of this Mortgage, entered into a certain indenture (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
"Indenture"; capitalized terms used herein and not otherwise defined shall have
the meanings assigned thereto in the Indenture), dated as of August __, 1999,
pursuant to which the Issuers are issuing their ___% senior secured notes due
2009 (the "Senior Secured Notes") in the aggregate principal amount of
$425,000,000. It is contemplated that the Issuers may, after the date hereof,
issue exchange notes pursuant to the Indenture (the "Exchange Notes"; together
with the Senior Secured Notes, the "Notes").
3. Mortgagor is subject to the terms of a certain guarantee (the
"Guarantee") set forth in the Indenture pursuant to which, among other things,
Mortgagor has guaranteed the obligations of the Issuers under the Notes and the
Indenture and Mortgagor desires that such Guarantee be secured hereunder.
4. This Mortgage is given by Mortgagor in favor of Mortgagee to
secure the payment and performance in full when due, whether at stated maturity,
by acceleration or otherwise (including, without limitation, the payment of
interest and other amounts which would accrue and become due but for the filing
of a petition in bankruptcy or the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)), of (i) all obligations of
Mortgagor now existing or hereafter arising under or in respect of the
Guarantee, including, without limitation, Mortgagor's obligations to pay
principal, interest and all other charges, fees, expenses, commissions,
reimbursements, premiums, indemnities and other payments related to or in
respect of the obligations contained in the Guarantee, (ii) all obligations of
the Issuers now or hereafter existing under or in respect of the Indenture and
the Notes (including, without limitation, the obligations of the Issuers to pay
principal of, premium, if any, and interest on the Notes when due and payable)
and all other charges, fees, premiums, indemnities and other amounts due or to
become due under or in connection with the Indenture and the Notes and (iii)
without duplication of the amounts described in clauses (i) and (ii), all
obligations, indebtedness and liabilities of Mortgagor pursuant to the terms of
this Mortgage, in each case whether now existing or hereafter arising, and
whether in the regular course of business or otherwise (collectively, the
"Secured Obligations"). The final maturity date of the Secured Obligations is
____________, 2009.
<PAGE>
G R A N T I N G C L A U S E S :
For and in consideration of the sum of Ten Dollars ($10.00) and
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Mortgagor hereby grants, mortgages, bargains, sells, assigns and
conveys to Mortgagee and hereby grants to Mortgagee a security interest in and
mortgage lien upon, all Mortgagor's right, title and interest in and to the
following property whether now owned or held or hereafter acquired
(collectively, the "Mortgaged Property"):
A. Any and all present estates or interests of Mortgagor in the land
described in Schedule A annexed hereto, together with all Mortgagor's
reversionary rights in and to any and all lots, parcels, alterations,
partitions, easements, rights-of-way, sidewalks, strips and gores of land,
drives, roads, curbs, streets, lanes, ways, alleys, passages, passageways, sewer
rights, waters, woods, watercourses, water rights, mineral, gas and oil rights,
power, air, light and other rights, estates, titles, interests, privileges,
liberties, servitudes, licenses, tenements, hereditaments and appurtenances
whatsoever, in any way belonging, relating or appertaining thereto, or any part
thereof, or which hereafter shall in any way belong, relate or be appurtenant
thereto (collectively, the "Land");
B. Any and all estates or interests of Mortgagor in the buildings,
structures and other improvements and any and all Alterations (as hereinafter
defined) now or hereafter located or erected on the Land, including, without
limitation, attachments, walks and ways (collectively, the "Improvements";
together with the Land, the "Premises");
C. Any and all interests of Mortgagor in all permits, licenses,
franchises, certificates, consents, approvals and authorizations, however
characterized, issued or in any way furnished in connection with the Premises,
whether necessary or not for the operation and use of the Premises, including,
without limitation, building permits, certificates of occupancy, environmental
certificates, industrial permits, or licenses and certificates of operation;
provided, however, that Mortgaged Property shall not include any items of
property described in this Granting Clause C to the extent that Mortgagor is
expressly prohibited from granting a Lien thereon or applicable law provides for
the involuntary forfeiture of the property in the event that a Lien is granted
thereon without the consent of the appropriate Person, governmental authority,
agency or instrumentality; provided, further, that in the event of the
termination or elimination of any prohibition or requirement for any consent
contained in any law, rule, regulation, license, franchise, certificate,
consent, approval, authorization or other document, or upon the granting of any
consent, the items of property so excluded from the definition of Mortgaged
Property by virtue of the immediately preceding proviso shall (without any act
or delivery by any Person) constitute Mortgaged Property hereunder;
D. Any and all interest of Mortgagor in all "equipment", as such
term is defined in the UCC, located at or used in connection with the operation
of Mortgagor's business conducted at the Premises, whether or not affixed to the
Premises, and shall specifically include, without limitation, (i) goods which
would be considered a "fixture" under Section 9-313 of the UCC or otherwise
would be considered a "fixture" or a part of the Premises under applicable law,
except for Real Estate Fixtures, (ii) all machinery, facilities, installations,
apparatus, equipment, office machinery, electronic data processing equipment,
computers and computer hardware and software (whether owned or licensed), all
indoor or outdoor furniture, tools, materials, automotive equipment, motor
vehicles, manufacturing, storage and handling equipment, overhead cranes,
cutting and bending machines and other equipment for the fabrication of steel
bars, rods and wire products, furnaces, electric arc furnaces, ladle arc
furnaces, billet mills, reheat furnaces, rolling mills, conveyors, coilers,
cooling beds and all other equipment of any kind or nature and owned by
Mortgagor or in which Mortgagor may have any interest (but only to the extent of
such interest), (iii) all modifications, renewals, improvements, alterations,
repairs, substitutions, attachments, additions, accessions and other property
now or hereafter affixed thereto or used in connection therewith and (iv) all
replacements and all parts therefor (collectively, the "Equipment");
-2-
<PAGE>
E. Any and all interest of Mortgagor in all "equipment", as such
term is defined in the UCC, which is (i) affixed to the Premises, (ii)
considered a fixture or a part of the Premises under applicable law and (iii)
integral to the occupancy or customarily used by occupants in connection with
the occupancy of the Land or the operation of the Improvements thereon as such,
as opposed to manufacturing or other business operations conducted therein or
therefrom and, in any event, shall include, without limitation, all
switchboards, utility systems, sprinkler and alarm systems or other fire
prevention or extinguishing apparatus and materials, HVAC equipment, boilers,
oil boilers, telecommunications equipment, refrigeration, electronic monitoring,
water or lighting systems, power, sanitation, waste removal, pollution abatement
or control, elevators, window cleaning, maintenance or other systems or
equipment, appliances or supplies, all heating apparatus, generators, plumbing,
lighting and gas fixtures, laundry, ventilating and air conditioning equipment,
all awnings, blinds, screens, storm sash, pumping equipment, electrical
equipment, including transformers, radiators and piping, coal stokers, plumbing
and bathroom fixtures, wash-tubs, sinks, stoves, ranges, window shades, motors,
generators, dynamos, kitchen cabinets, incinerators, plants and shrubbery and
all other articles used or useful in connection with the use, operation,
maintenance or repair of any part of the Premises, together with any and all
modifications, renewals, improvements, alterations, repairs, substitutions,
attachments, additions, accessions and other property now or hereafter affixed
thereto or used in connection therewith, all replacements and all parts
therefor, and all substitutes for any of the foregoing (collectively, the "Real
Estate Fixtures");
F. All Mortgagor's right, title and interest, as landlord,
franchisor, licensor or grantor, in all leases and subleases of space,
tenancies, lettings, franchise agreements, licenses, occupancy or concession
agreements, all books and records which contain payments under the leases,
contracts and other agreements, written or otherwise, now existing or hereafter
entered into relating in any manner to the Premises, the Equipment or the Real
Estate Fixtures and any and all amendments, modifications, supplements and
renewals of any thereof (each such lease, license or agreement, together with
any such amendment, modification, supplement or renewal, a "Lease"), whether now
in effect or hereafter coming into effect including, without limitation, all
rents, additional rents, rental income, receipts, management fees payable by
tenants, cash, guarantees, letters of credit, bonds, sureties or securities
deposited thereunder to secure performance of the lessee's, franchisee's,
licensee's or obligee's obligations thereunder, revenues, earnings, issues,
profits and income, advance rental payments, payments incident to assignment,
sublease or surrender of a Lease, claims for forfeited deposits, claims for
damages and awards, now due or hereafter to become due, with respect to any
Lease (collectively, the "Rents");
G. All general intangibles and contract rights relating to the
Premises, the Equipment or the Real Estate Fixtures and all reserves, deferred
payments, deposits, refunds and claims of every kind or character relating
thereto (collectively, the "Contract Rights");
H. All surveys, title insurance policies, drawings, plans,
specifications, construction contracts, file materials, operating and
maintenance records, catalogues, tenant lists, correspondence, advertising
materials, operating manuals, warranties, guaranties, appraisals, studies and
data relating to the Premises, the Equipment or the Real Estate Fixtures or the
construction of any Alteration or the maintenance of any Permit (as hereinafter
defined);
I. All the estate, right, title, interest, claim, and demand
whatsoever, of Mortgagor, in law, equity, or otherwise howsoever, of, in, and to
the same and every part of the foregoing; and
J. All proceeds of the conversion, voluntary or involuntary, of any
of the foregoing into cash or liquidated claims, including, without limitation,
proceeds of insurance (and any unearned premiums thereon), condemnation or
eminent domain, judgment or other awards or payments with respect thereto or
settlement in lieu thereof (including, without limitation, any Net Proceeds or
Net Award (each as hereinafter defined)), including, without limitation,
interest thereon (collectively, "Proceeds").
-3-
<PAGE>
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee and
Mortgagee's successors and assigns forever, for the purpose of securing the
payment and performance of the Secured Obligations.
C O V E N A N T S :
Mortgagor warrants, represents and covenants to and for the benefit
of Mortgagee as follows:
ARTICLE I
WARRANTIES, REPRESENTATIONS AND
COVENANTS OF MORTGAGOR
SECTION 1.1. Payment and Performance. Mortgagor shall pay as and
when the same shall become due, whether at its stated maturity, by acceleration
or otherwise, each and every amount payable by Mortgagor in respect of the
Secured Obligations and shall perform, at or prior to the time such performance
shall be due, all other obligations of Mortgagor which constitute Secured
Obligations.
SECTION 1.2. Authority and Validity. Mortgagor represents, warrants
and covenants that (i) Mortgagor is duly authorized to execute and deliver this
Mortgage, the Notes, the Indenture, the Guarantee and the other documents
evidencing or securing the Secured Obligations (this Mortgage, the Notes, the
Indenture, the Guarantee and such other documents, collectively, the "Indenture
Documents"), and all corporate and governmental actions, consents,
authorizations and approvals necessary or required therefor have been duly and
effectively taken or obtained, (ii) this Mortgage and the other Indenture
Documents are valid, binding and enforceable obligations of Mortgagor, except as
the enforceability of such obligations may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting creditors'
rights generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and (iii)
Mortgagor has the requisite organizational power and lawful authority to execute
and deliver this Mortgage and the other Indenture Documents and to mortgage and
grant a security interest in the Mortgaged Property as contemplated herein.
SECTION 1.3. Good Title.
1.3.1 Mortgagor represents, warrants and covenants that (i)
Mortgagor has (a) good and legal title to the Premises, (b) valid leasehold
interest to the landlord's interest and estate under or in respect of the
Leases, and (c) good title to the interest it purports to own in and to each of
the Permits, the Equipment, the Real Estate Fixtures and the Contract Rights, in
each case subject to no Liens, except for those Liens identified on Schedule B
annexed hereto (collectively, "Prior Liens"), (ii) Mortgagor will keep in effect
all material rights and appurtenances to or that constitute a part of the
Mortgaged Property which are necessary for the conduct of Mortgagor's business
at the Mortgaged Property, (iii) Mortgagor will protect, preserve and defend its
interest in the Mortgaged Property and title thereto, (iv) Mortgagor will comply
in all material respects with each of the terms, conditions and provisions of
any obligation of Mortgagor which is secured by the Mortgaged Property or the
noncompliance with which could reasonably be expected to result in the
imposition of a Lien on the Mortgaged Property, (v) Mortgagor will appear and
defend the Lien and security interests created and evidenced hereby and the
validity and priority of this Mortgage in any action or proceeding affecting or
purporting to affect the Mortgaged Property or any of the rights of Mortgagee
hereunder, (vi) this Mortgage creates and constitutes a valid and enforceable
Lien on the Mortgaged Property, except as the enforceability of such obligations
may be limited by bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting creditors' rights generally or by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and, to the extent any of the Mortgaged
Property shall consist of personalty, a
-4-
<PAGE>
security interest in the Mortgaged Property, which Lien and security interest
are and will be subject only to (a) Prior Liens (but not to extensions or
replacements of Prior Liens) and (b) Liens hereafter created and which, pursuant
to the provisions of subsection 1.12(i), are permitted to be superior to the
Lien and security interests created and evidenced hereby, and Mortgagor does now
and shall warrant and defend to Mortgagee and all its successors and assigns
such title and the validity and priority of the Lien and security interests
created and evidenced hereby against the claims of all Persons, (vii) there has
been issued and remain in effect (or applied for, as applicable) each and every
certificate of occupancy or use or other material Permit currently required for
the existing use and occupancy by Mortgagor and its tenants of the Premises and
(viii) the Premises comply in all material respects with all local zoning, land
use, setback or other development and use requirements of Governmental
Authorities (as hereinafter defined), except in the case of clause (vii) where
the failure to obtain such Permit and in the case of clause (viii) where the
failure to comply, could not reasonably be expected to have a material adverse
effect on the Mortgaged Property ("Material Adverse Effect").
1.3.2 Mortgagor, immediately upon obtaining knowledge or receiving
notice, as the case may be, of the pendency of any proceedings for the eviction
of Mortgagor from the Mortgaged Property or any part thereof by paramount title
or otherwise questioning Mortgagor's title to the Mortgaged Property as
warranted in this Mortgage, or of any condition that might reasonably be
expected to give rise to any such proceeding, shall notify Mortgagee in writing
thereof. Mortgagee may participate in such proceedings, and Mortgagor shall
deliver or cause to be delivered to Mortgagee all instruments reasonably
requested by Mortgagee to permit such participation. In any such proceedings
Mortgagee may be represented by counsel reasonably satisfactory to Mortgagee and
the reasonable fees and disbursements of such counsel shall be at the expense of
Mortgagor. If, upon the resolution of such proceedings, Mortgagor shall suffer a
loss of the Mortgaged Property or any part thereof or interest therein and title
insurance proceeds shall be payable to Mortgagor in connection therewith, such
proceeds are hereby assigned to and shall be paid to Mortgagee to be applied in
the manner applicable to proceeds of Asset Sales pursuant to Section 4.13 of the
Indenture.
1.3.3 Mortgagor represents and warrants that upon and after any
release from the lien of this Mortgage of any Closed Facility, Specialty Steel
Assets or Released Mortgaged Property (as each such term is defined in the
Indenture) in accordance with Section 11.3(b) of the Indenture (i) Mortgagor
shall have in effect all material rights and appurtenances that constitute a
part of the Mortgaged Property which are necessary for the conduct of
Mortgagor's business at the Mortgaged Property including, without limitation,
any such rights and appurtenances derived from, in part or whole, any property
to be released and (ii) the Premises will comply in all material respects with
all local zoning, land use, setback or other development and use requirements of
Governmental Authorities.
SECTION 1.4. Recording Documentation To Assure Security Interest;
Fees and Expenses.
1.4.1 Mortgagor shall, forthwith after the execution and delivery of
this Mortgage and thereafter, from time to time, cause this Mortgage and any
financing statement, continuation statement or similar instrument relating to
any thereof or to any property intended to be subject to the Lien of this
Mortgage to be filed, registered and recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect the validity and priority thereof or the Lien hereof
purported to be created upon the Mortgaged Property and the interest and rights
of Mortgagee therein. Mortgagor shall pay or cause to be paid all taxes and fees
incident to such filing, registration and recording, and all expenses incident
to the preparation, execution and acknowledgement thereof, and of any instrument
of further assurance, and all Federal or state stamp taxes or other taxes,
duties and charges arising out of or in connection with the execution and
delivery of such instruments.
1.4.2 Mortgagor shall, at the sole cost and expense of Mortgagor,
do, execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages, assignments, notices of assignment, transfers, financing
statements, continuation statements and assurances as Mortgagee shall from time
to time rea-
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sonably request to assure, perfect, convey, assign, mortgage, transfer and
confirm unto Mortgagee the property and rights hereby conveyed or assigned, or
which Mortgagor may be or may hereafter become bound to convey or assign to
Mortgagee or which may facilitate the performance of the terms of this Mortgage
or the filing, registering or recording of this Mortgage. In the event Mortgagor
shall fail to execute any instrument required to be executed by Mortgagor under
this subsection 1.4.2 and if such failure shall constitute an Event of Default,
Mortgagee may execute the same as the attorney-in-fact for Mortgagor, such power
of attorney being coupled with an interest and irrevocable.
SECTION 1.5. Payment of Taxes, Insurance Premiums, Assessments;
Compliance with Law and Insurance Requirements.
1.5.1 Unless contested in accordance with the provisions of
subsection 1.5.5 hereof, Mortgagor shall pay and discharge or cause to be paid
and discharged, from time to time before the same shall become delinquent, all
real estate and other taxes, special assessments, levies, permits, inspection
and license fees, all premiums for insurance, all water and sewer rents and
charges, and all other public charges imposed upon or assessed against the
Mortgaged Property or any part thereof or upon the revenues, rents, issues,
income and profits of the Mortgaged Property, including, without limitation,
those arising in respect of the occupancy, use or possession thereof. Except to
the extent contemplated in Section 1.6 hereof, this subsection 1.5.1 shall not
obligate Mortgagor to pay and discharge any charges imposed upon Mortgagee in
respect of franchise, income or other similar taxes.
1.5.2 Upon the occurrence and during the continuance of an Event of
Default, at the written request of Mortgagee, Mortgagor shall deposit with
Mortgagee, on the first day of each month, an amount reasonably estimated by
Mortgagor to be equal to one-twelfth (1/12th) of the annual taxes, assessments
and other items required to be discharged by Mortgagor under subsection 1.5.1
and amounts reasonably estimated by Mortgagor to be necessary to maintain the
insurance coverages contemplated in Section 1.7. Such amounts shall be held by
Mortgagee without interest to Mortgagor and applied to the payment of each
obligation in respect of which such amounts were deposited, in such order or
priority as Mortgagee shall determine, on or before the date on which such
obligation would become delinquent. If at any time the amounts so deposited by
Mortgagor shall, in Mortgagee's reasonable judgment, be insufficient (when added
to the installments anticipated to be paid thereafter) to discharge any of such
obligations when due, Mortgagor shall, within five (5) Business Days after
demand, deposit with Mortgagee such additional amounts as may be requested by
Mortgagee. Nothing contained in this Section 1.5 shall affect any right or
remedy of Mortgagee under any provision of this Mortgage or of any statute or
rule of law to pay any such amount from its own funds and to add the amount so
paid, together with interest at a rate ("Default Rate") per annum equal to the
highest rate then payable under the Notes to the other amounts outstanding in
respect of the Secured Obligations or relieve Mortgagor of its obligations to
make or provide for the payment of the annual taxes, assessments and other
charges required to be discharged by Mortgagor under subsection 1.5.1. Mortgagor
hereby grants to Mortgagee a security interest in all sums held pursuant to this
subsection 1.5.2 to secure payment and performance of the Secured Obligations.
During the continuance of an Event of Default, Mortgagee may apply all or any
part of the sums held pursuant to this subsection 1.5.2 to payment and
performance of the Secured Obligations in accordance with Section 6.10 of the
Indenture.
1.5.3 Unless contested in accordance with the provisions of
subsection 1.5.5, Mortgagor shall timely pay, or cause to be paid, all lawful
claims and demands of mechanics, materialmen, laborers, employees, suppliers,
government agencies administering worker's compensation insurance, old age
pensions and social security benefits and all other claims, judgments, demands
or amounts of any nature which, if unpaid, or not bonded, would be likely to
result in the creation of a Lien on the Mortgaged Property or any part thereof
or the Rents arising therefrom, or which would be likely to result in forfeiture
of all or any part of the Mortgaged Property.
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1.5.4 Mortgagor shall maintain, or cause to be maintained, in full
force and effect, all material permits, certificates, authorizations, consents,
approvals, licenses, franchises or other instruments now or hereafter required
to be maintained by any federal, state, municipal or local government or
quasi-governmental agency or authority (each of the foregoing, a "Governmental
Authority") to operate or use and occupy the Premises, the Real Estate Fixtures
and the Equipment for their intended uses (collectively, the "Permits"; each, a
"Permit"), except where the failure to maintain or cause to be maintained would
not have a Material Adverse Effect. Mortgagor represents that none of the
Permits will be subject to cancellation, forfeiture or any limitation on the
scope thereof solely by virtue of the execution of this Mortgage or the
foreclosure of the Lien hereof. Unless contested in accordance with the
provisions of subsection 1.5.5, Mortgagor shall comply promptly with, or cause
prompt compliance in all material respects with, (i) all requirements set forth
in the Permits and (ii) all requirements of any law, ordinance, rule, regulation
or similar statute or case law (collectively, "Legal Requirements") of any
Governmental Authority applicable to all or any part of the Mortgaged Property
or the condition, use or occupancy of all or any part thereof or any recorded
deed of restriction, declaration, covenant running with the land or otherwise,
now or hereafter in force, except where the failure to comply would not have a
Material Adverse Effect. Mortgagor shall not initiate or consent to any change
in the zoning, subdivision or any other use classification of the Land, if such
action would be likely to diminish the value of the Mortgaged Property or impair
Mortgagee's rights or benefits hereunder, without the prior written consent of
Mortgagee.
1.5.5 Mortgagor may at its own expense contest the amount or
applicability of any of the obligations described in subsections 1.5.1, 1.5.3
and 1.5.4 by appropriate legal proceedings, prosecution of which operates to
prevent the collection or enforcement thereof and the sale or forfeiture of the
Mortgaged Property or any part thereof to satisfy such obligations; provided,
however, that in connection with such contest, Mortgagor shall have made
provision for the payment or performance of such contested obligation on
Mortgagor's books if and to the extent required by generally accepted accounting
principles, or shall have deposited with Mortgagee a sum sufficient to pay and
discharge such obligation and Mortgagee's reasonable estimate of all interest
and penalties related thereto. Notwithstanding the foregoing provisions of this
subsection 1.5.5, (i) no contest of any such obligations may be pursued by
Mortgagor if such contest would expose Mortgagee or any holder of Notes to any
possible criminal liability or, unless Mortgagor shall have furnished an
Additional Undertaking (as hereinafter defined) therefor reasonably satisfactory
to Mortgagee, any additional civil liability for failure to comply with such
obligations and (ii) if at any time payment or performance of any obligation
contested by Mortgagor pursuant to this subsection 1.5.5 shall become necessary
to prevent the delivery of a tax or similar deed conveying the Mortgaged
Property or any portion thereof because of nonpayment or nonperformance,
Mortgagor shall pay or perform the same in sufficient time to prevent the
delivery of such tax or similar deed.
1.5.6 Mortgagor shall not in its use and occupancy of the Premises,
the Real Estate Fixtures or the Equipment (including, without limitation, in the
making of any Alteration) take any action that could reasonably be expected to
be the basis for termination, revocation or denial of any insurance coverage
required to be maintained under this Mortgage or that could reasonably be
expected to be the basis for a defense to any claim under any insurance policy
maintained in respect of the Premises, the Real Estate Fixtures or the Equipment
(unless Mortgagor shall have obtained in substitution for any such insurance an
insurance policy or policies complying with the provisions of Section 1.7 hereof
such that there would not result any period of time during which the insurance
coverage required to be maintained hereunder would not be so maintained) and
Mortgagor shall otherwise comply in all respects with the requirements of any
insurer that issues a policy of insurance in respect of the Premises, the Real
Estate Fixtures or the Equipment.
1.5.7 Mortgagor shall, promptly upon receipt of any written notice
regarding any failure by Mortgagor to pay or discharge any of the obligations
described in subsection 1.5.1, 1.5.3, 1.5.4 or 1.5.6, furnish a copy of such
notice to Mortgagee.
SECTION 1.6. Certain Tax Law Changes. In the event of the passage
after the date of this Mortgage of any law deducting from the value of real
property, for the purpose of taxation, amounts in respect of
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any Lien thereon or changing in any way the laws for the taxation of mortgages
or debts secured by mortgages for state or local purposes or the manner of the
collection of any such taxes, and imposing a new tax, either directly or
indirectly, on this Mortgage, Mortgagee, any Indenture Document to which
Mortgagor is a party or any other document relating to the Secured Obligations,
Mortgagor shall promptly pay to Mortgagee such amount or amounts as may be
necessary from time to time to pay such tax.
SECTION 1.7. Required Insurance Policies.
1.7.1 Mortgagor shall maintain in respect of the Premises the
following insurance coverages:
(i) Physical hazard insurance on an "all risk" basis covering,
without limitation, hazards commonly covered by fire and extended
coverage, lightning, windstorm, civil commotion, hail, riot, strike, water
damage, sprinkler leakage, collapse and malicious mischief, in an amount
equal to the full replacement cost of the Improvements, the Real Estate
Fixtures and all Equipment, with such deductibles as would be maintained
by a prudent operator of property similar in use and configuration to the
Premises and located in the locality where the Premises are located. "Full
replacement cost" means the Cost of Construction (as hereinafter defined)
to replace the Improvements, the Real Estate Fixtures and the Equipment,
exclusive of depreciation, excavation, foundation and footings, as
determined from time to time (but not less frequently than once every
twelve (12) months) by any Person selected by Mortgagor in consultation
with its insurance company or insurance agent, as appropriate;
(ii) Comprehensive general liability insurance against claims
for bodily injury, death or property damage occurring on, in or about the
Premises and any adjoining streets, sidewalks and passageways and covering
any and all claims, including, without limitation, all legal liability,
subject to customary exclusions, to the extent insurable, imposed upon
Mortgagee and all court costs and attorneys' fees, arising out of or
connected with the possession, use, leasing, operation or condition of the
Premises, with policy limits and deductibles in such amounts as would be
maintained by a prudent operator of property similar in use and
configuration to the Premises and located in the locality where the
Premises are located;
(iii) Workers' compensation insurance as required by the laws
of the state in which the Premises are located to protect Mortgagor
against claims for injuries sustained in the course of employment at the
Premises;
(iv) Explosion insurance in respect of any boilers and similar
apparatus located on the Premises or comprising any Real Estate Fixtures
or Equipment, with policy limits and deductibles in such amounts as would
be maintained by a prudent operator of property similar in use and
configuration to the Premises, the Real Estate Fixtures and the Equipment
and located in the locality where the Premises, the Real Estate Fixtures
and the Equipment are located;
(v) To the extent available, during the performance of any
alterations, renovations, repairs, restorations or construction, broad
form Builders Risk Insurance on an all-risk completed value basis;
(vi) Such other insurance, against such risks and with policy
limits and deductibles in such amounts as would be maintained by a prudent
operator of property similar in use and configuration to the Premises and
located in the locality in which the Premises are located; and
(vii) If the Premises are located in an area designated by the
Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the
National Flood Insurance Act of 1968, as amended, flood insurance in such
amounts
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as would be maintained by a prudent operator of property similar in use and
configuration to the Premises and located in the locality where the Premises are
located.
1.7.2 Mortgagor may maintain the coverages required by this Section
1.7 under blanket policies covering the Premises and other locations owned or
operated by Mortgagor if the terms of such blanket policies otherwise comply
with the provisions of this Section 1.7 and contain specific coverage
allocations in respect of the Premises determined in accordance with the
provisions of this Section 1.7. All insurance policies required by this Section
1.7 shall be in form customarily maintained by a prudent operator of property
similar in use and configuration to the Premises and located in the locality in
which the Premises are located. Subject to the provisions of the Intercreditor
Agreement, all insurance policies in respect of the coverages required by
subsections 1.7.1(i), 1.7.1(iv), 1.7.1(v) and, if applicable, 1.7.1(vi) shall be
in amounts at least sufficient to prevent coinsurance liability and all losses
thereunder shall be payable to Mortgagee, as loss payee pursuant to a standard
noncontributory New York mortgagee endorsement or local equivalent, and each
such policy shall (i) to the extent available on a commercially reasonable
basis, include effective waivers (whether under the terms of such policy or
otherwise) by the insurer of all claims for insurance premiums against all loss
payees and named insureds other than Mortgagor and all rights of subrogation
against any named insured, and (ii) provide that any losses thereunder shall be
payable notwithstanding (a) any act, failure to act, negligence of, or violation
or breach of warranties, declarations or conditions contained in such policy by
Mortgagor or Mortgagee or any other named insured or loss payee, (b) the
occupation or use of the Premises for purposes more hazardous than permitted by
the terms of the policy, (c) any foreclosure or other proceeding or notice of
sale relating to the Premises, the Real Estate Fixtures or the Equipment or (d)
any change in the title to or ownership or possession of the Premises, the Real
Estate Fixtures or the Equipment; provided, however, that (with respect to items
contemplated in clauses (c) and (d) above) any notice requirements of the
applicable policies are satisfied. All insurance policies in respect of the
coverages required by subsections 1.7.1(ii) and, if applicable, 1.7.1(vi) and
1.7.1(vii), shall name Mortgagee as an additional insured. Each policy of
insurance required under this Section 1.7 shall provide that it may not be
canceled or otherwise terminated without at least thirty (30) days' prior
written notice to Mortgagee and shall permit Mortgagee to pay any premium
therefor within thirty (30) days after receipt of any notice stating that such
premium has not been paid when due. The policy or policies of such insurance or
certificates of insurance evidencing the required coverages and all renewals or
extensions thereof shall be delivered to Mortgagee. Prior to the occurrence of
an Event of Default, settlement of any claim in an amount in excess of
$1,000,000 under any of the insurance policies referred to in this Section 1.7
shall require the prior approval of Mortgagee, which shall not be unreasonably
withheld or delayed, and Mortgagor shall use its best efforts to cause each such
insurance policy to contain a provision to such effect; provided, however, that
Mortgagor shall not settle any such claim which in Mortgagor's reasonable
judgment involves loss in an amount greater than $250,000 but less than
$1,000,000 unless Mortgagor shall have delivered to Mortgagee, prior to such
settlement, an Officers' Certificate (i) describing the incident giving rise to
such claim, (ii) setting forth the amount of the proposed settlement in respect
of such claim and (iii) stating that such settlement amount constitutes a
reasonable settlement in respect of such claim. During the continuance of any
Event of Default, Mortgagor shall not settle any claim under any of the
insurance policies referred to in this Section 1.7 without the prior approval of
Mortgagee.
1.7.3 At least thirty (30) days prior to the expiration of any
insurance policy required by subsection 1.7.1, a policy or policies renewing or
extending such expiring policy or renewal or extension certificates or other
evidence of renewal or extension shall be delivered to Mortgagee.
1.7.4 Mortgagor shall not purchase separate insurance policies
concurrent in form or contributing in the event of loss with those policies
required to be maintained under this Section 1.7, unless Mortgagee is included
thereon as an additional insured and, if applicable, with loss payable to
Mortgagee under an endorsement containing the provisions described in subsection
1.7.2. Mortgagor promptly shall notify Mortgagee whenever any such separate
insurance policy is obtained and promptly shall deliver to Mortgagee the policy
or certificate evidencing such insurance.
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1.7.5 Mortgagor shall, immediately upon receipt of any written
notice of any failure by Mortgagor to pay any insurance premium in respect of
any insurance policy required to be maintained under this Section 1.7, furnish a
copy of such notice to Mortgagee.
1.7.6 Mortgagor shall maintain, or cause to be maintained, the
insurance described in this Section 1.7 with primary insurers rated (for claims
paying purposes) in one of the two highest generic categories by each Rating
Agency (as hereinafter defined). All insurers under policies required hereunder
shall be licensed and authorized to issue insurance in the state in which the
Land is located.
SECTION 1.8. Failure To Make Certain Payments. If Mortgagor shall
fail to perform any of the covenants contained in this Mortgage (including,
without limitation, Mortgagor's covenants to (i) pay the premiums in respect of
all required insurance coverages, (ii) pay taxes and assessments, (iii) make
repairs, (iv) discharge Liens or (v) pay or perform any obligations of Mortgagor
under the Leases), and such failure shall constitute an Event of Default,
Mortgagee may, but shall not be obligated to, make advances to perform such
covenant on Mortgagor's behalf and all sums so advanced shall be included in the
Secured Obligations and shall be secured hereby. Mortgagor shall repay within
five Business Days after demand therefor all sums so advanced by Mortgagee on
behalf of Mortgagor, with interest at the Default Rate. Neither the provisions
of this Section 1.8 nor any action taken by Mortgagee pursuant to the provisions
of this Section 1.8 shall prevent any such failure to observe any covenant
contained in this Mortgage from constituting an Event of Default.
SECTION 1.9. Inspection. Mortgagor shall permit Mortgagee, by its
agents, representatives, accountants and attorneys, to visit and inspect the
Premises, the Real Estate Fixtures and the Equipment at such reasonable times
and upon reasonable notice to Mortgagor as may be reasonably requested by
Mortgagee. To the extent practicable, such inspection shall not unreasonably
interfere with the normal operation or business conducted by Mortgagor.
SECTION 1.10. Mortgagor To Maintain Improvements. Mortgagor shall
not commit any waste on the Premises or with respect to any Real Estate Fixtures
or Equipment. Mortgagor represents and warrants that (i) the Premises are served
by all utilities required or necessary for the current use thereof, (ii) all
streets necessary to serve the Premises are completed and serviceable and have
been dedicated and accepted as such by the appropriate Governmental Authorities
and (iii) Mortgagor has access to the Premises from public roads sufficient to
allow Mortgagor and its tenants and invitees to conduct its and their businesses
at the Premises in the manner in which a prudent operator of property similar in
use and configuration to the Premises and located in the locality where the
Premises are located would conduct its business. Mortgagor shall, at all times,
maintain the Premises, the Real Estate Fixtures and the Equipment (other than
any portion thereof which shall be obsolete and/or disposed of in accordance
with the provisions of the Indenture) in good operating order, condition and
repair and shall make all repairs necessary, structural or nonstructural, for
the operation of Mortgagor's business. Mortgagor shall (a) not alter the
occupancy or use of all or any part of the Premises, or any Real Estate Fixtures
or Equipment, if such action would be reasonably likely to diminish the value of
the Mortgaged Property or impair Mortgagee's rights and benefits hereunder,
without the prior written consent of Mortgagee, and (b) do all other acts which
from the character or use of the Premises, the Real Estate Fixtures and the
Equipment may be reasonably necessary or appropriate to maintain and preserve
their value.
SECTION 1.11. Mortgagor's Obligations with Respect to Leases.
1.11.1 Mortgagor shall manage and operate the Mortgaged Property or
cause the Mortgaged Property to be managed and operated in a reasonably prudent
manner and will not, without the written consent of Mortgagee, enter into any
Lease (or any amendment or modification thereof) with any Person other than
Leases permitted under Section 11.3 of the Indenture.
1.11.2 Mortgagor shall not in respect of any Leases:
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(i) receive or collect, or permit the receipt or collection
of, any rental or other payments under any Lease more than one (1) month
in advance of the respective period in respect of which they are to
accrue, except that (a) in connection with the execution and delivery of
any Lease or of any amendment to any Lease, rental payments thereunder may
be collected and received in advance in an amount not in excess of one (1)
month's rent and (b) Mortgagor may receive and collect escalation and
other charges in accordance with the terms of each Lease;
(ii) assign, transfer or hypothecate (other than to Mortgagee
hereunder or as otherwise permitted under Section 1.12 of this Mortgage)
any rental or other payment under any Lease whether then due or to accrue
in the future, the interest of Mortgagor as lessor under any Lease or the
rents, issues, revenues, profits or other income of the Mortgaged
Property;
(iii) enter into any Lease after the date hereof that does not
contain terms substantially to the effect as follows:
(a) such Lease and the rights of the tenant thereunder
shall be subject and subordinate to the rights of Mortgagee
under and the Lien of this Mortgage;
(b) such Lease has been assigned as collateral security
by Mortgagor as landlord thereunder to Mortgagee under this
Mortgage;
(c) in the case of any foreclosure hereunder, the rights
and remedies of the tenant in respect of any obligations of
any successor landlord thereunder shall be limited to the
equity interest of such successor landlord in the Premises and
any successor landlord shall not (1) be liable for any act,
omission or default of any prior landlord under the Lease or
(2) be required to make or complete any tenant improvements or
capital improvements or repair, restore, rebuild or replace
the demised premises or any part thereof in the event of
damage, casualty or condemnation or (3) be required to pay any
amounts to tenant arising under the Lease prior to such
successor landlord taking possession;
(d) the tenant's obligation to pay rent and any
additional rent shall not be subject to any abatement,
deduction, counterclaim or setoff as against any mortgagee or
purchaser upon the foreclosure of any of the Premises for the
period prior to such foreclosure or the giving or granting of
a deed in lieu thereof by reason of a landlord default
occurring prior to such foreclosure and such mortgagee or
purchaser will not be bound by any advance payments of rent in
excess of one month or any security deposits unless such
security was actually received; and
(e) subject to Mortgagee's agreement not to disturb the
tenant, the tenant agrees to attorn, upon a foreclosure of the
Premises or the giving or granting of a deed in lieu thereof;
or
(iv) terminate or permit the termination of any Lease of
space, accept surrender of all or any portion of the space demised under
any Lease prior to the end of the term thereof or accept assignment of any
Lease to Mortgagor unless:
(a) the tenant under such Lease has not paid the
equivalent of two months' rent and Mortgagor has made
reasonable efforts to collect such rent; or
(b) Mortgagor shall deliver to Mortgagee an Officers'
Certificate to the effect that Mortgagor has entered into a
new Lease (or Leases) for the space covered by the termi-
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nated or assigned Lease with a term (or terms) which
expire(s) no earlier than the date on which the terminated or
assigned Lease was to expire (excluding renewal options), and
with a tenant (or tenants) having a creditworthiness (as
reasonably determined by Mortgagor) sufficient to pay the rent
and other charges due under the new Lease (or Leases), and the
tenant(s) shall have commenced paying rent, including, without
limitation, all operating expenses and other amounts payable
under the new Lease (or Leases) without any abatement or
concession in an amount at least equal to the amount which
would have then been payable under the terminated or assigned
Lease; or
(c) otherwise permitted under Section 11.3 of the
Indenture.
1.11.3 Mortgagor timely shall, in all material respects, perform and
observe all the terms, covenants and conditions required to be performed and
observed by Mortgagor under each Lease. Mortgagor promptly shall notify
Mortgagee of the receipt of any notice from any lessee under any material Lease
claiming that Mortgagor is in default in the performance or observance of any of
the terms, covenants or conditions thereof to be performed or observed by
Mortgagor and will cause a copy of each such notice to be delivered promptly to
Mortgagee.
1.11.4 Mortgagor shall deliver to Mortgagee, within thirty (30) days
after request thereof (but not more than once in each calendar year), an
Officers' Certificate, (i) containing a list of names of all tenants under
Leases, if any, and the net square footage leased and the annual rental
currently payable by each of them, (ii) stating for which, if any, Leases then
in force Mortgagor has issued a notice of default which default has not been
cured and the nature of such default and (iii) stating that, to the best of such
officers' knowledge, each Lease complies with the provisions of this Mortgage.
Mortgagor shall deliver to Mortgagee within thirty (30) days after request
thereof copies, certified by an officer of Mortgagor, of all Leases not
theretofore delivered to Mortgagee.
SECTION 1.12. Transfer Restrictions. Except as permitted by the
Indenture and under Section 1.11.1 of this Mortgage, Mortgagor shall not sell,
convey, assign or otherwise dispose of, or grant any option with respect to, any
of the Mortgaged Property. Mortgagor shall not create or permit to exist any
Lien upon or with respect to any of the Mortgaged Property other than the
following Liens:
(i) Liens in respect of amounts payable by Mortgagor pursuant
to Section 1.5 if and to the extent such amounts are not yet due and
payable or are being bonded (to the extent required) in accordance with
the provisions of subsection 1.5.3 or are being contested in accordance
with the provisions of subsection 1.5.5; provided, however, that such
Liens shall in all respects be subject and subordinate in priority to the
Lien and security interest created and evidenced by this Mortgage except
to the extent the law or regulation creating or authorizing such Lien
provides that such Lien must be superior to the Lien and security interest
created and evidenced by this Mortgage.
(ii) Prior Liens.
(iii) The Lien and security interest granted to Mortgagee
pursuant to this Mortgage.
(iv) As to each category or type of Mortgaged Property, the
Liens described in Section 4.2 of the Intercreditor Agreement which are
subject and subordinate to the Lien and security interest evidenced by
this Mortgage in such category or type of Mortgaged Property and
refinancings thereof to the extent permitted under the Indenture and the
Intercreditor Agreement.
(v) Liens of the type described in clause (iv) of the
definition of Permitted Collateral and, to the extent the same relates to
refinancing of the indebtedness secured by the Liens described in
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clause (iv), clause (v) of the definition of Permitted Collateral Liens
and in Section 11.3 of the Indenture and refinancings thereof to the
extent permitted under the Indenture and the Intercreditor Agreement.
SECTION 1.13. Destruction; Condemnation.
1.13.1 Destruction; Insurance Proceeds. If there shall occur any
damage to, or loss or destruction of, the Improvements, Real Estate Fixtures and
Equipment, or any part of any thereof (each, a "Destruction"), Mortgagor shall
promptly send to Mortgagee a notice setting forth the nature and extent of such
Destruction; provided, however, that Mortgagor shall not be required to deliver
the notice contemplated in this sentence in the event that any Destruction would
give rise to insurance proceeds in an amount less than or equal to $500,000. The
proceeds of any insurance payable in respect of any such Destruction shall
constitute Trust Moneys and are hereby assigned and shall be paid to Mortgagee.
All such proceeds, less the amount of any expenses incurred in litigating,
arbitrating, compromising or settling any claim arising out of such Destruction
(the "Net Proceeds"), shall constitute Trust Moneys and be applied in accordance
with the provisions of this Mortgage, the Indenture and/or the Intercreditor
Agreement. Mortgagee is hereby authorized and directed to pay from Trust Moneys
any and all such expenses deemed reasonably necessary by Mortgagee in connection
with the foregoing.
1.13.2 Condemnation; Assignment of Award. If there shall occur any
taking of the Mortgaged Property or any part thereof, in or by condemnation or
other eminent domain proceedings pursuant to any law, general or special, or by
reason of the temporary requisition of the use or occupancy of the Mortgaged
Property or any part thereof, by any governmental authority, civil or military
(each, a "Taking"), Mortgagor promptly shall notify Mortgagee upon receiving
notice of such Taking or commencement of proceedings therefor; provided,
however, that Mortgagor shall not be required to deliver the notice contemplated
in this sentence in the event that any Taking would give rise to a loss in an
amount less than or equal to $500,000. Mortgagee may participate in any
proceedings or negotiations which might result in any Taking. Mortgagee may be
represented by counsel reasonably satisfactory to it at the expense of
Mortgagor. Mortgagor shall deliver or cause to be delivered to Mortgagee all
instruments reasonably requested by it to permit such participation. Mortgagor
shall in good faith and with due diligence file and prosecute what would
otherwise be Mortgagor's claim for any such award or payment and cause the same
to be collected and paid over to Mortgagee, and hereby irrevocably authorizes
and empowers Mortgagee, in the name of Mortgagor as its true and lawful
attorney-in-fact or otherwise, to collect and to receipt for any such award or
payment, and, in the event Mortgagor fails so to act or is otherwise in default
hereunder beyond any applicable notice and grace period set forth herein or in
the Indenture, to file and prosecute such claim. Mortgagor shall pay all costs,
fees and expenses reasonably incurred by Mortgagee in connection with any Taking
and seeking and obtaining any award or payment on account thereof. Any proceeds,
award or payment in respect of any Taking shall constitute Trust Moneys and are
hereby assigned and shall be paid to Mortgagee. Mortgagor shall take all steps
necessary to notify the condemning authority of such assignment. Such award or
payment, less the amount of any expenses incurred in litigating, arbitrating,
compromising or settling any claim arising out of such Taking ("Net Award"),
shall be applied in accordance with the provisions of the Indenture and/or the
Intercreditor Agreement. Mortgagee is hereby authorized and directed to pay from
Trust Moneys any and all such expenses deemed necessary and reasonable by
Mortgagee in connection with the foregoing.
SECTION 1.14. Alterations. Mortgagor shall not make any structural
addition, modification or change (each, an "Alteration") to the Premises, the
Real Estate Fixtures or the Equipment except as permitted by Section 11.3 of the
Indenture. Mortgagor shall (a) complete each Alteration promptly (provided,
however, that in the event of the occurrence of any Force Majeure, Mortgagor
shall exercise all reasonable efforts to complete the Alteration affected
thereby as promptly as practicable), in a good and workmanlike manner and, in
all material respects, in compliance with all applicable local laws, ordinances
and requirements and (b) pay when due all lawful claims for labor performed and
materials furnished in connection with such Alteration, unless contested in
accordance with the provisions of subsection 1.5.5.
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SECTION 1.15. Hazardous Material.
1.15.1 Mortgagor represents and warrants that except as set forth in
the Schedule to that certain letter dated August 11, 1999 from the Issuers to
Mortgagee and except as would not reasonably be expected to have a Material
Adverse Effect, to the best of its knowledge after due and diligent inquiry (i)
it has obtained, or is in the process of applying for and expects to receive,
all material Permits which are currently required with respect to the
construction, ownership and operation of its business at the Mortgaged Property
under any and all federal, state, local and foreign laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder relating to pollution or protection of the environment,
including, without limitation, laws relating to handling, use, storage,
treatment, disposal, removal, emission, discharge or release of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
("Hazardous Materials") into the environment (including, without limitation,
ambient air, surface water, ground water, drinking water supply, land surface or
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws") as they relate to the
Mortgaged Property; (ii) it is in substantial compliance with all terms and
conditions of all such Permits or material representations made in such Permit
applications as they relate to the Mortgaged Property, and also is in
substantial compliance with Environmental Laws, including, without limitation,
all limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws as they relate to the Mortgaged Property; (iii) there is no
civil, criminal or administrative action, suit, demand, claim, hearing, notice
of violation, notice of governmental investigation, proceeding, notice or demand
letter pending or, to its knowledge, threatened against it or any subsidiary
under the Environmental Laws relating to the Mortgaged Property or operations of
Mortgagor or any predecessor in interest which could be expected to result in a
material fine, penalty or other cost or expense to Mortgagor; (iv) there are no
present or, to Mortgagor's knowledge, past events, conditions, circumstances,
activities, practices, incidents, actions or plans which are expected to
interfere with or prevent compliance by Mortgagor or the Mortgaged Property in
any substantial respect with the Environmental Laws relating to the Mortgaged
Property, or which are expected to give rise to any material common law or legal
liability, including, without limitation, liability under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, or
similar state, local or foreign laws, or otherwise form the basis of any
material claim, action, demand, suit, proceeding, hearing or notice of
violation, governmental study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment of any Hazardous Material.
1.15.2 Subject to Mortgagor's right to contest set forth in Section
1.5.5 of this Mortgage, Mortgagor shall (i) comply or cause compliance in all
substantial respects with any and all applicable present and future
Environmental Laws relating to the Mortgaged Property and all operations
conducted thereat; (ii) conduct or cause to be conducted and/or pay or cause to
be paid, as required, the cost of any investigation, remediation, removal,
response or corrective action (collectively, "Response Action") relating to any
Hazardous Materials on, at, under or emanating from the Mortgaged Property
required by any applicable present and future Environmental Laws; (iii) not
release, discharge or dispose of any Hazardous Materials on, at, under or from
the Mortgaged Property except in substantial compliance with any applicable
present and future Environmental Laws; and (iv) apply any insurance proceeds or
other sums received by it in respect of any Response Action relating to any
Hazardous Materials to any unpaid costs or expenses of such Response Action, if
any, or to reimbursement for such costs previously paid by Mortgagee, if any. In
the event Mortgagor fails to comply with the covenants in the preceding sentence
and such failure shall constitute an Event of Default, Mortgagee may (upon
receipt of an indemnity or other security reasonably satisfactory to Mortgagee),
in addition to any other remedies set forth herein, but shall not be obligated
to, as trustee for and at Mortgagor's sole cost and expense cause to be taken,
any reasonable Response Action relating to Hazardous Materials and required by
any and all applicable present and future Environmental Laws. Any reasonable
costs or expenses incurred by Mortgagee for such purpose shall be due within ten
(10) days after demand and payable by Mortgagor and shall bear interest at the
Default Rate. Mortgagor shall provide to Mortgagee and its agents and employees
reasonable access to the Mortgaged Property
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and upon the occurrence and during the continuation of an Event of Default,
specifically grants to Mortgagee a license, at the sole reasonable cost and
expense of Mortgagor, in substantial compliance with any and all applicable
present and future Environmental Laws, to investigate, remove or otherwise
remediate any Hazardous Material located thereon, or to take any reasonable
action with respect to any and all applicable present and future Environmental
Laws or in connection with any Hazardous Materials that could reasonably be
expected to result in a material diminution in the value of the Mortgaged
Property, or in the incurrence of any material obligation or liability of the
holders of the Notes or Mortgagee if Mortgagor fails to so act and such
investigation, removal, remediation or other action is required under any
applicable present and future Environmental Laws; provided, however, that
nothing contained herein shall obligate Mortgagee to exercise any rights under
such license. Upon written demand by Mortgagee, which shall include a reasonably
specific statement of the basis thereof (which shall be specific to the
condition of the Mortgaged Property) and which shall be made not more frequently
than once in any twelve-month period or at any time that Mortgagee is exercising
its remedies under this Mortgage during the continuation of an Event of Default,
Mortgagee shall have the right, but shall not be obligated, at the sole
reasonable cost and expense of Mortgagor, to conduct an environmental audit or
update thereof or other review of the Mortgaged Property, relating to those
items specified in writing or relating to the remedy that the Mortgagee is
exercising under this Mortgage, by such persons or firms appointed by Mortgagee
and reasonably acceptable to Mortgagor, and Mortgagor shall cooperate in all
respects in the conduct of such environmental audit or review, including,
without limitation, by providing reasonable access to the Mortgaged Property and
to all relevant records relating thereto. Mortgagor shall indemnify and hold
Mortgagee harmless from and against all loss, cost, damage or expense
(including, without limitation, reasonable attorneys' and consultants' fees)
that Mortgagee may sustain by reason of the assertion against Mortgagee by any
party of any claim relating to Hazardous Materials or reasonable actions taken
with respect thereto as authorized hereunder other than such loss, cost, damage
or expense, if any, to the extent it is caused solely by the gross negligence or
willful misconduct of Mortgagee or its agents, contractors and subcontractors in
performing any act or exercising its remedies under this Mortgage. It is the
express intention of the parties to this Mortgage that nothing contained herein
or in any other Document shall result in Mortgagee being deemed an "owner" or
"operator" under applicable present and future Environmental Laws.
SECTION 1.16. Asbestos. Mortgagor shall not install nor permit to be
installed in the Mortgaged Property asbestos or any asbestos-containing material
(collectively, "ACM") except in compliance with any and all applicable present
and future Environmental Laws respecting ACM. With respect to any ACM currently
present in the Mortgaged Property, Mortgagor shall comply in all substantial
respects with any and all applicable present and future Environmental Laws, all
at Mortgagor's sole cost and expense. Upon the occurrence and during the
continuation of an Event of Default, Mortgagee may, but shall not be obligated
to, in addition to any other remedies set forth herein, take, in substantial
compliance with any applicable present and future Environmental Laws, whatever
steps it deems reasonably necessary or appropriate to comply with any and all
applicable present and future Environmental Laws. Any costs or expenses
reasonably incurred by Mortgagee for such purpose shall be due within ten (10)
days after demand and payable by Mortgagor and shall bear interest at the
Default Rate. Mortgagor shall provide to Mortgagee and its agents and employees
reasonable access to the Mortgaged Property and hereby specifically grants to
Mortgagee a license to remove or encapsulate such ACM in substantial compliance
with any applicable present and future Environmental Law if Mortgagor fails to
do so and removal or encapsulation is required under any applicable present and
future Environmental Law; provided, however, that nothing contained herein shall
obligate Mortgagee to exercise any rights under such license. Mortgagor shall
indemnify and hold Mortgagee harmless from and against all loss, cost, damage
and expense (including, without limitation, reasonable attorneys' and
consultants' fees) that Mortgagee may sustain as a result of the presence of any
ACM and any removal or encapsulation thereof or compliance with any and all
applicable present and future Environmental Laws other than such loss, cost,
damage or expense, if any, to the extent it is caused solely by the gross
negligence or willful misconduct of Mortgagee or its agents, contractors and
subcontractors in performing any act or exercising its remedies under this
Mortgage.
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SECTION 1.17. Books and Records; Reports. Mortgagor shall keep
proper books of record and account, which shall accurately represent the
financial condition of Mortgagor and the business and affairs of Mortgagor
relating to the Mortgaged Property. Mortgagee and its authorized representatives
shall have the right upon reasonable advance notice, and at reasonable times,
from time to time, to examine the books and records of Mortgagor relating to the
operation of the Mortgaged Property.
SECTION 1.18. No Claims Against Mortgagee. Nothing contained in this
Mortgage shall constitute any consent or request by Mortgagee, express or
implied, for the performance of any labor or services or the furnishing of any
materials or other property in respect of the Premises or any part thereof, nor
as giving Mortgagor any right, power or authority to contract for or permit the
performance of any labor or services or the furnishing of any materials or other
property in such fashion as would permit the making of any claim against
Mortgagee in respect thereof or any claim that any Lien based on the performance
of such labor or services or the furnishing of any such materials or other
property is prior to the Lien of this Mortgage.
SECTION 1.19. Utility Services. Mortgagor shall pay, or cause to be
paid, when due all charges for all public or private utility services, all
public or private rail and highway services, all public or private communication
services, all sprinkler systems, and all protective services, any other services
of whatever kind or nature at any time rendered to or in connection with the
Premises or any part thereof, shall comply in all material respects with all
contracts relating to any such services, and shall do all other things required
for the maintenance and continuance of all such services to the extent required
to fulfill the obligations set forth in Section 1.10.
ARTICLE II
ASSIGNMENT OF RENTS; SECURITY AGREEMENT
SECTION 2.1. Assignment of Leases, Rents, Issues and Profits.
2.1.1 Mortgagor absolutely, presently and irrevocably assigns,
transfers and sets over to Mortgagee and grants to Mortgagee, subject to the
terms and conditions hereof, all Mortgagor's estate, right, title, interest,
claim and demand as landlord to collect rent and other sums due under all
existing Leases and any other Leases, including, without limitation, all
extensions of the terms of the Leases (such assigned rights, "Mortgagor's
Interest"), as follows:
(i) the immediate and continuing right to receive and collect
Rents payable by all tenants or other parties pursuant to the Leases;
(ii) all claims, rights, powers, privileges and remedies of
Mortgagor, whether provided for in any Lease or arising by statute or at
law or in equity or otherwise, consequent on any failure on the part of
any tenant to perform or comply with any term of any Lease;
(iii) all rights to take all actions upon the happening of a
default under any Lease as shall be permitted by such Lease or by law,
including, without limitation, the commencement, conduct and consummation
of proceedings at law or in equity; and
(iv) the full power and authority, in the name of Mortgagor or
otherwise, to enforce, collect, receive and receipt for any and all of the
foregoing and to do any and all other acts and things whatsoever which
Mortgagor or any landlord is or may be entitled to do under the Leases.
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2.1.2 Any Rents receivable by Mortgagee hereunder, after payment of
all proper costs and charges, shall be applied to all amounts due and owing
under and as provided in this Mortgage, the Indenture and/or the Intercreditor
Agreement. Mortgagee shall be accountable to Mortgagor only for Rents actually
received by Mortgagee pursuant to this assignment. The collection of such Rents
and the application thereof shall not cure or waive any Event of Default or
waive, modify or affect notice of Event of Default or invalidate any act done
pursuant to such notice.
2.1.3 So long as no Event of Default shall have occurred and be
continuing, Mortgagor shall have a license to collect and apply the Rents and to
enforce the obligations of tenants under the Leases. Immediately upon the
occurrence of any Event of Default, the license granted in the immediately
preceding sentence shall cease and terminate, with or without any notice, action
or proceeding. Upon such Event of Default and during the continuance thereof,
Mortgagee may, to the fullest extent permitted by the Leases (i) exercise any of
Mortgagor's rights under the Leases, (ii) enforce the Leases, (iii) demand,
collect, sue for, attach, levy, recover, receive, compromise and adjust, and
make, execute and deliver receipts and releases for all Rents or other payments
that may then be or may thereafter become due, owing or payable with respect to
the Leases and (iv) generally do, execute and perform any other act, deed,
matter or thing whatsoever that ought to be done, executed and performed in and
about or with respect to the Leases, as fully as allowed or authorized by
Mortgagor's Interest. At such time as any Event of Default which shall have
caused Mortgagor's rights described in the first sentence of this subsection
2.1.3 to cease shall have been cured, Mortgagor shall thereafter be entitled to
exercise the rights described in the first sentence of this subsection 2.1.3
until such time as any other Event of Default shall have occurred and be
continuing.
2.1.4 Mortgagor hereby irrevocably authorizes and directs the tenant
under each Lease to pay directly to, or as directed by, Mortgagee all Rents
accruing or due under its Lease upon receipt of a notice from Mortgagee to the
effect that an Event of Default exists hereunder and requesting such payment.
Mortgagor hereby authorizes the tenant under each Lease to rely upon and comply
with any notice or demand from Mortgagee for payment of Rents to Mortgagee and
Mortgagor shall have no claim against any tenant for Rents paid by such tenant
to Mortgagee pursuant to such notice or demand.
2.1.5 Subject to the provisions of Section 1.11 of this Mortgage,
Mortgagor at its sole cost and expense shall use commercially reasonable efforts
to enforce the Leases in accordance with their terms. Neither this Mortgage nor
any action or inaction on the part of Mortgagee shall release any tenant under
any Lease, any guarantor of any Lease or Mortgagor from any of their respective
obligations under the Leases or constitute an assumption of any such obligation
on the part of Mortgagee. No action or failure to act on the part of Mortgagor
shall adversely affect or limit the rights of Mortgagee under this Mortgage or,
through this Mortgage, under the Leases.
2.1.6 All rights, powers and privileges of Mortgagee herein set
forth are coupled with an interest and are irrevocable, subject to the terms and
conditions hereof, and Mortgagor shall not take any action under the Leases or
otherwise which is inconsistent with this Mortgage or any of the terms hereof
and any such action inconsistent herewith or therewith shall be void. Mortgagor
shall, from time to time, upon request of Mortgagee, execute all instruments and
further assurances and all supplemental instruments and take all such action as
Mortgagee from time to time may reasonably request in order to perfect, preserve
and protect the interests intended to be assigned to Mortgagee hereby.
2.1.7 Subject to the provisions of Section 1.11 of this Mortgage,
Mortgagor shall not, unilaterally or by agreement, subordinate, amend, modify,
extend, discharge, terminate, surrender, waive or otherwise change any term of
any of the Leases in any manner which would (i) materially increase landlord's
obligations thereunder, (ii) reduce landlord's rights thereunder, (iii)
materially decrease tenant's obligations thereunder, (iv) impair the value or
utility of the Mortgaged Property or the Lien of this Mortgage or (v) otherwise
violate
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this Mortgage. If the Leases shall be amended as permitted hereby, they shall
continue to be subject to the provisions hereof without the necessity of any
further act by any of the parties hereto.
2.1.8 Nothing contained herein shall operate or be construed to (i)
obligate Mortgagee to perform any of the terms, covenants or conditions
contained in the Leases or otherwise to impose any obligation upon Mortgagee
with respect to the Leases (including, without limitation, any obligation
arising out of any covenant of quiet enjoyment contained in the Leases in the
event that any tenant under a Lease shall have been joined as a party defendant
in any action by which the estate of such tenant shall be terminated) or (ii)
place upon Mortgagee any responsibility for the operation, control, care,
management or repair of the Premises.
SECTION 2.2. Security Interest in Personal Property.
2.2.1 This Mortgage shall constitute a security agreement and shall
create and evidence a security interest or common law Lien in all the Equipment
and in all the other items of Mortgaged Property in which a security interest
may be granted or a common law pledge created pursuant to the Uniform Commercial
Code as in effect in the state in which the Premises are located or under the
common law in such state (collectively, "Personal Property").
2.2.2 Upon the occurrence and during the continuation of any Event
of Default, in addition to the remedies set forth in Article III, Mortgagee
shall have the power to sell the Personal Property in accordance with the
Uniform Commercial Code as enacted in the state in which the Premises are
located or under other applicable law. It shall not be necessary that any
Personal Property offered be physically present at any such sale or
constructively in the possession of Mortgagee or the person conducting the sale.
2.2.3 Upon the occurrence and during the continuance of any Event of
Default, Mortgagee may sell the Personal Property or any part thereof at public
or private sale with notice to Mortgagor as hereinafter provided. The Proceeds
of any such sale, after deducting all expenses of Mortgagee in taking, storing,
repairing and selling the Personal Property (including, without limitation,
attorneys' fees) shall be applied in the manner set forth in subsection 3.2.3.
At any sale, public or private, of the Personal Property or any part thereof,
Mortgagee may purchase any or all of the Personal Property offered at such sale.
2.2.4 Mortgagee shall give Mortgagor reasonable notice of any sale
of any of the Personal Property pursuant to the provisions of this Section 2.2.
Notwithstanding the provisions of Section 5.2, any such notice shall
conclusively be deemed to be reasonable and effective if such notice is mailed
at least ten (10) days prior to any sale, by first class or certified mail,
postage prepaid to Mortgagor at its address determined in accordance with the
provisions of Section 5.2.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
SECTION 3.1. Remedies in Case of an Event of Default. If an Event of
Default (as defined in the Indenture) shall have occurred and be continuing,
Mortgagee may, but shall not be obligated to, in addition to any other action
permitted by law (and not limited in any manner by the remedies contained in the
Notes and the Indenture), take one or more of the following actions, to the
greatest extent permitted by applicable local law:
3.1.1 by written notice to Mortgagor, declare the entire principal
amount of the Secured Obligations to be due and payable immediately;
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3.1.2 personally, or by its agents or attorneys, (i) enter into and
upon all or any part of the Mortgaged Property and exclude Mortgagor, its agents
and servants wholly therefrom, (ii) use, operate, manage and control the
Premises, the Real Estate Fixtures and the Equipment and conduct the business
thereof, (iii) maintain and restore the Mortgaged Property, (iv) make all
reasonably necessary or proper repairs, renewals and replacements and such
useful Alterations thereto and thereon as Mortgagee may deem advisable, (v)
manage, lease and operate the Mortgaged Property and carry on the business
thereof and exercise all rights and powers of Mortgagor with respect thereto
either in the name of Mortgagor or otherwise, or (vi) collect and receive all
earnings, revenues, rents, issues, profits and income of the Mortgaged Property
and any or every part thereof;
3.1.3 with or without entry, personally or by its agents or
attorneys, (i) sell the Mortgaged Property and all estate, right, title and
interest, claim and demand therein at one or more sales in one or more parcels,
in accordance with the provisions of Section 3.2 or (ii) institute and prosecute
proceedings for the complete or partial foreclosure of the Lien and security
interests created and evidenced hereby; or
3.1.4 take such steps to protect and enforce its rights whether by
action, suit or proceeding at law or in equity for the specific performance of
any covenant, condition or agreement in the Indenture, the Notes and any other
document evidencing or securing the Secured Obligations or in aid of the
execution of any power granted in this Mortgage, or for any foreclosure
hereunder, or for the enforcement of any other appropriate legal or equitable
remedy or otherwise as Mortgagee shall elect.
SECTION 3.2. Sale of Mortgaged Property If Event of Default Occurs;
Proceeds of Sale.
3.2.1 If an Event of Default shall have occurred and be continuing,
Mortgagee may institute an action to foreclose this Mortgage or take such other
action as may be permitted and available to Mortgagee at law or in equity for
the enforcement of the Indenture and the Notes and realization on the Mortgaged
Property and proceeds thereon through power of sale or to final judgment and
execution thereof for the Secured Obligations, and in furtherance thereof
Mortgagee may sell the Mortgaged Property at one or more sales, as an entirety
or in parcels, at such time and place, upon such terms and after such notice
thereof as may be required or permitted by law or statute or in equity.
Mortgagee may execute and deliver to the purchaser at such sale a conveyance of
the Mortgaged Property in fee simple and an assignment or conveyance of all
Mortgagor's interest in the Leases and the Mortgaged Property, each of which
conveyances and assignments shall contain recitals as to the Event of Default
upon which the execution of the power of sale herein granted depends and
Mortgagor hereby constitutes and appoints Mortgagee the true and lawful
attorney-in-fact of Mortgagor to make any such recitals, sale, assignment and
conveyance, and all of the acts of Mortgagee as such attorney-in-fact are hereby
ratified and confirmed. Mortgagor agrees that such recitals shall be binding and
conclusive upon Mortgagor and that any assignment or conveyance to be made by
Mortgagee shall divest Mortgagor of all right, title, interest, equity and right
of redemption, including any statutory redemption, in and to the Mortgaged
Property. The power and agency hereby granted are coupled with an interest and
are irrevocable by death or dissolution, or otherwise, and are in addition to
any and all other remedies which Mortgagee may have hereunder, at law or in
equity. So long as the Secured Obligations, or any part thereof, remain unpaid,
Mortgagor agrees that possession of the Mortgaged Property by Mortgagor, or any
person claiming under Mortgagor, shall be as tenant and, in case of a sale under
power or upon foreclosure as provided in this Mortgage, Mortgagor and any person
in possession under Mortgagor, as to whose interest such sale was not made
subject, shall, at the option of the purchaser at such sale, then become and be
tenants holding over, and shall forthwith deliver possession to such purchaser,
or be summarily dispossessed in accordance with the laws applicable to tenants
holding over. In case of any sale under this Mortgage by virtue of the exercise
of the powers herein granted, or pursuant to any order in any judicial
proceeding or otherwise, the Mortgaged Property may be sold as an entirety or in
separate parcels in such manner or order as Mortgagee in its sole discretion may
elect. One or more exercises of powers herein granted shall not extinguish or
exhaust such powers, until the entire Mortgaged Property is sold or all amounts
secured hereby are paid in full.
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3.2.2 In the event of any sale made under or by virtue of this
Article III, the entire principal of and interest in respect of the Secured
Obligations, if not previously due and payable, shall, at the option of
Mortgagee, immediately become due and payable, anything in this Mortgage to the
contrary notwithstanding.
3.2.3 The proceeds of any sale made under or by virtue of this
Article III, together with any other sums which then may be held by Mortgagee
under this Mortgage, whether under the provisions of this Article III or
otherwise, shall, except as otherwise required by law, be applied in accordance
with the provisions of the Indenture and/or the Intercreditor Agreement.
3.2.4 Mortgagee may bid for and acquire the Mortgaged Property or
any part thereof at any sale made under or by virtue of this Article III and, in
lieu of paying cash therefor, may make settlement for the purchase price by
crediting against the purchase price the unpaid amounts outstanding to Mortgagee
whether or not then due and owing in respect of the Secured Obligations, after,
to the extent permitted by applicable law, deducting from the sales price the
expense of the sale and the reasonable costs of the action or proceedings and
any other sums that Mortgagee is authorized to deduct under this Mortgage.
3.2.5 To the extent permitted by applicable law, Mortgagee may
adjourn from time to time any sale by it to be made under or by virtue of this
Mortgage by announcement at the time and place appointed for such sale or for
such adjourned sale or sales and Mortgagee, without further notice or
publication, may make such sale at the time and place to which the same shall be
so adjourned.
SECTION 3.3. Additional Remedies in Case of an Event of Default.
3.3.1 Mortgagee shall be entitled to recover judgment as aforesaid
either before, after or during the pendency of any proceedings for the
enforcement of the provisions of this Mortgage, and the right of Mortgagee to
recover such judgment shall not be affected by any entry or sale hereunder, or
by the exercise of any other right, power or remedy for the enforcement of the
provisions of this Mortgage, or the foreclosure of, or absolute conveyance
pursuant to, this Mortgage. In case of proceedings against Mortgagor in
insolvency or bankruptcy or any proceedings for its reorganization or involving
the liquidation of its assets, Mortgagee shall be entitled to prove the whole
amount of principal and interest and other payments, charges and costs due in
respect of the Secured Obligations to the full amount thereof without deducting
therefrom any proceeds obtained from the sale of the whole or any part of the
Mortgaged Property; provided, however, that in no case shall Mortgagee receive a
greater amount than the aggregate of such principal, interest and such other
payments, charges and costs (with interest at the Default Rate) from the
proceeds of the sale of the Mortgaged Property and the distribution from the
estate of Mortgagor.
3.3.2 Any recovery of any judgment by Mortgagee and any levy of any
execution under any judgment upon the Mortgaged Property shall not affect in any
manner or to any extent the Lien and security interest created and evidenced
hereby upon the Mortgaged Property or any part thereof, or any conveyances,
powers, rights and remedies of Mortgagee hereunder, but such conveyances,
powers, rights and remedies shall continue unimpaired as before.
3.3.3 Any moneys collected by Mortgagee under this Section 3.3 shall
be applied in accordance with the provisions of subsection 3.2.3.
SECTION 3.4. Legal Proceedings After an Event of Default.
3.4.1 After the occurrence of any Event of Default and immediately
upon the commencement of any action, suit or legal proceedings to obtain
judgment for the Secured Obligations or any part thereof, or of any proceedings
to foreclose the Lien and security interest created and evidenced hereby or
otherwise enforce the
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provisions of this Mortgage or of any other proceedings in aid of the
enforcement of this Mortgage, Mortgagor shall enter its voluntary appearance in
such action, suit or proceeding.
3.4.2 Upon the occurrence of an Event of Default, Mortgagee shall be
entitled forthwith as a matter of right, concurrently or independently of any
other right or remedy hereunder either before or after declaring the Secured
Obligations or any part thereof to be due and payable, to the appointment of a
receiver or other custodian ex parte and without giving notice to any party and
without regard to the adequacy or inadequacy of any security for the Secured
Obligations or the solvency or insolvency of any person or entity then legally
or equitably liable for the Secured Obligations or any portion thereof.
Mortgagor hereby consents to the appointment of such receiver. Notwithstanding
the appointment of any receiver or other custodian, Mortgagee shall be entitled
as pledgee to the possession and control of any cash, deposits or instruments at
the time held by or payable or deliverable under the terms of the Indenture
and/or the Intercreditor Agreement to Mortgagee.
3.4.3 Mortgagor shall not (i) at any time insist upon or plead or in
any manner whatsoever claim or take any benefit or advantage of any stay or
extension or moratorium law, any exemption from execution or sale of the
Mortgaged Property or any part thereof, wherever enacted, now or at any time
hereafter in force, which may affect the covenants and terms of performance of
this Mortgage, (ii) claim, take or insist on any benefit or advantage of any law
now or hereafter in force providing for the valuation or appraisal of the
Mortgaged Property, or any part thereof, prior to any sale or sales of the
Mortgaged Property which may be made pursuant to this Mortgage, or pursuant to
any decree, judgment or order of any court of competent jurisdiction or (iii)
after any such sale or sales, claim or exercise any right under any statute
heretofore or hereafter enacted to redeem the property so sold or any part
thereof. To the extent permitted by applicable law, Mortgagor hereby expressly
(i) waives all benefit or advantage of any such law or laws, including, without
limitation, any statute of limitations applicable to this Mortgage, (ii) waives
and Mortgagee by acceptance of this Mortgage waives any and all rights to trial
by jury in any action or proceeding related to the enforcement of this Mortgage,
(iii) waives any objection which it may now or hereafter have to the laying of
venue of any action, suit or proceeding brought in connection with this Mortgage
in any jurisdiction to which it has consented under the Indenture, the
Intercreditor Agreement or any Security Document and further waives and agrees
not to plead that any such action, suit or proceeding brought in any such
jurisdiction has been brought in an inconvenient forum and (iv) covenants not to
delay or impede the execution of any power granted or delegated to Mortgagee by
this Mortgage, but to suffer and permit the execution of every such power as
though no such law or laws had been made or enacted. Mortgagor, for itself and
all who may claim under it, waives all rights to have the Mortgaged Property
marshalled on any foreclosure of this Mortgage.
SECTION 3.5. Remedies Not Exclusive. No remedy conferred upon or
reserved to Mortgagee by this Mortgage is intended to be exclusive of any other
remedy or remedies, and each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Mortgage or now or
hereafter existing at law or in equity. Any delay or omission of Mortgagee to
exercise any right or power accruing upon the occurrence of an Event of Default
shall not impair any such right or power and shall not be construed to be a
waiver of or acquiescence in any such Event of Default. Every power and remedy
given by this Mortgage may be exercised from time to time concurrently or
independently, when and as often as may be deemed expedient by Mortgagee in such
order and manner as Mortgagee, in its sole discretion, may elect. If Mortgagee
accepts any moneys required to be paid by Mortgagor under this Mortgage after
the same become due, such acceptance shall not constitute a waiver of the right
either to require prompt payment, when due, of all other sums secured by this
Mortgage or to declare an Event of Default with regard to subsequent defaults.
If Mortgagee accepts any moneys required to be paid by Mortgagor under this
Mortgage in an amount less than the sum then due, such acceptance shall be
deemed an acceptance on account only and on the condition that it shall not
constitute a waiver of the obligation of Mortgagor to pay the entire sum then
due, and Mortgagor's failure to pay the entire sum then due shall be and
continue to be a default hereunder notwithstanding acceptance of such amount on
account.
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ARTICLE IV
CERTAIN DEFINITIONS
The following terms shall have the following respective meanings:
"Additional Undertaking" means (a) cash or Cash Equivalents or (b) a
Surety Bond, Guaranty or Letter of Credit which is (i) provided by a Person,
(ii) whose long-term unsecured debt is rated at least AA (or equivalent) and
(iii) is otherwise satisfactory to Mortgagee. Additional Undertakings shall be
addressed directly to Mortgagee and shall name Mortgagee as the beneficiary
thereof and the party entitled to make claims thereunder.
"Cost of Construction" means the sum, so far as it relates to the
reconstructing, renewing, restoring or replacing of the Improvements, of (i)
obligations incurred or assumed by Mortgagor or undertaken by tenants pursuant
to the terms of the Leases for labor, materials and other expenses and to
contractors, builders and materialmen; (ii) the cost of contract bonds and of
insurance of all kinds that may reasonably be deemed by Mortgagor to be
necessary during the course of construction; (iii) the expenses incurred or
assumed by Mortgagor (or tenant under the Lease performing such Restoration) for
test borings, surveys, estimates, permits, any Plans and Specifications and
preliminary investigations therefor, and for supervising construction, as well
as for the performance of all other duties required by or reasonably necessary
for proper construction; (iv) ad valorem property taxes levied upon the Premises
during performance of any Restoration; (v) any costs or other charges in
connection with obtaining title insurance and counsel opinions that may be
required or necessary in connection with a Restoration; and (vi) any costs or
other charges in connection with obtaining services (including legal counsel)
that may reasonably be deemed by Mortgagor to be necessary in connection with
the construction.
"Force Majeure" means any acts of God, fires, explosions, floods,
epidemic, abnormal storms, acts of a public enemy, wars, blockades, riots,
rebellions, sabotage, insurrections, restraints of government or civil
disturbances, national, regional or local labor strikes, work stoppages,
boycotts, walkouts or other labor disputes, but only to the extent that any such
act, event or circumstances (i) is beyond the reasonable control of Mortgagor,
and (ii) is reasonably unforeseen.
"Guaranty" means the unconditional guarantee of payment of any
corporation, limited liability company or partnership organized and existing
under the laws of the United States of America or any State or the District of
Columbia or Canada or province thereof that has a long-term unsecured debt
rating (as determined by each Rating Agency) at the time such guarantee is
delivered equal to or higher than the then current rating of the Notes, given to
Mortgagee, accompanied by an Opinion of Counsel to such guarantor to the effect
that such guarantee has been duly authorized, executed and delivered by such
guarantor and constitutes the legal, valid and binding obligation of such
guarantor enforceable against such guarantor by Mortgagee in accordance with its
terms subject to customary exceptions at the time for opinions for such
instruments, together with an Opinion of Counsel to the effect that, taking into
account the purpose under this Mortgage for which such guarantee will be given,
such guarantee and accompanying opinion are responsive to the requirements of
this Mortgage.
"Intercreditor Agreement" means that certain amended and restated
intercreditor and subordination agreement (as amended, amended and restated,
supplemented or otherwise modified from time to time), dated as of August __,
1999, by and among the Issuers, Mortgagee, as Collateral Agent and Trustee, the
Pennsylvania Lenders (as defined therein), BankBoston, N.A., as Revolver Agent
(as defined therein), those parties which in the future become Government
Lenders and/or Notes Refinancing Lenders (each as defined therein), those
parties who in the future become New Bar Mill Lenders (as defined therein),
Mortgagor, Republic Technologies International Holdings, LLC, Bliss & Laughlin,
LLC, Nimishillen & Tuscarawas, LLC, Canadian Drawn Steel Company Inc. and each
of the other parties from time to time made party thereto.
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"Letter of Credit" means a clean, irrevocable, unconditional letter
of credit in favor of Mortgagee and entitling Mortgagee to draw thereon in The
City of New York issued by a bank with a letter of credit evaluation determined
by each Rating Agency, at the time such letter of credit is delivered, in one of
the three highest generic rating categories of such Rating Agency.
"Rating Agency" means Standard & Poor's Corporation, if such Person
shall then be rating corporate obligations, and Moody's Investors Service, Inc.,
if such Person shall then be rating corporate obligations, or, if neither such
Person shall be rating corporate obligations, then any other organization of
generally recognized standing, selected by Mortgagee.
"rated or rating" in connection with long-term unsecured debt, means
that the Person in question has, or has been determined to be qualified for, the
rating in question by the Rating Agency.
"Surety Bond" means a clean irrevocable surety bond or credit
insurance policy in favor of Mortgagee issued by an insurance company the claims
paying ability rating of which at the time such surety bond or credit insurance
policy is delivered is in one of the three highest generic rating categories of
each Rating Agency.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Severability. In the event any one or more of the
provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Mortgage, but this
Mortgage shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein or therein. The invalidity of any
provision of this Mortgage in any one jurisdiction shall not affect or impair in
any manner the validity of such provision in any other jurisdiction.
SECTION 5.2. Notices. Unless otherwise provided herein or in the
Indenture, any notice or other communication herein shall be given in the manner
and at the address set forth in the Indenture, or as to any party at such other
address as shall be designated by such party in a written notice to the other
party.
SECTION 5.3. Covenants To Run with the Land. All of the grants,
covenants, terms, provisions and conditions in this Mortgage shall run with the
land and shall apply to and bind the successors and assigns of Mortgagor.
SECTION 5.4. Captions; Gender and Number. The captions and section
headings of this Mortgage are for convenience only and are not to be used to
define the provisions hereof. All terms contained herein shall be construed,
whenever the context of this Mortgage requires, so that the singular includes
the plural and so that the masculine includes the feminine.
SECTION 5.5. Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state or federal,
that are applicable to the transaction of which this Mortgage is a part. All
agreements between Mortgagor and the Mortgagee, whether now existing or
hereafter arising and whether oral or written, are hereby expressly limited so
that in no contingency or event whatsoever shall the amount paid or agreed to be
paid by Mortgagor for the use, forbearance or detention of the money to be
loaned or advanced under the Indenture or any related document, or for the
payment or performance of any covenant or obligation contained herein or in the
Indenture, exceed the maximum amount permissible under applicable fed-
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<PAGE>
eral or state usury laws. If under any circumstances whatsoever fulfillment of
any such provision, at the time performance of such provision shall be due,
shall involve exceeding the limit of validity prescribed by law, then the
obligation to be fulfilled shall be reduced to the limit of such validity. If
under any circumstances Mortgagor shall have paid an amount deemed interest by
applicable law, which would exceed the highest lawful rate, such amount that
would be excessive interest under applicable usury laws shall be applied to the
reduction of the principal amount owing in respect of the Secured Obligations
and not to the payment of interest, or if such excessive interest exceeds the
unpaid balance of principal and any other amounts due hereunder, the excess
shall be refunded to Mortgagor. All sums paid or agreed to be paid for the use,
forbearance or detention of the principal under any extension of credit or
advancement of funds by Mortgagee shall, to the extent permitted by applicable
law, and to the extent necessary to preclude exceeding the limit of validity
prescribed by law, be amortized, prorated, allocated and spread from the date of
this Mortgage until payment in full of the Secured Obligations so that the
actual rate of interest on account of such principal amounts is uniform
throughout the term hereof.
SECTION 5.6. Indemnification; Reimbursement. Each and every
obligation of Mortgagor to indemnify and hold harmless the Mortgagee, as
collateral agent under the Intercreditor Agreement, contained in Section 8 of
the Intercreditor Agreement is incorporated herein mutatis mutandis as an
obligation of Mortgagor hereunder to indemnify Mortgagee and the officers,
directors, employees, agents and affiliates of Mortgagee (each, an "Indemnified
Party"). In addition to the foregoing, Mortgagor shall reimburse Mortgagee,
within five (5) Business Days after demand, for all costs and expenses
reasonably incurred by Mortgagee in connection with the administration and
enforcement of this Mortgage, except to the extent any such costs or expenses
result from the gross negligence or willful misconduct of Mortgagee. If any
action or proceeding, including, without limitation, bankruptcy or insolvency
proceedings, is commenced to which action or proceeding Mortgagee is made a
party or in which it becomes necessary to defend or uphold the Lien or validity
of this Mortgage, Mortgagor shall, upon demand, reimburse Mortgagee for all
expenses (including, without limitation, attorneys' and agents' fees and
disbursements) reasonably incurred by Mortgagee in such action or proceeding. In
any action or proceeding to foreclose this Mortgage or to recover or collect the
Secured Obligations, the provisions of law relating to the recovery of costs,
disbursements and allowances shall prevail unaffected by this covenant.
Mortgagor's obligations under this Section 5.6 shall survive the satisfaction of
this Mortgage and the discharge of Mortgagor's other obligations hereunder.
SECTION 5.7. Choice of Law. The terms and provisions of this
Mortgage and the enforcement hereof shall be governed by and construed in
accordance with the laws of the state where the Land is located.
SECTION 5.8. Changes in Writing. This Mortgage may not be modified,
amended, discharged or waived in whole or in part except by an instrument in
writing executed in accordance with the Indenture and signed by (i) Mortgagor,
to the extent any modification, amendment, discharge or waiver is sought to be
enforced against Mortgagor, and (ii) Mortgagee, in accordance with the
provisions of the Indenture to the extent any modification, amendment, discharge
or waiver is sought to be enforced against Mortgagee.
SECTION 5.9. No Merger. The rights and estate created by this
Mortgage shall not, under any circumstances, be held to have merged into any
other estate or interest now owned or hereafter acquired by Mortgagee unless
Mortgagee shall have consented to such merger in writing.
SECTION 5.10. Concerning Mortgagee.
5.10.1 Mortgagee shall be entitled to rely upon any written notice,
statement, certificate, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper person, and, with
respect to all matters pertaining to this Mortgage and its duties hereunder,
upon advice of counsel selected by it.
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5.10.2 Mortgagor shall recognize as the mortgagee under this
instrument any party who has succeeded to the interest of Mortgagee under the
Indenture and the Intercreditor Agreement.
5.10.3 If any item of Mortgaged Property also constitutes collateral
granted to Mortgagee under any other mortgage, security agreement, pledge or
instrument of any type, in the event of any conflict between the provisions of
this Mortgage and the provisions of such other mortgage, security agreement,
pledge or instrument of any type in respect of such collateral, Mortgagee, in
its sole discretion, shall select which provision or provisions shall control.
5.10.4 Mortgagee may resign from the performance of all its
functions and duties hereunder at any time by giving ten (10) days' prior
written notice to Mortgagor. Such resignation shall take effect upon the
appointment of a successor Mortgagee pursuant to the provisions of the Indenture
and/or the Intercreditor Agreement.
5.10.5 Mortgagee has been appointed as collateral agent pursuant to
the Indenture and/or the Intercreditor Agreement. The actions of Mortgagee
hereunder are subject to the provisions of the Indenture and/or the
Intercreditor Agreement. Mortgagee shall have the right hereunder to make
demands, to give notices, to exercise or refrain from exercising any rights, and
to take or refrain from taking action (including, without limitation, the
release or substitution of Mortgaged Property), in accordance with this
Mortgage, the Indenture and the Intercreditor Agreement.
SECTION 5.11. Mortgagee's Right To Sever Indebtedness.
5.11.1 Mortgagor acknowledges that (a) the Mortgaged Property does
not constitute the sole source of security for the payment and performance of
the Secured Obligations and that the Secured Obligations are also secured by
property of Mortgagor and its affiliates in other jurisdictions (all such
property, collectively, the "Collateral"), (b) the number of such jurisdictions
and the nature of the transaction of which this instrument is a part are such
that it would have been impracticable for the parties to allocate to each item
of Collateral a specific loan amount and to execute in respect of such item a
separate indenture and (c) Mortgagor intends that Mortgagee have the same rights
with respect to the Mortgaged Property, in foreclosure or otherwise, that
Mortgagee would have had if each item of Collateral had been mortgaged or
pledged pursuant to a separate indenture and mortgage or security document. In
furtherance of such intent, Mortgagor agrees that Mortgagee may at any time by
notice (an "Allocation Notice") to Mortgagor allocate a portion (the "Allocated
Indebtedness") of the Secured Obligations to the Mortgaged Property and sever
from the remaining Secured Obligations the Allocated Indebtedness. From and
after the giving of an Allocation Notice with respect to the Mortgaged Property,
the Secured Obligations hereunder shall be limited to the extent set forth in
the Allocation Notice and (as so limited) shall, for all purposes, be construed
as a separate loan obligation of Mortgagor unrelated to the other transactions
contemplated by the Indenture or any document related to either thereof. To the
extent that the proceeds on any foreclosure of the Mortgaged Property shall
exceed the Allocated Indebtedness, such proceeds shall belong to Mortgagor and
shall not be available hereunder to satisfy any Secured Obligations of Mortgagor
other than the Allocated Indebtedness. In any action or proceeding to foreclose
the Lien of this Mortgage or in connection with any power of sale foreclosure or
other remedy exercised under this Mortgage commenced after the giving by
Mortgagee of an Allocation Notice, the Allocation Notice shall be conclusive
proof of the limits of the Secured Obligations hereby secured, and Mortgagor may
introduce, by way of defense or counterclaim, evidence thereof in any such
action or proceeding.
5.11.2 Mortgagor hereby waives, to the greatest extent permitted
under law, the right to a discharge of any of the Secured Obligations under any
statute or rule of law now or hereafter in effect which provides that
foreclosure of the Lien of this Mortgage or other remedy exercised under this
Mortgage constitutes the exclusive means for satisfaction of the Secured
Obligations or which makes unavailable a deficiency judgment or any subsequent
remedy because Mortgagee elected to proceed with a power of sale foreclosure or
such other
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<PAGE>
remedy or because of any failure by Mortgagee to comply with laws that prescribe
conditions to the entitlement to a deficiency judgment. In the event that,
notwithstanding the foregoing waiver, any court shall for any reason hold that
Mortgagee is not entitled to a deficiency judgment, Mortgagor shall not (a)
introduce in any other jurisdiction such judgment as a defense to enforcement
against Mortgagor of any remedy in the Indenture, any Security Document or any
document related thereto or (b) seek to have such judgment recognized or entered
in any other jurisdiction, and any such judgment shall in all events be limited
in application only to the state or jurisdiction where rendered.
5.11.3 In the event any instrument in addition to the Allocation
Notice is necessary to effectuate the provisions of this Section 5.11,
including, without limitation, any amendment to this Mortgage, any substitute
promissory note or affidavit or certificate of any kind, Mortgagee may execute,
deliver or record such instrument as the attorney-in-fact of Mortgagor in the
event that Mortgagor fails to deliver such instrument within ten (10) days after
delivery to Mortgagor of a request therefor. Such power of attorney is coupled
with an interest and is irrevocable.
SECTION 5.12. Waiver of Stay.
5.12.1 Mortgagor agrees that in the event that Mortgagor or any
property or assets of Mortgagor shall hereafter become the subject of a
voluntary or involuntary proceeding under the Bankruptcy Code or Mortgagor shall
otherwise be a party to any federal or state bankruptcy, insolvency, moratorium
or similar proceeding to which the provisions relating to the automatic stay
under Section 362 of the Bankruptcy Code or any similar provision in any such
law is applicable, then, in any such case, whether or not Mortgagee has
commenced foreclosure proceedings under this Mortgage, Mortgagee shall be
entitled to relief from any such automatic stay as it relates to the exercise of
any of the rights and remedies (including, without limitation, any foreclosure
proceedings) available to Mortgagee as provided in this Mortgage or in any other
document evidencing or securing the Secured Obligations.
5.12.2 Mortgagee shall have the right to petition or move any court
having jurisdiction over any proceeding described in subsection 5.12.1 for the
purposes provided therein, and Mortgagor agrees, to the extent permitted by law,
(i) not to oppose any such petition or motion and, (ii) at Mortgagor's sole cost
and expense, to assist and cooperate with Mortgagee, as may be requested by
Mortgagee from time to time, in obtaining any relief requested by Mortgagee,
including, without limitation, by filing any such petitions, supplemental
petitions, requests for relief, documents, instruments or other items from time
to time requested by Mortgagee or any such court.
SECTION 5.13. No Credit for Payment of Taxes or Impositions.
Mortgagor shall not be entitled to any credit against the principal, premium, if
any, or interest payable on the Notes, and Mortgagor shall not be entitled to
any credit against any other sums which may become payable under the terms
thereof or hereof by reason of the payment of any tax or other impositions on
the Mortgaged Property or any part thereof.
SECTION 5.14. Stamp and Other Taxes. Subject to the provisions of
subsection 1.5.5 relating to permitted contests, Mortgagor shall pay any United
States documentary stamp taxes, with interest and fines and penalties, and any
mortgage recording taxes or fees, with interest and fines and penalties, that
may hereafter be levied, imposed or assessed under or upon or by reason of this
Mortgage or the Secured Obligations or any instrument or transaction affecting
or relating to either thereof and in default thereof Mortgagee may advance the
same and the amount so advanced shall be payable by Mortgagor to Mortgagee
within ten (10) days after demand therefor, together with interest thereon at
the Default Rate.
SECTION 5.15. Estoppel Certificates. Each party hereto shall, from
time to time, upon twenty (20) days' prior written request by the other party,
execute, acknowledge and deliver to such other party a certificate signed by an
authorized officer or officers stating that this Mortgage and the other
Indenture Docu-
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<PAGE>
ments are unmodified and in full force and effect (or, if there have been
modifications, that this Mortgage and such other Indenture Documents, as
applicable, are in full force and effect as modified and setting forth such
modifications) and stating the date to which payments have been made in respect
of the Secured Obligations.
SECTION 5.16. Additional Security. Without notice to or consent of
Mortgagor and without impairment of the Lien and rights created by this
Mortgage, Mortgagee may accept (but Mortgagor shall not be obligated to furnish)
from Mortgagor or from any other Person or Persons, additional security for the
Secured Obligations. Neither the giving of this Mortgage nor the acceptance of
any such additional security shall prevent Mortgagee from resorting, first, to
such additional security, and, second, to the security created by this Mortgage
without affecting Mortgagee's Lien and rights under this Mortgage.
SECTION 5.17. Release. The Lien of this Mortgage shall be released
from the Mortgaged Property or any portion thereof in accordance with the
provisions of the Indenture, including, without limitation, Section 11.3(b)
thereof. Mortgagee, on the written request and at the expense of Mortgagor, will
execute and deliver such proper instruments of release and satisfaction or
assignment as may reasonably be requested to evidence such release or
assignment, and any such instrument, when duly executed by Mortgagee and duly
recorded by Mortgagor in the places where this Mortgage is recorded, shall
conclusively evidence the partial release, release or assignment of this
Mortgage.
SECTION 5.18. Expenses of Collection. In the event this Mortgage or
any other instrument evidencing the Secured Obligations is placed in the hands
of counsel for collection of any amount payable hereunder or thereunder or for
the enforcement of any of the provisions hereof or thereof, Mortgagor agrees to
pay all reasonable costs associated therewith incurred by Mortgagee, either with
or without the institution of an action, suit or other proceeding, in addition
to all costs, disbursements and allowances provided by law, all such costs to be
paid upon demand, together with interest thereon at the Default Rate from the
date of notice or incurring thereof, and the same shall be deemed to be secured
hereby.
SECTION 5.19. Business Days. In the event any time period or any
date provided in this Mortgage ends or falls on a day other than a Business Day,
then such time period shall be deemed to end and such date shall be deemed to
fall on the next succeeding Business Day, and performance herein may be made on
such Business Day, with the same force and effect as if made on such other day.
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IN WITNESS WHEREOF, this Mortgage has been duly executed by
Mortgagor as of the date first written above.
-----------------------------,
Mortgagor
By:
-----------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
LEGAL DESCRIPTION
<PAGE>
SCHEDULE B
PRIOR LIENS
Each of the liens and other encumberances excepted on Schedule B of the
marked title commitment bearing Title Associates Inc. reference number TA
N99-1948 (__) relating to the real property described on Schedule A attached
hereto.
<PAGE>
MASTER PLEDGE AGREEMENT
MASTER PLEDGE AGREEMENT ("Agreement"), dated as of August 13, 1999, among
Republic Technologies International, LLC, a Delaware limited liability company
(the "Company"), RTI CAPITAL CORP., a Delaware corporation ("RTI"), REPUBLIC
TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC, a Delaware limited liability company
("Holdings"), each other guarantor listed on Schedule I hereto (each such
guarantor, together with Holdings, the Company and RTI, each, a "Pledgor",
collectively, the "Pledgors") and UNITED STATES TRUST COMPANY OF NEW YORK, a
bank and trust company organized under the New York Banking Law, as collateral
agent (in such capacity, the "Collateral Agent") for the Secured Parties (as
defined herein).
R E C I T A L S :
A. Reference is made to (i) the Credit Agreement, dated as of August 13,
1999 (as amended, amended and restated, supplemented or otherwise modified from
time to time, including any refinancing, refunding, replacement or extension
thereof or a portion thereof and whether by the Lenders (as hereinafter defined)
or any other lender or group of lenders, the "Credit Agreement"), among the
Company, the financial institutions party thereto as lenders (the "Lenders"),
BankBoston, N.A., as an agent for the Lenders (in such capacity, the
"Administrative Agent", together with the Lenders, the "Credit Agreement
Parties") and (ii) the Indenture, dated as of August __, 1999 (as amended or
modified from time to time, the "Indenture"), among United States Trust Company
of New York, as trustee (in such capacity, the "Indenture Trustee"), for the
holders of the Senior Notes (as defined below) from time to time (the "Senior
Note Holders"), the Company and RTI, as issuers (the "Issuers"), and the
Guarantors party thereto and (iii) the Pledge Intercreditor Agreement, dated as
of August 13, 1999 (as amended or modified from time to time, the "Pledge
Intercreditor Agreement"), among the Secured Parties and the Collateral Agent
and countersigned by the Pledgors.
B. The Lenders have agreed to make Revolving Credit Loans (as defined in
the Credit Agreement and which term will include any loans, revolving, term or
otherwise, made under the Credit Agreement) to, and issue Letters of Credit (as
defined in the Credit Agreement) for the account of, the Company in an aggregate
principal amount of up to $425,000,000 upon the terms and subject to the
conditions specified in the Credit Agreement. Pursuant to the Indenture, the
Issuers are issuing $425,000,000 aggregate principal amount of their 133/4%
Senior Secured Notes due 2009 (together with any substantially identical notes
of the Issuers issued in exchange therefor in accordance with the Indenture, the
"Senior Notes").
C. The obligations of the Lenders to make Revolving Credit Loans and to
issue Letters of Credit under the Credit Agreement, and the obligations of the
Senior Note Holders to purchase the Senior Notes, are conditioned upon, among
other things, the execution and delivery by the Pledgors of a pledge agreement
in the form hereof to secure (i) the due and punctual payment of (a) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Revolving Credit Loans and the Senior Notes, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
redemption, upon a required offer to purchase or otherwise, (b) each payment
required to be made by the Company under the Credit Agreement in respect of any
Letter of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral, and (c) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy,
<PAGE>
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insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Pledgors to the Secured Parties
under the Senior Credit Documents, (ii) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the Pledgors under the
Senior Credit Documents and (iii) the due and punctual payment and performance
of all obligations of the Pledgors under each Rate Protection Agreement (as
defined in the Credit Agreement) entered into with any counterparty that was a
Lender at the time such Rate Protection Agreement was entered into (all the
monetary and other obligations referred to in the preceding clauses (i) through
(iii) being referred to collectively as the "Obligations").
A G R E E M E N T:
Accordingly, the Pledgors and the Collateral Agent, on behalf of itself
and each other Secured Party (and each of their successors or assigns), hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definition of Terms Used Herein. All capitalized terms used
but not defined herein shall have the meanings set forth in the Credit
Agreement, the Indenture and the other Senior Credit Documents, as appropriate.
All references to specific Sections in the Credit Agreement shall be deemed to
also be references to the parallel provision of any other credit agreement
included within the definition of "Credit Agreement."
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein, the
following terms shall have the following meanings:
"Additional Interests" shall have the meaning assigned to such term in
Section 2.01.
"Additional Shares" shall have the meaning assigned to such term in
Section 2.01.
"Collateral" shall have the meaning assigned to such term in Section 2.01.
"Distributions" shall have the meaning assigned to such term in Section
2.01.
"Event of Default" shall mean any "Event of Default" as defined in the
Credit Agreement and any "Event of Default" as defined in the Indenture.
"Federal Securities Laws" shall have the meaning assigned to such term in
Section 4.03.
"Guarantee Agreements" shall mean the "Guaranties" as defined in the
Credit Agreement and the Indenture.
"Governmental Authority" shall have the meaning assigned to such term in
the Indenture.
"Indebtedness" shall mean any "Indebtedness" as defined in the Credit
Agreement and any "indebtedness" as defined in the Indenture.
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"Indemnitee" shall have the meaning assigned to such term in the Pledge
Intercreditor Agreement.
"Initial Pledged Shares" shall have the meaning assigned to such term in
Section 2.01.
"Initial Pledged Interests" shall have the meaning assigned to such term
in Section 2.01.
"Obligations" shall have the meaning assigned to such term in Recital C of
this Agreement.
"Person" shall have the meaning assigned to such term in the Credit
Agreement.
"Pledged Interests" shall have the meaning assigned to such term in
Section 2.01.
"Pledged Securities" shall have the meaning assigned to such term in
Section 2.01.
"Pledged Shares" shall have the meaning assigned to such term in Section
2.01.
"Secured Parties" shall mean (i) the Lenders, (ii) the Senior Note
Holders, (iii) the Administrative Agent, (iv) the Indenture Trustee, (v) the
Collateral Agent and (vi) the successors and assigns of each of the foregoing.
"Security Documents" shall mean each of the documents and agreements
defined as a "Security Document" in the Indenture or the Credit Agreement.
"Senior Credit Documents" shall mean the Credit Agreement, the Indenture
and the Support Documents.
"Support Documents" shall mean the Security Documents and the Guarantee
Agreements.
"Tax Code" shall have the meaning assigned to such term in Section 2.01.
"Wholly-Owned Restricted Subsidiary" shall have the meaning assigned to
such term in the Indenture.
SECTION 1.03. Terms Generally. The definitions in Section 1.02 shall apply
equally to both 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". All references
herein to Articles and Sections shall be deemed references to Articles and
Sections of this Agreement unless the context shall otherwise require.
ARTICLE II
PLEDGE
SECTION 2.01. Pledge. As security for the payment or performance, as the
case may be, in full of the Obligations, the Pledgors hereby bargain, sell,
convey, assign, set over, mortgage, pledge, hypothecate and transfer to the
Collateral Agent, its successors and its assigns, for the benefit of the Secured
Parties, and hereby grant to the Collateral Agent, its successors and assigns,
for the benefit of the Secured Parties, a security interest in the following:
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(i) the issued and outstanding shares of capital stock of each
Person described in Schedule II-A annexed hereto and each other Subsidiary
which is a corporation hereafter acquired or formed by such Pledgor (which
are and shall remain at all times until this Agreement terminates,
certificated shares), including the certificates representing all such
shares (collectively, the "Initial Pledged Shares") and any interest of
such Pledgor in the entries on the books of any financial intermediary
pertaining to the Initial Pledged Shares; provided, however, that such
Pledgor shall not be required to pledge shares possessing more than 65% of
the voting power of all classes of capital stock entitled to vote of any
Subsidiary (other than Canadian Drawn Steel Company Inc.) which is a
controlled foreign corporation (as defined in Section 957(a) of the
Internal Revenue Code of 1986, as amended from time to time (the "Tax
Code")) and, in any event, shall not be required to pledge the shares of
stock of any Subsidiary (other than Canadian Drawn Steel Company Inc.)
otherwise required to be pledged pursuant to this Section 2.01(i) to the
extent that such pledge would constitute an investment of earnings in
United States property under Section 956 (or a successor provision) of the
Tax Code, which investment would trigger an increase in the gross income
of a United States shareholder of such Pledgor pursuant to Section 951 (or
a successor provision) of the Tax Code;
(ii) all additional shares of capital stock of whatever class of any
issuer of the Pledged Shares from time to time acquired by such Pledgor in
any manner (which are and shall remain at all times until this Agreement
terminates, certificated shares), including the certificates representing
such additional shares and any interest of such Pledgor in the entries on
the books of any financial intermediary pertaining to such additional
(collectively, the "Additional Shares"; together with the Initial Pledged
Shares, the "Pledged Shares");
(iii) all membership interests and/or partnership interests, as
applicable, of each Person described in Schedule II-B annexed hereto and
each other Subsidiary which is a limited liability company or partnership
hereafter acquired or formed by such Pledgor, together with all rights,
privileges, authority and powers of such Pledgor in and to each such
Person or under the membership or partnership agreement of each such
Person (the "Operative Agreements"), and the certificates, instruments and
agreements, if any, representing such membership or partnership interests
(collectively, the "Initial Pledged Interests");
(iv) subject to Section 2.04, all options, warrants, rights,
agreements, additional membership or partnership interests or other
interests relating to each such Person described in Section 2.01(iii)
above or any interest in any such Person, including, without limitation,
any right relating to the equity or membership or partnership interests in
any such Person or under the Operative Agreement of any such Person, from
time to time acquired by such Pledgor in any manner and the certificates,
instruments and agreements, if any, representing such additional interests
(collectively, the "Additional Interests"; together with the Initial
Pledged Interests, the "Pledged Interests"; the Pledged Interests,
together with the Pledged Shares and the items or types of Pledged
Collateral described in Section 2.01(vi) of this Agreement, collectively,
the "Pledged Securities");
(v) subject to Section 2.04, all dividends, cash, options, warrants,
rights, instruments, distributions, returns of capital or principal,
income, interest, profits and other property, interests (debt or equity)
or proceeds, including as a result of a split, revision, reclassification
or other like change of the Pledged Securities, from time to time
received, receivable or otherwise distributed to such Pledgor in respect
of or in exchange for any or all of the Pledged Securities (collectively,
"Distributions");
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(vi) subject to Section 2.04, without affecting the obligations of
such Pledgor under any provision prohibiting such action hereunder or
under the Senior Credit Documents, in the event of any consolidation or
merger in which any Person listed in Schedule II-A or Schedule II-B
annexed hereto is not the surviving entity, all shares of each class of
the capital stock of the successor corporation or interests or
certificates of the successor limited liability company or partnership
owned by such Pledgor (unless such successor is such Pledgor itself)
formed by or resulting from such consolidation or merger;
(vii) all other property that may be delivered to and held by the
Collateral Agent pursuant to the terms hereof;
(viii) all general intangibles to the extent necessary to realize on
any of the foregoing;
(ix) all documents, books, records, files and other materials
relating to any of the foregoing; and
(x) all proceeds of any of the foregoing (the items referred to in
Section 2.01 (i) through (x) being collectively called the "Collateral").
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and its assigns, for the ratable
benefit of the Secured Parties, forever, subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 2.02. Delivery of the Collateral. (i) Each Pledgor agrees to
promptly deliver or cause to be delivered to the Collateral Agent any and all
Pledged Securities, and any and all certificates, agreements or other
instruments or documents representing the Collateral.
(ii) Upon delivery to the Collateral Agent, (a) the Pledged
Securities shall be accompanied by undated stock powers duly executed in blank
or other instruments of transfer reasonably satisfactory to the Collateral Agent
and by such other instruments and documents as the Collateral Agent may
reasonably request, (b) all other property comprising part of the Collateral,
including uncertificated Pledged Securities, shall be accompanied by proper
instruments of assignment duly executed by the applicable Pledgor and such other
instruments or documents as the Collateral Agent may reasonably request and (c)
UCC-1 financing statements for each of the entities and in each of the
jurisdictions listed on Schedule V. Each delivery of Pledged Securities shall be
accompanied by a schedule describing the securities being delivered and the
securities that have been previously pledged, which schedule shall be attached
hereto as Schedules II-A and II-B, as applicable, and made a part hereof. Each
schedule so delivered shall supersede any prior schedule so delivered.
SECTION 2.03. Registration in Nominee Name; Denominations. The Collateral
Agent shall have the right (in its sole and absolute discretion) to hold the
Pledged Securities in its own name as pledgee, the name of its nominee or the
name of the applicable Pledgor, endorsed or assigned in blank or in favor of the
Collateral Agent. Each Pledgor will promptly give to the Collateral Agent copies
of any notices or other communications received by it with respect to Pledged
Securities registered in the name of such Pledgor. The Collateral Agent shall at
all times have the right to exchange the certificates representing Pledged
Securities for certificates of smaller or larger denominations for any purpose
consistent with this Agreement.
SECTION 2.04. Voting Rights; Dividends and Interest, etc. (i) Unless and
until an Event of Default shall have occurred and be continuing:
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(a) Each Pledgor shall be entitled to exercise any and all voting
and/or other consensual rights and powers accruing to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms
of this Agreement and the other Senior Credit Documents; provided,
however, that no such action shall be permitted (regardless of whether an
Event of Default has occurred and is continuing) if such action would
materially and adversely affect the rights inuring to a holder of the
Pledged Securities or the rights and remedies of the Collateral Agent or
the other Secured Parties under this Agreement or any other Senior Credit
Document or the ability of the Collateral Agent or the other Secured
Parties to exercise the same.
(b) The Collateral Agent shall execute and deliver to each Pledgor,
or cause to be executed and delivered to such Pledgor, all such proxies,
powers of attorney and other instruments as such Pledgor may reasonably
request for the purpose of enabling such Pledgor to exercise the voting
and/or consensual rights and powers that it is entitled to exercise
pursuant to Section 2.04 (a).
(c) Each Pledgor shall be entitled to receive and retain any and all
dividends, interest and principal paid in cash on the Pledged Securities
pledged by it to the extent and only to the extent that such cash
dividends, interest and principal are permitted by, and otherwise paid in
accordance with, the terms and conditions of the Senior Credit Documents
and applicable laws. Other than pursuant to the first sentence of this
Section 2.04 (i)(c), all principal, all noncash dividends, interest and
principal, and all dividends, interest and principal paid or payable in
cash or otherwise in connection with a partial or total liquidation or
dissolution, return of capital, capital surplus or paid-in surplus, and
all other distributions made on or in respect of Pledged Securities,
whether paid or payable in cash or otherwise, whether resulting from a
subdivision, combination or reclassification of the outstanding capital
stock of the issuer of any Pledged Securities or received in exchange for
Pledged Securities or any part thereof, or in redemption thereof, or as a
result of any merger, consolidation, acquisition or other exchange of
assets to which such issuer may be a party or otherwise, shall be and
become part of the Collateral, and, if received by a Pledgor, shall not be
commingled by such Pledgor with any of its other funds or property but
shall be held separate and apart therefrom, shall be held in trust for the
benefit of the Collateral Agent and shall be forthwith delivered to the
Collateral Agent in the same form as so received (with any necessary
endorsement or instrument of transfer).
(ii) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to dividends, interest and principal payments
that such Pledgor is authorized to receive pursuant to Section 2.04 (i)(c) above
shall cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to receive
and retain such dividend, interest and principal payments. All dividends,
interest and principal that are received by any Pledgor contrary to the
provisions of this Section 2.04 shall be received in trust for the benefit of
the Collateral Agent, shall be segregated from other property or funds of such
Pledgor and shall be forthwith delivered to the Collateral Agent in the same
form as so received (with any necessary endorsement or instrument of transfer).
Any and all money and other property paid over to or received by the Collateral
Agent pursuant to the provisions of Section 2.04 (ii) shall be retained by the
Collateral Agent in an account to be established by the Collateral Agent upon
receipt of such money or other property and shall be applied in accordance with
the provisions of Section 4.02. After all Events of Default under the Credit
Agreement and the Indenture have been cured or waived, the Collateral Agent
shall, within five Business Days after all such Events of Default have been
cured or waived, repay to the Pledgors all cash dividends, interest or principal
that such Pledgors would otherwise be permitted to retain pursuant to the terms
of Section 2.04 (i)(c), but only to the extent such cash dividends, interest or
principal remain in such account.
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(iii) Upon the occurrence and during the continuance of an Event of
Default, all rights of the Pledgors to exercise the voting and consensual rights
and powers that they are entitled to exercise pursuant to Section 2.04 (i)(a),
and the obligations of the Collateral Agent under Section 2.04 (i)(b), shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to exercise
such voting and consensual rights and powers.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Pledgor represents, warrants and covenants, as to itself and the
Collateral pledged by it hereunder, to and with the Collateral Agent and each
other Secured Party, that:
(i) the Pledged Shares and Pledged Interests represent that
percentage as set forth on Schedules II-A and II-B of the issued and
outstanding shares of each class of the Pledged Shares and of the
membership or partnership interests of the Pledged Interests of the issuer
with respect thereto;
(ii) the Pledged Securities have been duly and validly authorized
and issued by the issuers thereof and are fully paid and nonassessable;
(iii) except for the security interest granted hereunder and as
provided in Section 2.04, each Pledgor (a) is and will at all times
continue to be the direct owner, beneficially and of record, of the
Pledged Securities indicated on Schedules II-A and II-B to be owned by
such Pledgor, (b) holds the same free and clear of all Liens, (c) will
make no assignment, pledge, hypothecation or transfer of, or create any
security interest in, the Collateral, other than as permitted hereunder
and (d) subject to Section 2.04, will cause any and all Collateral,
whether for value paid by any Pledgor or otherwise, to be forthwith
deposited with the Collateral Agent and pledged or assigned hereunder;
(iv) such Pledgor (a) has the power and authority to pledge the
Collateral pledged by it hereunder in the manner hereby done or
contemplated and (b) will defend its and the Collateral Agent's title or
interest thereto or therein (and in the proceeds thereof) against any and
all Liens (other than the Lien of this Agreement), however arising, of all
Persons whomsoever;
(v) no consent of any other Person (including stockholders or
creditors of any Pledgor) and no consent, approval or action by, or notice
to or filing with, any Government Authority or any securities exchange was
or is necessary (a) to the validity of the pledge effected hereby (b) the
exercise by the Collateral Agent of the rights provided for in this
Agreement or (c) the exercise by the Collateral Agent of the remedies in
respect of the Collateral pursuant to this Agreement, except those which
have been obtained and are in full force and effect. In the event that the
Collateral Agent desires to exercise any remedies, voting or consensual
rights or attorney-in-fact powers set forth in this Agreement and
determines it necessary to obtain any approvals or consents of any
approvals or consents of any Governmental Authority or any other Person
therefor, then, upon the reasonable request of the Collateral Agent, such
Pledgor agrees to use its commercially reasonable best efforts to assist
and aid the Collateral Agent to obtain as soon as practicable any
necessary approvals for the exercise of any such remedies, rights and
powers;
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(vi) by virtue of the execution and delivery by the Pledgors of this
Agreement, (a) when the Pledged Securities, certificates, instruments,
agreements or other documents representing or evidencing the Collateral
are delivered to the Collateral Agent in accordance with this Agreement
and (b) upon the filing of UCC-1 financing statements for each of the
entities and each of the jurisdictions listed on Schedule V, the
Collateral Agent will obtain a legal, valid and perfected first priority
security interest in the Pledged Securities and the proceeds thereof, as
security for the payment and performance of the Obligations;
(vii) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein;
(viii) all information set forth herein relating to the Pledged
Securities is accurate and complete in all material respects as of the
date hereof;
(ix) the pledge of the Pledged Securities pursuant to this Agreement
does not violate Regulation T, U or X of the Federal Reserve Board or any
successor thereto as of the date hereof;
(x) with respect to each Pledgor that is a corporation, partnership,
limited liability company or similar entity, such Pledgor's chief
executive office is located at the address indicated on Schedule IV
annexed hereto. No Pledgor shall move its chief executive office nor
change its name unless (1) it shall have given the Collateral Agent not
less than thirty (30) days' prior written notice of its intention so to
do, clearly describing such new location or name and providing such other
information in connection therewith as the Collateral Agent may reasonably
request and Schedule IV hereof shall be deemed to be amended to reflect
such information, and (2) with respect to such new location or name, such
Pledgor shall have taken all action reasonably satisfactory to the
Collateral Agent to maintain the perfection and priority of the security
interest of the Collateral Agent for the benefit of the Secured Parties in
the Collateral intended to be granted hereby;
(xi) except for the warrants to be issued in connection with the
Senior Notes, there are no options, warrants, calls, rights, commitments
or agreements of any character to which any Pledgor is a party or by which
such Pledgor is bound obligating such Pledgor to issue, deliver or sell or
cause to be issued, delivered or sold, additional Pledged Securities or
obligating such Pledgor to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement or would result in the
imposition of any other Lien, restrict the transferability of any of the
Collateral or otherwise impair or conflict with such Pledgor's obligations
or the rights of the Collateral Agent or the Secured Parties;
(xii) neither the execution and delivery of this Agreement or any
Senior Credit Document by any Pledgor nor the consummation of the
transactions herein contemplated nor the fulfillment of the terms hereof
(a) violates any charter or by-laws or other organizational document of
any Pledgor or any issuer of Pledged Securities, (b) violates the terms of
any agreement, indenture, mortgage, deed of trust, equipment lease,
instrument or other document to which any Pledgor is a party, or by which
it may be bound or to which any of its properties or assets may be
subject, which violation or conflict would have a material adverse effect
on the value of the Collateral or an adverse effect on the security
interests hereunder or (c) conflicts with any law, order, rule or
regulation applicable to any Pledgor of any Governmental Authority having
jurisdiction over such Pledgor or its property which conflict would have a
material adverse effect on the value of the Collateral or an adverse
effect on the security interests hereunder; and
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(xiii) each Pledgor agrees that at any time and from time to time,
at the sole cost and expense of such Pledgor, it shall promptly execute
and deliver all further instruments and documents, including, without
limitation, supplemental or additional UCC-l financing statements, and
take all further action that may be necessary or that the Collateral Agent
may reasonably request, in order to perfect and protect the pledge,
security interest and Lien granted or purported to be granted hereby or to
enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral.
ARTICLE IV
REMEDIES
SECTION 4.01. Remedies upon Default. If an Event of Default shall have
occurred and be continuing, the Collateral Agent may exercise, to the extent
permitted by law, all the rights of a secured party under the Uniform Commercial
Code of the State of New York or its equivalent in other jurisdictions (the
"Code") (whether or not the Code is in effect in the jurisdiction where such
rights are exercised) and, in addition, the Collateral Agent may, without being
required to give any notice, except as herein provided or as may be required by
mandatory provisions of law, sell the Collateral, or any part thereof, at public
or private sale or at any broker's board or on any securities exchange, for
cash, upon credit or for future delivery as the Collateral Agent shall deem
appropriate. The Collateral Agent shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
to Persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale the Collateral Agent shall
have the right to assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any such sale shall hold
the property sold absolutely free from any claim or right on the part of any
Pledgor, and each Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay, valuation and appraisal that such Pledgor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted.
The Collateral Agent shall give each Pledgor at least 10 days' prior
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Code) of the Collateral Agent's intention to
make any sale of Collateral owned by such Pledgor. Such notice, in the case of a
public sale, shall state the time and place for such sale and, in the case of a
sale at a broker's board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof, will first be offered for sale at such board or exchange
and, in the case of a private sale, shall state the time after which any such
sale is to be made. Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as the Collateral
Agent may fix and state in the notice of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Collateral Agent may (in its sole and absolute
discretion) determine. The Collateral Agent shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the sale price is paid in full by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. Subject
to the terms of the Pledge Intercreditor
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Agreement, at any public sale made pursuant to this Section 4.01, any Secured
Party may bid for or purchase, free (to the extent permitted by law) from any
right of redemption, stay, valuation or appraisal on the part of any Pledgor
(all said rights being also hereby waived and released to the extent permitted
by law), the Collateral or any part thereof offered for sale and may make
payment on account thereof by using any Obligation then due and payable to it
from any Pledgor as a credit against the purchase price, and the Collateral
Agent may, upon compliance with the terms of sale, hold, retain and dispose of
such property without further accountability to any Pledgor therefor. For
purposes hereof, a written agreement to purchase the Collateral or any portion
thereof shall be treated as a sale thereof; the Collateral Agent shall be free
to carry out such sale pursuant to such agreement, and none of the Pledgors
shall be entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Collateral Agent shall have
entered into such an agreement all Events of Default shall have been cured and
the Obligations paid in full; provided, however, that in the event the
Obligations shall have been paid in full, the Pledgors shall be entitled to the
return of the proceeds of the sale of any such Collateral to the extent not
applied to payment of the Obligations. As an alternative to exercising the power
of sale herein conferred upon it, the Collateral Agent may proceed by a suit or
suits at law or in equity to foreclose this Agreement and to sell the Collateral
or any portion thereof pursuant to a judgment or decree of a court or courts
having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver. Any sale pursuant to the provisions of this Section 4.01 shall be
deemed to conform to the commercially reasonable standards as provided in
Section 9-504(3) of the Code.
SECTION 4.02. Application of Proceeds of Sale. The proceeds of any sale of
Collateral pursuant to Section 4.01, as well as any Collateral consisting of
cash, shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all reasonable costs and expenses incurred
by the Collateral Agent (in its capacity as such hereunder) in connection
with such sale or otherwise in connection with this Agreement or the
Pledge Intercreditor Agreement, including all court costs and the fees,
other charges and expenses of its agents and legal counsel, the repayment
of all advances made by the Collateral Agent hereunder or under the Pledge
Intercreditor Agreement on behalf of any Pledgor and any other costs or
expenses incurred in connection with the exercise of any right or remedy
hereunder or under the Pledge Intercreditor Agreement;
SECOND, subject to the provisions of the Pledge Intercreditor
Agreement, to the Collateral Agent for distribution to the Secured Parties
as provided in Article IV of the Pledge Intercreditor Agreement for the
satisfaction of the Obligations owed to the Secured Parties; and
THIRD, to the Pledgors, their successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
Subject to the terms of the Pledge Intercreditor Agreement, the Collateral Agent
shall have absolute discretion as to the time of application of any such
proceeds, moneys or balances in accordance with this Agreement. Upon any sale of
the Collateral by the Collateral Agent including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt of the
Collateral Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Collateral Agent or such officer or
be answerable in any way for the misapplication thereof.
SECTION 4.03. Securities Act, etc. In view of the position of the Pledgors
in relation to the Pledged Securities, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such
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Act and any such similar statute as from time to time in effect being called the
"Federal Securities Laws") with respect to any disposition of the Pledged
Securities permitted hereunder. The Pledgors understand that compliance with the
Federal Securities Laws might very strictly limit the course of conduct of the
Collateral Agent if the Collateral Agent were to attempt to dispose of all or
any part of the Pledged Securities, and might also limit the extent to which or
the manner in which any subsequent transferee of any Pledged Securities could
dispose of the same. Similarly, there may be other legal restrictions or
limitations affecting the Collateral Agent in any attempt to dispose of all or
part of the Pledged Securities under applicable Blue Sky or other state
securities laws or similar laws analogous in purpose or effect. The Pledgors
recognize that in light of the foregoing restrictions and limitations the
Collateral Agent may, with respect to any sale of Pledged Securities, limit the
purchasers to those who will agree, among other things, to acquire Pledged
Securities for their own account, for investment, and not with a view to the
distribution or resale thereof. The Pledgors acknowledge and agree that, in
light of the foregoing restrictions and limitations, the Collateral Agent, in
its sole and absolute discretion, (i) may proceed to make such a sale whether or
not a registration statement for the purpose of registering the Pledged
Securities or part thereof shall have been filed under the Federal Securities
Laws and (ii) may approach and negotiate with a single possible purchaser to
effect such sale. The Pledgors acknowledge and agree that any such sale might
result in prices and other terms less favorable to the seller than if such sale
were a public sale without such restrictions. In the event of any such sale, the
Collateral Agent shall incur no responsibility or liability for selling all or
any part of the Pledged Securities at a price that the Collateral Agent, in its
sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might have been realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The provisions of
this Section 4.03 will apply notwithstanding the existence of a public or
private market upon which the quotations or sales prices may exceed
substantially the price at which the Collateral Agent sells.
SECTION 4.04. Registration, etc. Each P1edgor agrees that, upon the
occurrence and during the continuance of an Event of Default, if for any reason
the Collateral Agent desires to sell any of the Pledged Securities at a public
sale, it will, at any time and from time to time, upon the written request of
the Collateral Agent, take or cause the issuer of such Pledged Securities to
take such action and prepare, distribute and/or file such documents, as are
required or advisable in the reasonable opinion of counsel for the Collateral
Agent, to permit the public sale of such Pledged Securities. Each Pledgor
jointly and severally agrees to (i) indemnify, defend and hold harmless the
Collateral Agent, the other Secured Parties and their respective officers,
directors, affiliates and controlling Persons from and against all losses,
liabilities, expenses, costs (including the reasonable fees and expenses of
legal counsel to the Collateral Agent) and claims (including the costs of
investigation) that they may incur insofar as any such loss, liability, expense,
cost or claim arises out of or is based upon any alleged untrue statement of a
material fact contained in any prospectus, offering circular or similar document
(or any amendment or supplement thereto), or arises out of or is based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading, except insofar
as the same may have been caused by any untrue statement or omission based upon
information furnished in writing to any Pledgor or the issuer of such Pledged
Securities by the Collateral Agent or any other Secured Party expressly for use
therein, and (ii) enter into an indemnification agreement with any underwriter
of or placement agent for any Pledged Securities, on its standard form, to
substantially the same effect. Each Pledgor further agrees to use all reasonable
efforts to qualify, file or register, or cause the issuer of such Pledged
Securities to qualify, file or register, any of the Pledged Securities under the
Blue Sky or other securities laws of such states as may be requested by the
Collateral Agent and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations. The Pledgors will jointly and
severally bear all costs and expenses of carrying out their obligations under
this Section 4.04. The Pledgors acknowledge that there is no adequate remedy at
law for failure by them to comply with the provisions of this Section 4.04 and
that such failure would not be adequately compensable in damages, and therefore
agree that their agreements contained in this Section 4.04 may be specifically
enforced.
<PAGE>
-12-
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in the Credit Agreement or the Indenture. All communications and
notices hereunder to any Pledgor shall be given to it at the address for notices
set forth on Schedule IV. All communications and notices hereunder to the
Collateral Agent shall be given to it at the address set forth in Schedule III
hereto.
SECTION 5.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the security interests granted hereunder and all obligations of
the Pledgors hereunder shall be absolute and unconditional irrespective of (i)
any lack of validity or enforceability of any Senior Credit Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (ii) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from any
Senior Credit Document or any other agreement or instrument, (iii) any exchange,
release or non-perfection of any Lien on other collateral, or any release or
amendment or waiver of or consent under or departure from any guarantee,
securing or guaranteeing all or any of the Obligations or (iv) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, any Pledgor in respect of the Obligations or in respect of this
Agreement (other than the indefeasible payment in full of all the Obligations by
any of the Pledgors).
SECTION 5.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Pledgor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Senior Credit Document shall be
considered to have been relied upon by the Secured Parties and shall survive the
making by the Lenders of the Revolving Credit Loans and any Letter of Credit and
the purchase by the Senior Note Holders of the Senior Notes, and the execution
and delivery to the Senior Note Holders of the Senior Notes, regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on,
or any other fee or amount payable under or in respect of, any Loan, Senior Note
or Letter of Credit, or this Agreement or, without duplication of the foregoing,
under any of the other Senior Credit Documents is outstanding and unpaid and so
long as the Commitments and the Letter of Credit Commitment have not been
terminated.
SECTION 5.04. Binding Effect; Assignments. This Agreement shall become
effective as to any Pledgor when a counterpart hereof executed on behalf of such
Pledgor shall have been delivered to the Collateral Agent and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Pledgor and the Collateral Agent and their
respective successors and assigns, and shall inure to the benefit of the parties
hereto, and their respective successors and assigns, except that the Pledgors
shall not have the right to assign their rights hereunder or any interest herein
or in the Collateral, or any part thereof (and any such attempted assignment
shall be void), or otherwise pledge, encumber or grant any option with respect
to the Collateral, or any part thereof, or any cash or property held by the
Collateral Agent as Collateral under this Agreement except as expressly
contemplated by this Agreement or the other Senior Credit Documents.
SECTION 5.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Pledgor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
<PAGE>
-13-
SECTION 5.06. Power of Attorney. The Collateral Agent is hereby appointed
by the Pledgors, as the true and lawful agent and attorney-in-fact of each
Pledgor, and in such capacity the Collateral Agent shall have the right, with
power of substitution for the Pledgors and in each Pledgor's name or otherwise,
for the use and benefit of the Collateral Agent and the other Secured Panics,
upon the occurrence and during the continuance of an Event of Default, (i) to
receive, endorse, assign and/or deliver any and all notes, acceptances, checks,
drafts, money orders or other evidences of payment representing any interest or
dividend or other distribution payable in respect of the Collateral or any part
thereof, (ii) to demand, collect, receive payment of, give receipt for and give
discharges and releases of all or any of the Collateral; (iii) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (iv) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (v) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Collateral
Agent were the absolute owner of the Collateral for all purposes; provided,
however, that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent or any other Secured Party to make any
commitment, incur any liability or make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent or any other Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or to become due
in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Collateral Agent or any other Secured Party with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of any Pledgor or to any claim or action against
the Collateral Agent or any other Secured Party.
SECTION 5.07. Collateral Agent's Fees and Expenses; Indemnification. (i)
Each Pledgor jointly and severally agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts or agents, that the
Collateral Agent may incur in connection with (a) the administration of this
Agreement or the Pledge Intercreditor Agreement, (b) the custody or preservation
of, or the sale of, collection from or other realization upon any of the
Collateral, (c) the exercise, enforcement or protection of any of the rights of
the Collateral Agent hereunder or under the Pledge Intercreditor Agreement or
(d) the failure of the Pledgors to perform or observe any of the provisions
hereof or thereof.
(ii) Without limitation of their indemnification obligations under
the other Senior Credit Documents, each Pledgor jointly and severally agrees to
indemnify the Collateral Agent and the other Indemnitees against, and hold each
of them harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees and expenses, incurred by or
asserted against any of them arising out of, in any way connected with, or as a
result of, the execution, delivery or performance of this Agreement or the
Pledge Intercreditor Agreement or any claim, litigation, investigation or
proceeding relating hereto or thereto or to the Collateral, whether or not any
Indemnitee is a party thereto; provided, however, that such indemnity shall not,
as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(iii) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 5.07 shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Senior Credit Document or any investigation made by or on behalf of the
<PAGE>
-14-
Collateral Agent or any other Secured Party. All amounts due under this Section
shall be payable on written demand therefor.
SECTION 5.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 5.09. Waivers; Amendment. (i) No failure or delay of the
Collateral Agent or any other Secured Party in exercising any power or right
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 Collateral Agent hereunder and of the other Secured Parties under the other
Senior Credit Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provisions of this
Agreement or any other Senior Credit Document or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, 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 Pledgor in any case shall entitle such Pledgor or any
other Pledgor to any other or further notice or demand in similar or other
circumstances.
(ii) Subject to the provisions of the Pledge Intercreditor
Agreement, neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into among
the Pledgors and the Collateral Agent, with the prior written consent of the
Required Secured Parties (as defined in the Pledge Intercreditor Agreement);
provided, however, that except as provided herein or in the other Senior Credit
Documents, no such agreement shall amend, modify, waive or otherwise adversely
affect a Secured Party's rights and interests in any material amount of the
Collateral without the prior written consent of such Secured Party.
SECTION 5.10. 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 RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER SENIOR CREDIT
DOCUMENTS. 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 AND THE OTHER SENIOR CREDIT DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 5.10.
SECTION 5.11. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Senior Credit Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of 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.
<PAGE>
-15-
SECTION 5.12. Jurisdiction; Consent to Service of Process. (i) Each
Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Senior Credit Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that a claims in respect of any
such action or proceeding may be heard and determined in such New York State
court 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 the Collateral Agent or any other Secured Party may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Senior Credit Documents against any Pledgor or its properties in the
courts of any jurisdiction.
(ii) Each Pledgor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that 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 or the other Senior
Credit Documents in any New York State or Federal court. 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.
(iii) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 5.01. 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 5.13. Termination. This Agreement and the security interests
granted hereby shall terminate when all the Obligations have been indefeasibly
paid in full and the Lenders have no further Commitments (as defined in the
Credit Agreement) under the Credit Agreement.
SECTION 5.14. Headings. Article and Section 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 5.15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 5.04. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Agreement.
SECTION 5.16. Agreement May Constitute Financing Statement. Each Pledgor
consents to the filing of this Agreement or a photocopy thereof as a financing
statement under the Code in which the Collateral Agent may determine such filing
to be necessary or desirable.
SECTION 5.17. Pledge Intercreditor Agreement. (i) The Collateral Agent
agrees, for itself and for each other Secured Party, that it and each other
Secured Party shall be bound by the terms of the Pledge Intercreditor Agreement
in connection with the administration of this Agreement.
(ii) Each Pledgor hereby acknowledges receipt of a copy of and
agrees to be bound by the terms of the Pledge Intercreditor Agreement.
<PAGE>
-16-
SECTION 5.18. References to Credit Agreement. Upon the payment and
discharge in full of all Outstanding Credit Agreement Obligations (as defined in
the Pledge Intercreditor Agreement), all references herein to the terms of the
Credit Agreement shall become null and void (other than references for the
purposes of incorporating herein definitions of terms used therein, which terms
will continue to have the meanings assigned thereto immediately prior to such
payment and discharge, subject to subsequent amendment or modifications in
accordance with the terms hereof).
SECTION 5.19. Additional Pledgors. Pursuant to the Credit Agreement, and
the Indenture, each Wholly-Owned Restricted Subsidiary that was not in existence
or not such a Subsidiary on the date of the Credit Agreement is required to
enter into this Agreement as a Pledgor at such time as (i) it becomes such a
Subsidiary if such Subsidiary owns or possesses property of a type that would be
considered Collateral hereunder or (ii) such Subsidiary acquires or possesses
property of a type that would be considered Collateral hereunder. Upon execution
and delivery by the Collateral Agent and any Person mentioned in clause (i) or
(ii) above of an instrument in the form of Annex 1, such Person shall become a
Pledgor hereunder with the same force and effect as if originally named as a
Pledgor herein. The execution and delivery of such instrument shall not require
the consent of any Pledgor hereunder. The rights and obligations of each Pledgor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Pledgor as a party to this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
REPUBLIC TECHNOLOGIES INTERNATIONAL
HOLDINGS, LLC
By: ___________________________________
Name:
Title:
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By: ___________________________________
Name:
Title:
RTI CAPITAL CORP.
By: ___________________________________
Name:
Title:
BLISS & LAUGHLIN, LLC
By: ___________________________________
Name:
Title:
CANADIAN DRAWN STEEL COMPANY INC.
By: ___________________________________
Name:
Title:
<PAGE>
NIMISHILLEN & TUSCARAWAS, LLC
By: ___________________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW
YORK, as Collateral Agent
By: ___________________________________
Name:
Title:
<PAGE>
Schedule I to the
Master Pledge Agreement
GUARANTORS
Bliss & Laughlin, LLC
Canadian Drawn Steel Company Inc.
Nimishillen & Tuscarawas, LLC
<PAGE>
Schedule II-A to the
Master Pledge Agreement
PLEDGED SHARES
RTI Capital Corp.
1 share of Common Stock, $.01 par value
Certificate #1
Registered owner - Republic Technologies International, LLC
Ownership Percentage - 100%
Canadian Drawn Steel Company Inc.
12,393,094 shares of Common Stock
Certificate #C-3
Registered owner - Republic Technologies International, LLC
Ownership Percentage - 100%
<PAGE>
Schedule II-B to the
Master Pledge Agreement
PLEDGED INTERESTS
Republic Technologies International, LLC
100% Profit Sharing Interests
Certificate #1
Registered owner - Republic Technologies International Holdings, LLC
Bliss & Laughlin, LLC
100% Profit Sharing Interests
Certificate #1
Registered owner - Republic Technologies International, LLC
Nimishillen & Tuscarawas, LLC
100% Profit Sharing Interests
Certificate #1
Registered owner - Republic Technologies International, LLC
<PAGE>
Schedule III to the
Master Pledge Agreement
INDENTURE COLLATERAL AGENT
United States Trust Company of New York,
as Collateral Agent
114 West 47th Street
New York, NY 10036
Attention: Corporate Trust Department
Telephone: (212) 852-1000
Telecopy: (212) 852-1625/1626
<PAGE>
Schedule IV to the
Master Pledge Agreement
ADDRESSES OF PLEDGORS
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Republic Technologies International, LLC 3770 Embassy Parkway, Akron, Ohio 44333
Republic Technologies International Holdings, LLC 3770 Embassy Parkway, Akron, Ohio 44333
RTI Capital Corp. 3770 Embassy Parkway, Akron, Ohio 44333
Canadian Drawn Steel Company Inc. 155 Chatham Street, Hamilton, Ontario L8P 2B7
Nimishillen & Tuscarawas, LLC 2633 8th Street, N.E., Canton, Ohio 44704
Bliss & Laughlin, LLC 281 East 155th Street, Harvey, Illinois 60426
</TABLE>
<PAGE>
Schedule V to the
Master Pledge Agreement
UCC-1 FINANCING STATEMENT
<TABLE>
<CAPTION>
Name Jurisdiction
<S> <C>
Republic Technologies International, LLC -Delaware Secretary of State
-New York Secretary of State
Republic Technologies International Holdings, LLC -Delaware Secretary of State
-New York Secretary of State
RTI Capital Corp. -Delaware Secretary of State
-New York Secretary of State
Canadian Drawn Steel Company Inc. -New York Secretary of State
Nimishillen & Tuscarawas, LLC -Delaware Secretary of State
-New York Secretary of State
Bliss & Laughlin, LLC -Delaware Secretary of State
-New York Secretary of State
</TABLE>
<PAGE>
Annex 1 to the
Master Pledge Agreement
SUPPLEMENT NO. , dated as of , to the Master Pledge Agreement dated as of
August ___, 1999 (as the same may be amended, supplemented or otherwise modified
from time to time, the "Master Pledge Agreement"), among Republic Technologies
International, LLC, a Delaware limited liability company (the "Company"), RTI
CAPITAL CORP., a Delaware corporation ("RTI"), REPBULIC TECHNOLOGIES
INTERNATIONAL HOLDINGS, LLC, a Delaware corporation ("Holdings"), each other
guarantor listed on Schedule I hereto (each such subsidiary, together with
Holdings, the Company and RTI, each, a "Pledgor", collectively, the "Pledgors")
and UNITED STATES TRUST COMPANY OF NEW YORK, a bank and trust company organized
under the New York Banking Law, as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as defined in the Master Pledge
Agreement).
R E C I T A L S :
A. Reference is made to (i) the Credit Agreement, dated as of August
__, 1999 (as amended, amended and restated, supplemented or otherwise modified
from time to time, including any refinancing, refunding, replacement or
extension thereof or a portion thereof and whether by the Lenders (as
hereinafter defined) or any other lender or group of lenders, the "Credit
Agreement"), among the Company, the Guarantors party thereto, the financial
institutions party thereto, as lenders (the "Lenders"), BankBoston, N.A., as an
agent for the Lenders (in such capacity, the "Administrative Agent", together
with the Lenders, the "Credit Agreement Parties") and (ii) the Indenture, dated
as of August __, 1999 (as amended or modified from time to time, the
"Indenture"), among United States Trust Company of New York, as trustee (in such
capacity, the "Indenture Trustee"), for the holders of the Senior Notes (as
defined below) from time to time (the "Senior Note Holders"), the Company and
RTI, as issuers (the "Issuers"), and the Guarantors party thereto and (iii) the
Pledge Intercreditor Agreement, dated as of August __, 1999 (as amended or
modified from time to time, the "Pledge Intercreditor Agreement"), among the
Secured Parties and the Collateral Agent and countersigned by the Pledgors.
B. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement, the
Indenture and the other Senior Credit Documents.
C. The Pledgors have entered into the Master Pledge Agreement in
order to induce the Lenders to make Revolving Credit Loans, the Issuing Bank to
issue Letters of Credit and the Senior Note Holders to purchase the Senior
Notes. Pursuant to the Credit Agreement and the Indenture, each Subsidiary that
was not in existence or not such a Subsidiary on the date of the Credit
Agreement is required to enter into the Master Pledge Agreement as a Pledgor at
such time as (a) it becomes a Subsidiary if such Subsidiary owns or possesses
property of a type that would be considered Collateral under the Master Pledge
Agreement or (b) such Subsidiary acquires or possesses property of a type that
would be considered Collateral and. Section 5.19 of the Master Pledge Agreement
provides that such Persons may become Pledgors under the Master Pledge Agreement
by execution and delivery of an instrument in the form of this Supplement. The
undersigned Person (the "New Pledgor") is executing this Supplement in
accordance with the requirements of the Credit Agreement and the Indenture to
become a Pledgor under the Master Pledge Agreement in order to induce the
Lenders to make additional Revolving Credit Loans and the Issuing Bank to issue
additional Letters of Credit and as consideration for Revolving Credit Loans
previously made, Letters of Credit previously issued and Senior Notes previously
purchased.
Accordingly, the Collateral Agent and the New Pledgor agree as follows:
<PAGE>
SECTION 1. In accordance with Section 5.19 of the Master Pledge Agreement,
the New Pledgor by its signature below becomes a Pledgor under the Master Pledge
Agreement with the same force and effect as if originally named therein as a
Pledgor and the New Pledgor hereby agrees (a) to all the terms and provisions of
the Master Pledge Agreement applicable to it as a Pledgor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Pledgor thereunder are true and correct in all material respects on and as of
the date hereof (except to the extent such representations and warranties
expressly relate to an earlier date). In furtherance of the foregoing, the New
Pledgor, as security for the payment and performance in full of the Obligations
(as defined in the Master Pledge Agreement), does hereby create and grant to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, their successors and assigns, a security interest in and lien on all of
the New Pledgor's right, title and interest in and to the Collateral (as defined
in the Master Pledge Agreement) of the New Pledgor. Each reference to a
"Pledgor" in the Master Pledge Agreement shall be deemed to include the New
Pledgor. The Master Pledge Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the Collateral Agent
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Pledgor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that set forth
on Schedules II-A and II-B, as applicable, attached hereto is a true and correct
schedule of all its Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the Master Pledge
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Master Pledge Agreement shall not in any way be affected or
impaired. The parties hereto 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 8. All communications and notices hereunder shall be in writing
and given as provided in Section 5.01 of the Master Pledge Agreement. All
communications and notices hereunder to the New Pledgor shall be given to it at
the address set forth under its signature hereto, with a copy to the Borrowers
if such New Pledgor is a Subsidiary.
SECTION 9. The New Pledgor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
<PAGE>
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly
executed this Supplement to the Master Pledge Agreement as of the day and year
first above written.
[NAME OF NEW PLEDGOR]
By: _____________________________
Name:
Title:
Address:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
By: _____________________________
Name:
Title:
<PAGE>
AMENDED AND RESTATED INTERCREDITOR
AND SUBORDINATION AGREEMENT
THIS AMENDED AND RESTATED INTERCREDITOR AND SUBORDINATION AGREEMENT
(the "Agreement") dated as of August 13, 1999 is by and among United States
Trust Company of New York, as Collateral Agent (as defined), United States Trust
Company of New York, as Trustee (as defined) with respect to the Senior Secured
Notes (as defined) issued under the Indenture (as defined), the Pennsylvania
Lenders (as defined), BankBoston, N.A., as Agent (as defined), those parties who
in the future become Government Lenders (as defined), those parties who in the
future become Notes Refinancing Lenders (as defined), those parties who in the
future become New Bar Mill Lenders (as defined), Republic Technologies
International Holdings, LLC, a Delaware limited liability company ("Holdings"),
Republic Technologies International, LLC, a Delaware limited liability company
(the "Company"), RTI Capital Corp., a Delaware corporation ("RTI Capital"),
Bliss & Laughlin, LLC, a Delaware limited liability company ("Bliss LLC"),
Canadian Drawn Steel Company Inc., a Canadian corporation ("CDSC"), Nimishillen
& Tuscarawas, LLC, a Delaware limited liability company ("N&T"), and each of the
other Pledgors (as defined) from time to time made party hereto.
W I T N E S S E T H:
WHEREAS, the Pennsylvania Lenders, Bethlehem Steel Corporation, a
Delaware corporation ("Bethlehem"), and a number of other creditors and pledgors
are parties to an Amended and Restated Intercreditor and Subordination Agreement
dated as of April 2, 1996 (the "Existing Intercreditor Agreement");
WHEREAS, pursuant to a series of actions set forth in the Master
Restructuring Agreement (as defined), (i) the Company will succeed to all of the
assets of (including, without limitation, a portion of the Collateral (as
defined)), and will assume all of the liabilities (including all of the
indebtedness and other obligations owed to the Pennsylvania Lenders) of, Bar
Technologies, Inc. (formerly known as BRW Steel Corpo-
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ration) ("BarTech"), Republic Engineered Steels, Inc. ("RESI"), RES Holding
Corporation ("RES Holding") and USS/Kobe Steel Company ("USS/Kobe"), (ii) Bliss
LLC will succeed to all the assets of (including, without limitation, a portion
of the Collateral), and will assume all of the liabilities of, Bliss & Laughlin
Industries, Inc. and Bliss & Laughlin Steel Corporation and (iii) in connection
with the foregoing, the Company will refinance certain indebtedness of such
entities, including the 13 1/2% Senior Secured Notes due 2001 (the "Old Notes")
of BarTech, the amended and restated BarTech credit facility and the other
indebtedness to be repaid and referred to in Section 4 of the Master
Restructuring Agreement;
WHEREAS, the Company will be liable for the new indebtedness to be
incurred in connection with such refinancing and certain of such new
indebtedness will be secured by the same assets as secured the Old Notes, as
well as by certain new assets;
WHEREAS, the parties hereto desire to amend and restate the Existing
Intercreditor Agreement as and to the extent set forth herein;
WHEREAS, the Pledgors have requested that the Collateral Agent act,
and the Collateral Agent has agreed to act, as the agent of (i) the Trustee, for
the benefit of itself (in its capacity as Trustee) and the holders of the Senior
Secured Notes, (ii) each of the Pennsylvania Lenders, (iii) any Government
Lender, (iv) any Notes Refinancing Lender, (v) the New Bar Mill Lenders and (vi)
any Agent; and
WHEREAS, the parties hereto desire to set forth their agreements
with respect to the Collateral Agent's duties regarding the Collateral (as
defined) and the respective interests of the parties hereto in and to the
Collateral.
NOW, THEREFORE, in consideration of the mutual benefits accruing to
the parties hereto hereunder and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
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1. DEFINITIONS
As used herein, the following terms shall have the meanings ascribed
to them below. All terms used herein which are defined in the UCC shall have the
meanings set forth in the UCC unless otherwise defined herein.
1.1 "Acceptable Bank" means a corporation organized and doing
business under the laws of the United States of America or of any State,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000, subject to supervision or
examination by a Federal or State authority and, to the extent there is such an
institution eligible and willing to serve, having a corporate trust office in
The City of New York. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examination authority, then for the purposes of this definition,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.
1.2 "Accounts" means, collectively, all of the applicable Pledgors'
and their subsidiaries' presently existing and hereafter arising or acquired
"accounts" as such term is defined in the UCC, and in any event shall include,
without limitation, (i) any and all accounts, accounts receivable, margin
accounts, futures positions, book debts, instruments, documents, contracts,
contract rights, choses in action, notes, drafts, acceptances, chattel paper,
and other forms of obligations and receivables now or hereafter owned or held by
or payable to any applicable Pledgor relating in any way to Inventory or arising
from the sale or lease of Inventory or the rendering of services by any
applicable Pledgor or subsidiary, including the right to payment of any interest
or finance charge with respect thereto, together with all merchandise
represented by any of the accounts, (ii) all such merchandise that may be
reclaimed or repossessed or returned to any applicable Pledgor or subsidiary,
(iii) all of the applicable Pledgors' or subsidiaries' rights as an unpaid
vendor, including stoppage in transit, reclamation, replevin and sequestration,
(iv) all pledged assets and all letters of credit, guarantee claims, Liens, and
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-4-
security interests held by or granted to any applicable Pledgor or subsidiary to
secure payment of any accounts and which are delivered for or on behalf of any
account debtor, (v) all accessions to all of the foregoing described properties
and interests in properties, (vi) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (vii) all customer lists and
invoices, (viii) all Intangibles to the extent relating to any of the foregoing,
(ix) all Documents to the extent relating to any of the foregoing and (x) all
Proceeds of any of the foregoing.
1.3 "Acquisition Document Rights" means, collectively, all of the
applicable Pledgors' presently existing or hereafter arising rights, title and
interest in, to and under the Acquisition Documents including, without
limitation, (i) all rights and remedies relating to monetary damages, including
indemnification rights and remedies, and claims for damages or other relief
pursuant to or in respect of the Acquisition Documents, (ii) all rights and
remedies relating to monetary damages, including indemnification rights and
remedies, and claims for monetary damages under or in respect of the agreements,
documents and instruments referred to in the Acquisition Documents or related
thereto, (iii) all Intangibles to the extent relating to any of the foregoing,
(iv) all Documents to the extent relating to any of the foregoing and (v) all
Proceeds, collections, recoveries and rights of subrogation of any of the
foregoing.
1.4 "Acquisition Documents" means, collectively, the following
agreements, each as amended, amended and restated, supplemented, extended,
renewed, replaced or otherwise modified from time to time: (i) that certain
contribution agreement dated as of December 22, 1993 and amended by amendment
no. 1 to contribution agreement, dated as of January 1994, amendment no. 2 to
contribution agreement, dated as of January 7, 1994, amendment no. 3 to
contribution agreement, dated as of June 7, 1994, amendment no. 4 to
contribution agreement, dated as of June 29, 1994, and amendment no. 5 to
contribution agreement, dated as of September 21, 1994 (the "Contribution
Agreement") by and between Bethlehem and the Company, and all documents,
agreements and other instruments then or at any time thereafter executed and/or
delivered in connection therewith or related thereto, (ii) that certain amended
and restated agreement and plan of merger, dated as of October 18, 1995 (the
"B&L Merger Agreement"), by and among the Company, B&L Acquisition Corporation
and B&L, and all documents, agreements and other instruments executed and/or
delivered in connection therewith or related
<PAGE>
-5-
thereto, and (iii) the Master Restructuring Agreement and all documents,
agreements and other instruments executed and/or delivered in connection
therewith or related thereto.
1.5 "Affiliate" shall have the meaning ascribed to that term in the
Indenture.
1.6 "Agent" means BankBoston, N.A., as Agent under the Credit
Facility, and any successors acting as agent or collateral agent under the
Credit Facility or any agent or collateral agent under any other Credit Facility
or Credit Facilities which is or are secured by (i) to the extent such Credit
Facility or Credit Facilities are separately represented by an agent for a
revolving credit facility, a grant of a first priority Lien on Accounts and
Inventory, in which case "Agent" or "Revolver Agent" shall refer to such
revolving credit agent and (ii) to the extent such Credit Facility or Credit
Facilities are separately represented by an agent for a term loan facility, a
grant of a first priority Lien on the Cast-Roll Facility, in which case "Agent"
or "Term Agent" shall refer to such term loan agent. To the extent the Credit
Facility or Credit Facilities are not separately represented by an agent for the
revolving credit facility and an agent for the term loan facility, references to
"Term Agent" and "Revolving Agent" shall be deemed to refer to the Agent.
1.7 "Bankruptcy Law" has the meaning ascribed to that term under the
Indenture.
1.8 "BarTech Intellectual Property" means all Intellectual Property
of the Company to the extent such Intellectual Property was previously owned by
BarTech.
1.9 "BID Loans" means the loans made or to be made to the Company by
the Johnstown Industrial Development Corporation under the Business
Infrastructure Development Program with
<PAGE>
-6-
grant funds provided by or through Commerce in an aggregate principal amount not
to exceed $2,500,000.
1.10 "Bliss & Laughlin Equipment" means, collectively, (i) all
Equipment of Bliss LLC and CDSC, and all interests of Bliss LLC and CDSC in
Equipment, whether now owned or hereafter acquired, which is located at or used
in connection with the operation of the business conducted at any of the Bliss &
Laughlin Real Estate, (ii) all Intangibles to the extent relating thereto, (iii)
all Documents to the extent relating thereto and (iv) all Proceeds of any of the
foregoing.
1.11 "Bliss & Laughlin Real Estate" means all of the Real Estate
owned by Bliss LLC or CDSC or in which Bliss LLC or CDSC may have any interest
located in Harvey, Illinois, Batavia, Illinois, Medina, Ohio and Hamilton,
Ontario, Canada.
1.12 "Business Day" means any day other than a Saturday, Sunday or
any other day on which banking institutions in the City of New York are required
or authorized by law or other governmental action to be closed.
1.13 "Cash Equivalents" means, at any time, (a) any evidence of
Indebtedness with a maturity of 365 days or less issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (b) certificates of deposit or
acceptances with a maturity of 365 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $250,000,000; (c) repurchase
agreements and reverse repurchase agreements relating to marketable direct
obligations issued or unconditionally guaranteed by the government of the United
States of America or issued by any agency thereof and backed by the full faith
and credit of the United States of America, in each case maturing within one
year from the date of acquisition; provided that the terms of such agreements
comply with the guidelines set forth in the Federal Financial Agreements of
Depository Institutions With Securities Dealers and Others, as adopted by the
Comptroller of the Currency and (d) readily marketable direct obligations is-
<PAGE>
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sued by any state of the United States of America or any political subdivision
thereof having one of the two highest rating categories obtainable from either
Moody's Investors Service, Inc. or Standard & Poor's Rating Services.
1.14 "Cast-Roll Facility" means (i) all now-owned or after-acquired
real property and Equipment (including, without limitation, the No. 4(A)
electric arc furnace used in connection therewith) of the Company used in
connection with the facility commonly known as the "Cast-Roll Facility" and
located at 3707 Georgetown Road, N.E., Canton, Ohio, and used primarily in
connection with the Company's business and operations at such location, (ii) all
existing buildings, structures and other improvements located or erected
thereon, (iii) all Real Estate Fixtures, (iv) all permits, licenses, franchises,
certificates, consents, approvals and authorizations furnished in respect of the
real property and improvements located thereon including, without limitation,
building permits, certificates of occupancy and environmental certificates, (v)
all leases, licenses and occupancy and concession agreements in respect of the
real property and improvements located thereon and all rents, receipts, fees and
other amounts payable thereunder, and (vi) all general intangibles, documents
and proceeds (as each such term is defined in the UCC) relating to the
foregoing.
1.15 "CDBG Loans" means the loans made or to be made by the County
of Cambria, Pennsylvania with grant funds provided by or through the
Commonwealth of Pennsylvania, acting by and through the Department of Community
Affairs, under the Community Development Block Grant Competitive Program, in an
aggregate principal amount not to exceed $690,000.
1.16 "Collateral" means, collectively, (i) Miscellaneous Collateral,
(ii) Modernization Equipment, (iii) Other Johnstown Equipment, (iv) Johnstown
Real Estate, (v) the Other Collateral, (vi) the Collateral Account and
Collateral Account Funds, and (vii) the Acquisition Document Rights. Nothing
herein shall be construed as creating a Lien on any Collateral in favor of any
Secured Creditor that has not otherwise been granted a Lien pursuant to a
Security Document.
<PAGE>
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1.17 "Collateral Account Funds" means, collectively, (i) all cash,
cash equivalents and Trust Moneys from time to time on deposit in any Collateral
Account, (ii) all Intangibles to the extent relating thereto, (iii) all
Documents to the extent relating thereto and (iv) all Proceeds of any of the
foregoing.
1.18 "Collateral Accounts" means, collectively, (i) the collateral
accounts maintained by the Collateral Agent in accordance with the provisions of
Section 12 of this Agreement, (ii) all Intangibles to the extent relating
thereto, (iii) all Documents to the extent relating thereto and (iv) all
Proceeds of any of the foregoing.
1.19 "Collateral Agent" means United States Trust Company of New
York, in its capacity as Collateral Agent under this Agreement until its
resignation or removal as Collateral Agent pursuant to the provisions of Section
10 hereof and, upon such resignation or removal, any successor Collateral Agent
appointed pursuant to the provisions of Section 10 hereof until such successor's
resignation or removal as Collateral Agent pursuant to the provisions of Section
10 hereof.
1.20 "Combination Transactions" means the "Contemplated
Transactions," as such term is defined in the Master Restructuring Agreement.
1.21 "Copyrights" means, collectively, all of the applicable
Pledgor's copyrights, whether statutory or common law and whether presently
existing or hereafter arising or acquired, and all applications, registrations
and recordings relating to such copyrights in the United States Copyright Office
or in any similar office or agency of the United States, any State thereof, any
political subdivision thereof or in any other country, together with any and all
(i) rights and privileges arising under applicable law with respect to the
applicable Pledgor's use of any copyrights, (ii) reissues, extensions,
continuations and renewals thereof, (iii) income, fees, royalties, damages and
payments now and hereafter due and/or payable with respect thereto, including,
without limitation, damages and payments for past or future infringements
thereof, (iv) rights corresponding thereto throughout the world and
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(v) rights to sue for past, present and future infringements thereof.
1.22 "Credit Facility" means the Revolving Credit Agreement, dated
as of the date hereof, among the Company, the Guarantors party thereto,
BankBoston, N.A., as Agent, the lenders party thereto, and other parties
thereto, if any, and their respective successors and assigns, including any
related notes, guarantees, security agreements, pledge agreements, collateral
documents, instruments and agreements executed in connection therewith, each as
the same may at any time be amended, amended and restated, supplemented or
otherwise modified, including any refinancing, refunding, replacement or
extension thereof and whether by the same or any other lender or group of
lenders and including any replacements thereof which separate the revolving and
term credit facilities into separate loan agreements or which separates the
Credit Facility into a revolving credit facility and a term loan facility.
1.23 "Credit Facility Security Documents" means, collectively, (i)
that certain Patent Collateral Assignment and Security Agreement, dated as of
August __, 1999, made by the Company in favor of the Agent, (ii) that certain
Trademark Collateral Assignment and Pledge Agreement, dated as of August __,
1999, made by the Company in favor of the Agent and (iii) any other security
agreements, pledges, collateral assignments or other instruments evidencing or
creating a Security Interest in favor of any Agent with respect to any Credit
Agreement Obligations in all or any portion of the Collateral.
1.24 "Debt Instruments" means, collectively, the Indenture, the
Senior Secured Notes, the Guarantees (as defined in the Indenture), the
Pennsylvania Lenders Debt Instruments, the Credit Facility, any Government
Assisted Debt Instruments, any Notes Refinancing Debt Instruments, any New Bar
Mill Lenders Debt Instruments and any other agreement or instrument governing
obligations of the applicable Pledgor to a Secured Creditor.
1.25 "Documents" means, collectively, all of the applicable
Pledgor's or a subsidiary's now owned or hereafter acquired "documents," as such
term is defined in the UCC, relat-
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ing to any item or type of Collateral, Accounts, Inventory or the Pledged
Interests, as the case may be, and shall also include, without limitation, any
and all lists, books, records, ledgers, printouts, computer programs, computer
disks or tape files, computer runs and other computer prepared information,
files (whether in printed form or stored electronically), tapes, and other
papers or materials containing information to the extent relating to any item or
type of Collateral, Accounts, Inventory or the Pledged Interests, as the case
may be.
1.26 "ECP Loans" means the loans made or to be made to the Company
by the City of Johnstown, Pennsylvania with grant funds provided by or through
the Commonwealth of Pennsylvania, acting by and through the Department of
Community Affairs, under the Enterprise Zone Competitive Program, in an
aggregate principal amount not to exceed $1,000,000.
1.27 "EDP Loans" means the loans made or to be made to the Company
by the City of Johnstown, Pennsylvania with grant funds provided by or through
Commerce under the Economic Development Partnership Program in an aggregate
principal amount not to exceed $10,300,000.
1.28 "Enforcement" means, collectively or individually, to make
demand for payment or accelerate the Indebtedness of a Pledgor (other than any
acceleration which may occur automatically upon the filing of a bankruptcy
petition), repossess any collateral or commence the judicial or other
enforcement of any of the rights and remedies under a Debt Instrument or any
related mortgage, security instrument, guarantee or other agreement or under
applicable law.
1.29 "Enforcement Notice" means a written notice delivered, at a
time when an Event of Default has occurred and is continuing, by either the
Collateral Agent or an Agent announcing that it has commenced Enforcement with
respect to any of its rights and remedies.
1.30 "Equipment" means, collectively, all of the applicable
Pledgor's "equipment," as such term is defined in the UCC, whether or not
affixed to any Real Estate, and shall specifically include, without limitation,
(i) goods which would be
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considered a "fixture" under Section 9-313 of the UCC or otherwise would be
considered a "fixture" or a part of the Real Estate under applicable law
(including under the assembled economic unit or industrial plant doctrines which
might otherwise be applicable under the law of the Commonwealth of
Pennsylvania), except for Real Estate Fixtures, (ii) all machinery, facilities,
installations, apparatus, equipment, office machinery, electronic data
processing equipment, computers and computer hardware and software (whether
owned or licensed), all indoor or outdoor furniture, tools, materials,
automotive equipment, motor vehicles, manufacturing, storage and handling
equipment, overhead cranes, cutting and bending machines and other equipment for
the fabrication of steel bars, rods and wire products, furnaces, electric arc
furnaces, ladle arc furnaces, billet mills, reheat furnaces, rolling mills,
conveyors, coilers, cooling beds and all other equipment of any kind or nature
and owned by the applicable Pledgor or in which the applicable Pledgor may have
any interest (but only to the extent of such interest), (iii) all modifications,
renewals, improvements, alterations, repairs, substitutions, attachments,
additions, accessions and other property now or hereafter affixed thereto or
used in connection therewith and (iv) all replacements and all parts therefor.
1.31 "Event of Default" means an "Event of Default" under the
Indenture, as defined thereby, or any other event of default under any other
Debt Instrument.
1.32 "Excluded Collateral" means, collectively, (i) Inventory, (ii)
Accounts, (iii) the Pledged Interests, (iv) real property, fixtures, machinery
and equipment located in Cartersville, Bartow County, Georgia, (v) the Cast-Roll
Facility, (vi) Intellectual Property and (vii) all general intangibles,
documents and proceeds (as each such term is defined in the UCC) to the extent
relating thereto.
1.33 "Existing Liens" means the Liens of the Pennsylvania Lenders on
certain of the Collateral as of the date hereof.
1.34 "Existing Secured Creditors" means, collectively, the
Pennsylvania Lenders.
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1.35 "Fair Market Value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under undue pressure or compulsion to complete the transaction.
1.36 "First Priority Majority Secured Creditors" means the Secured
Creditor (other than the Collateral Agent) which has a first priority Lien with
respect to such Collateral in accordance with Section 4.2(a) (or if there shall
be more than one Secured Creditor entitled to a first priority claim pursuant to
Section 4.2(a), the Secured Creditors holding an aggregate principal amount of
outstanding Indebtedness under Debt Instruments representing a majority of the
aggregate principal amount of outstanding Indebtedness secured by Liens on such
item of Collateral which have a first priority under the provisions of Section
4.2(a) hereof).
1.37 "Goodwill" means all goodwill connected with the use of, and
symbolized by, any of the Copyrights, Patents, Trademarks and Licenses.
1.38 "Government Assisted Debt Instruments" means the agreement(s)
and instrument(s) governing and evidencing any Government Assisted Indebtedness
that may be outstanding at any time.
1.39 "Government Assisted Indebtedness" means Government Assisted
Refinancing Indebtedness and New Government Assisted Indebtedness.
1.40 "Government Assisted Indebtedness Obligations" means the
obligations of any kind whatsoever of the Company under any Government Assisted
Debt Instrument and, without limiting the foregoing, all obligations of the
Company under any Government Lender Security Documents.
1.41 "Government Assisted Refinancing Indebtedness" means
Refinancing Indebtedness (as defined in the Indenture) borrowed by the Company
from any Federal, State or local governmental authority, agency or
instrumentality, or for which any such authority, agency or instrumentality
provides direct
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or indirect credit support to refinance Indebtedness which has been secured by
Existing Liens; provided that (x) the Liens on any Collateral securing such
Indebtedness are junior in priority to the Liens on such Collateral of the
Trustee and (y) such Liens do not extend to or cover any Non-Shared Collateral
or any property or assets not subject to Existing Liens.
1.42 "Government Lender Security Documents" means the agreement(s)
and instrument(s) evidencing or creating any Lien on all or any portion of the
Collateral for the benefit of a Government Lender securing the obligations of
the Company under any of the Government Assisted Debt Instruments.
1.43 "Government Lenders" means each entity that holds Government
Assisted Indebtedness.
1.44 "Guarantors" means, collectively, (i) each of Holdings, Bliss
LLC, CDSC and N&T and (ii) each other person is or becomes a Guarantor under the
Indenture, which person shall execute an acknowledgment (in form satisfactory to
the Collateral Agent) that such person shall be a "Guarantor" for purposes of
this Agreement.
1.45 "Indebtedness" shall have the meaning ascribed to that term
under the Indenture.
1.46 "Indenture" means the Indenture dated as of August 13, 1999 by
and among United States Trust Company of New York, as trustee, the Company, RTI
Capital and the Guarantors.
1.47 "Independent Appraiser" means a person who in the ordinary
course of its business appraises property and, where real property is involved,
is a member in good standing of the American Institute of Real Estate
Appraisers, recognized and licensed to do business in the jurisdiction where
such real property is situated who does not, and whose directors, officers and
employees and Affiliates do not, have a direct or indirect financial interest in
a Pledgor or a Secured Creditor.
1.48 "Independent Financial Advisor" means a nationally recognized
investment banking or public accounting firm which does not, and whose
directors, officers and employees and
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Affiliates do not, have a direct or indirect financial interest in a Pledgor or
a Secured Creditor.
1.49 "Intangibles" means, collectively, all of the applicable
Pledgor's or a subsidiary's presently existing or hereafter arising or acquired
"general intangibles," as such term is defined in the UCC, relating to any item
or type of Collateral, Accounts, Inventory, Intellectual Property or the Pledged
Interests, as the case may be, and, in any event, shall include, without
limitation, any and all contract rights, goodwill (other than Goodwill),
descriptions, name plates, claims, choses-in-action, causes of action, catalogs,
confidential information, consulting agreements, engineering contracts, and such
other assets which relate to the goodwill (other than Goodwill) of the business
of the applicable Pledgor or subsidiary and rights to refund or indemnification
to the extent the foregoing relate to any item or type of Collateral, Accounts,
Inventory, Intellectual Property or the Pledged Interests, as the case may be,
deposits and deposit accounts, letters of credit, documents, instruments,
chattel paper, bankers' acceptances and guarantees, and income tax refunds to
the extent relating to any item or type of Collateral, Accounts, Inventory,
Intellectual Property or the Pledged Interests, as the case may be, claims for
tax or other refunds against any city, county or state or federal government, or
any agency or authority or other subdivision thereof relating to any item or
type of Collateral, Accounts, Inventory, Intellectual Property or the Pledged
Interests, as the case may be, corporate or other business records relating to
any item or type of Collateral, Accounts, Inventory, Intellectual Property or
the Pledged Interests, as the case may be, and all other general intangibles of
every kind and description relating to any item or type of Collateral, Accounts,
Inventory, Intellectual Property or the Pledged Interests, as the case may be.
1.50 "Intellectual Property" means, collectively, (i) all
Copyrights, Patents, Trademarks, Licenses and Goodwill, (ii) all Intangibles to
the extent relating to any of the foregoing, (iii) all Documents to the extent
relating to any of the foregoing, and (iv) all Proceeds of any of the foregoing.
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1.51 "Inventory" means, collectively, all now owned or hereafter
acquired "inventory" (as such term is defined in the UCC) of all of the
applicable Pledgors and their subsidiaries wherever located, and, in any event,
shall include, without limitation, (i) all goods, merchandise, raw materials,
supplies (other than supplies which would constitute spare parts),
work-in-process and finished goods intended for sale or lease, of every kind and
description now or at any time hereafter owned by the applicable Pledgors,
together with all the containers, packing, packaging, shipping and similar
materials related thereto, and including such inventory as is temporarily out of
the applicable Pledgors' custody or possession and items in transit and
including any returns and repossessions upon any accounts, documents,
instruments or chattel paper relating to or arising from the sale of inventory
(as such documents, instruments or chattel paper relate to the sale of such
inventory) and including, without limitation, all other classes of merchandise,
materials, parts, supplies, work-in-process, inventories and finished products
intended for sale by the applicable Pledgors and all substitutions therefor or
replacements thereof, and all additions and accessions thereto, (ii) all
Intangibles to the extent relating to any of the foregoing, (iii) all Documents
to the extent relating to any of the foregoing and (iv) all Proceeds of any of
the foregoing.
1.52 "Johnstown Real Estate" means all of the Real Estate owned by
the Company or in which the Company may have any interest located in Johnstown,
Pennsylvania.
1.53 "Lackawanna Equipment" means, individually and collectively,
(i) all the Equipment owned by the Company or in which the Company may have any
interest located at the Lackawanna Real Estate, (ii) all Intangibles relating
thereto, (iii) all Documents relating thereto and (iv) all Proceeds relating to
any of the foregoing.
1.54 "Lackawanna Real Estate" means all of the Real Estate owned by
the Company or in which the Company may have any interest located in Lackawanna,
New York.
1.55 "Licenses" means, collectively, all of the applicable Pledgor's
presently existing or hereafter arising or
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acquired license and distribution agreements with any other party with respect
to a Patent, Trademark or Copyright, whether the applicable Pledgor is a
licensor or licensee, distributor or distributee under any such license or
distribution agreement, along with any and all (i) renewals, extensions,
supplements and continuations thereof, (ii) income, royalties, damages and
payments now and hereafter due and/or payable to the applicable Pledgor with
respect thereto, including, without limitation, damages and payments for past or
future infringements or violations thereof and (iii) rights to sue for past,
present and future infringements or violations thereof.
1.56 "Lien" means any mortgage, lease, lien (statutory or other),
pledge, security interest, encumbrance, claim, hypothecation, assignment for
security, deposit arrangement or preference or other security agreement of any
kind or nature whatsoever.
1.57 "Master Restructuring Agreement" means the Master Restructuring
Agreement dated as of [ ] 1999 among BarTech, RES Holding, RESI, USX RTI
Holdings, Inc. and USS/Kobe, together with all exhibits, schedules and annexes
thereto.
1.58 "Miscellaneous Collateral" means, collectively, (i) all
existing and future property and assets of the Pledgors, whether tangible or
intangible, fixed or liquid, upon which any Secured Creditor has been granted a
Lien pursuant to the Security Documents, other than the Excluded Collateral, the
New Collateral and any Other Collateral (excluding Collateral of the type
described in clause (i) of the definition thereof), (ii) all Intangibles to the
extent relating thereto, (iii) all Documents to the extent relating thereto and
(iv) all Proceeds of any of the foregoing.
1.59 "Modernization Equipment" has the meaning assigned to the term
"Johnstown Modernization Equipment" in the Existing Intercreditor Agreement.
1.60 "New Bar Mill" means (i) all now-owned or after-acquired real
property and Equipment used primarily in connection with the business and
operations of the Company and its
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Subsidiaries at the new large size bar mill and related quality verification
line and shipping center and heat treatment center to be acquired and/or
constructed by the Company or any of its Subsidiaries, (ii) all buildings,
structures and other improvements located or erected thereon, (iii) all Real
Estate Fixtures, (iv) all permits, licenses, franchises, certificates, consents,
approvals and authorizations furnished in respect of the real property and
improvements located thereon including, without limitation, building permits,
certificates of occupancy and environmental certificates, (v) all leases,
licenses and occupancy and concession agreements in respect of the real property
and improvements located thereon and all rents, receipts, fees and other amounts
payable thereunder, (vi) all Intangibles to the extent relating to the
foregoing, (vii) all Documents to the extent relating to the foregoing and
(viii) all Proceeds of any of the foregoing.
1.61 "New Bar Mill Lenders" means the financial institutions making
New Bar Mill Loans, if any, pursuant to the New Bar Mill Lenders Debt
Instruments.
1.62 "New Bar Mill Lenders Debt Instruments" means, collectively,
all agreements and instruments, if any, from time to time evidencing or
governing New Bar Mill Loans.
1.63 "New Bar Mill Lenders Secured Obligations" means any and all
obligations of any kind whatsoever of any Pledgor to the New Bar Mill Lenders
arising under the New Bar Mill Lenders Debt Instruments and, without limiting
the foregoing, all obligations of any Pledgor under the New Bar Mill Lenders
Security Documents; provided, that in no event shall the aggregate principal
amount of the New Bar Mill Lenders Secured Obligations exceed 65% of the
aggregate cost of the acquisition and/or construction of the New Bar Mill.
1.64 "New Bar Mill Lenders Security Documents" means, collectively,
all security agreements, mortgages, deeds of trust, pledges, collateral
assignments and other instruments evidencing or creating any Security Interest
in favor of the New Bar Mill Lenders with respect to any New Bar Mill Lenders
Secured Obligations in all or any portion of the Collateral.
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1.65 "New Bar Mill Loans" means any Indebtedness incurred by any
Pledgor to fund the acquisition and/or construction of the New Bar Mill in an
aggregate principal amount not to exceed 65% of the aggregate cost thereof;
provided, that such Indebtedness is incurred in compliance with all applicable
Debt Instruments.
1.66 "New Collateral" means, collectively, (i) all existing and
future property and assets of any Pledgor, whether tangible or intangible, fixed
or liquid, which did not constitute Collateral (as defined under the Existing
Intercreditor Agreement) in which any Existing Secured Creditor had been granted
a Lien pursuant to the applicable Security Documents prior to and without ever
giving effect to any of the Combination Transactions, the issuance of the Senior
Secured Notes and the making of any loans under the Credit Facility, including,
without limitation, all such property and assets then owned by RES Holding, RESI
and USS/Kobe and the New Bar Mill (as defined in the Indenture), (ii) all
Intangibles to the extent relating thereto, (iii) all Documents to the extent
relating thereto and (iv) all Proceeds of any of the foregoing. "New Collateral"
shall in any event exclude the Excluded Collateral.
1.67 "New Government Assisted Indebtedness" means Indebtedness from
any Federal, State or local governmental authority or agency or for which any
such authority, agency or instrumentality provides direct or indirect credit
support; provided that (x) the Liens on any Collateral securing such
Indebtedness are junior in priority to the Liens on such Collateral of the
Trustee and the holders of the Senior Secured Notes and the Liens of any other
Secured Creditors secured by a Lien on such item of Collateral, (y) the Liens do
not extend to any Non-Shared Collateral (other than the New Bar Mill) and (z)
the Liens secure an aggregate principal amount of Indebtedness that does not
exceed $20.0 million outstanding at any time.
1.68 "Non-Shared Collateral" means any and all Collateral not
constituting Shared Collateral, including, without limitation, the New
Collateral.
1.69 "Notes Mortgages" shall mean all "Mortgages," as such term is
defined in the Indenture.
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1.70 "Notes Refinancing Debt Instruments" means the agreement(s) and
instrument(s) governing and evidencing any Notes Refinancing Indebtedness.
1.71 "Notes Refinancing Indebtedness" means Indebtedness of the
Company or any of its Subsidiaries (including Indebtedness of another person to
the extent such Indebtedness is guaranteed by the Company or any of its
Subsidiaries) to the extent the proceeds thereof are used to refinance (whether
by amendment, renewal, extension or refunding) in full all outstanding
Indebtedness under the Senior Secured Notes and which is secured to the same
extent as the Notes Secured Obligations pursuant to any Notes Refinancing
Security Documents.
1.72 "Notes Refinancing Indebtedness Obligations" means the
obligations of any kind whatsoever of the Pledgors under any Notes Refinancing
Debt Instrument and, without limiting the foregoing, all obligations of the
Pledgors under any Notes Refinancing Security Documents.
1.73 "Notes Refinancing Lender" means each person, and any duly
authorized agent or representative of such person, that holds Notes Refinancing
Indebtedness.
1.74 "Notes Refinancing Security Documents" means the agreement(s)
and instrument(s) evidencing or creating any Lien on all or any portion of the
Collateral for the benefit of a Notes Refinancing Lender securing obligations of
the Pledgors under any of the Notes Refinancing Debt Instruments.
1.75 "Notes Representative" means the Trustee or holder(s) of a
majority of the outstanding principal amount of Notes.
1.76 "Notes Secured Obligations" means any and all obligations of
any kind whatsoever of the Company or any of its Subsidiaries in respect of the
Senior Secured Notes, the Indenture and the Guarantees and, without limiting the
foregoing, all obligations of the Pledgors owing to the Trustee or holders of
Notes under or with respect to the Notes Security Documents.
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1.77 "Notes Security Documents" means, collectively, to the extent
securing Notes Secured Obligations, (i) the Security Agreement, dated as of the
date hereof, between the Pledgors and the Collateral Agent, (ii) the Master
Pledge Agreement, dated as of the date hereof, among the Pledgors and the
Collateral Agent, (iii) the Notes Mortgages, each dated as of the date hereof,
between the Company and the Collateral Agent in respect of the Johnstown Real
Estate and any Real Estate comprising part of the Other Collateral, (iv) the
Notes Mortgages, each dated as of the date hereof, between Bliss LLC or CDSC, as
applicable, and the Collateral Agent with respect to the Bliss & Laughlin Real
Estate and (v) all security agreements, mortgages, deeds of trust, pledges,
collateral assignments and other instruments evidencing or creating any security
interest in favor of the Collateral Agent (for the benefit of the Trustee and
the holders of the Senior Secured Notes) in all or any portion of the
Collateral, in each case as amended, amended and restated, supplemented or
otherwise modified from time to time in accordance with their terms.
1.78 "Officers' Certificate" of any person means a certificate
signed by the Chairman, President, any Vice President, Secretary or Assistant
Secretary of such person and the Chief Financial Officer or Chief Accounting
Officer of such person.
1.79 "Opinion of Counsel" means a written opinion of counsel, who
may be counsel for a Pledgor, and who shall be reasonably acceptable to the
Collateral Agent and, if applicable, the Secured Creditors.
1.80 "Other Collateral" means (i) all existing and future property
and assets of the Pledgors, whether tangible or intangible, fixed or liquid,
real or personal, upon which a Lien has been granted to secure the Notes Secured
Obligations or the Notes Refinancing Indebtedness Obligations, (ii) all
Intangibles to the extent relating thereto, (iii) all Documents to the extent
relating thereto and (iv) all Proceeds of any of the foregoing. "Other
Collateral" shall (1) include, without limitation, the New Collateral, Bliss &
Laughlin Real Estate, Bliss & Laughlin Equipment, Lackawanna Real Estate,
Lackawanna Equipment, Miscellaneous Collateral pledged by any Pledgor
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(other than the Company), Bliss & Laughlin Equipment and Acquisition Document
Rights under or relating to the RES Merger Agreement, the B&L Merger Agreement
and the Master Restructuring Agreement, and (2) in no event include the Excluded
Collateral or the Shared Collateral.
1.81 "Other Johnstown Equipment" means, individually and
collectively, (i) all Equipment of the Company, whether now owned or hereafter
acquired, which is located at or used in connection with the operation of the
business conducted at the Johnstown Real Estate, other than Modernization
Equipment, (ii) all Intangibles to the extent relating thereto, (iii) all
Documents to the extent relating thereto and (iv) all Proceeds of any of the
foregoing.
1.82 "PA 108 Loans" means the loans made to the Company by the City
of Johnstown, Pennsylvania and the County of Cambria, Pennsylvania in the
aggregate principal amount not to exceed $8,500,000 with funds provided by the
United States Department of Housing and Urban Development under the Section 108
Program.
1.83 "Patents" means, collectively, all of the applicable Pledgors'
patents and all applications, registrations and recordings relating thereto as
may at any time be filed in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof, any
political subdivision thereof or in any other country, together with any and all
(i) rights and privileges arising under applicable law with respect to the
applicable Pledgors' use of any patents, (ii) inventions and improvements
described and claimed therein, (iii) reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof, (iv) income, fees,
royalties, damages and payments now and hereafter due and/or payable under and
with respect thereto, including, without limitation, damages and payments for
past or future infringements thereof, (v) rights corresponding thereto
throughout the world and (vi) rights to sue for past, present and future
infringements thereof.
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1.84 "Pennsylvania Lenders" means the Johnstown Industrial
Development Corporation, the County of Cambria, Pennsylvania and the City of
Johnstown, Pennsylvania.
1.85 "Pennsylvania Lenders Debt Instruments" means, collectively,
(i) the Master Agreement dated as of July 18, 1994, among the Company and the
Pennsylvania Lenders as amended (the "Master Agreement"), (ii) the Escrow
Agreement dated as of September 21, 1994 among the City of Johnstown,
Pennsylvania, the Company and B.T. Financial Management Trust Company, (iii) the
Economic Development Partnership Loan Agreement dated September 21, 1994,
between the City of Johnstown, Pennsylvania and the Company, (iv) the Economic
Development Partnership Note dated September 21, 1994 by the Company payable to
the City of Johnstown, Pennsylvania in the principal amount of $6,000,000, (v)
the Economic Development Partnership Fund Escrow Agreement dated September 21,
1994, among the City of Johnstown, Pennsylvania and B.T. Management Trust
Company, (vi) the Section 108 Loan Agreement dated July 20, 1994 by and among
the City of Johnstown, Pennsylvania, the County of Cambria, Pennsylvania and the
Company, as amended, (vii) the contract for Loan Guarantee Assistance under
Section 108 of the Housing and Community Development Act of 1974, as amended,
dated July 28, 1994 among the County of Cambria, Pennsylvania, the Secretary of
Housing and Urban Development and the Commonwealth of Pennsylvania, (viii) the
Contract for Loan Guarantee Assistance under Section 108 of the Housing and
Community Development Act of 1974, as amended, dated July 21, 1994 between the
City of Johnstown, Pennsylvania and the Secretary of Housing and Urban
Development, (ix) the BID Loan Agreement dated March 12, 1996 between the
Company and the Johnstown Industrial Development Corporation, (x) the BID Note
dated March 12, 1996 by the Company payable to Johnstown Industrial Development
Corporation in the principal amount of $2,000,000 and (xi) all other agreements
and instruments from time to time evidencing or governing the BID Loans, the
CDBG Loans, the ECP Loans and the EDP Loans.
1.86 "Pennsylvania Lenders Secured Obligations" means any and all
obligations of any kind whatsoever of the Company to the respective Pennsylvania
Lenders arising under the Pennsylvania Lenders Debt Instruments and, without
limiting
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the foregoing, all obligations of the Company under the Pennsylvania Lenders
Security Documents.
1.87 "Pennsylvania Lenders Security Documents" means, collectively,
(i) the Assignment of Subscription Documents dated September 21, 1994 by and
among BRW Steel Holdings, L.P., Johnstown Acquisition Corp. and the Company,
(ii) Economic Development Partnership, Community Development Block Grant
Priority and Enterprise Zone Competitive Program and Section 108 Open-End
Mortgage dated September 21, 1994 among the City of Johnstown, Pennsylvania, the
County of Cambria, Pennsylvania and the Company and recorded on September 26,
1994 in Record Book Volume 1328, page 684 in the Recorder's Office of Cambria
County, Pennsylvania, (iii) the Economic Development Partnership Fund, Community
Development Block Grant Project, the Enterprise Zone Competitive Program and
Section 108 Security Agreement dated September 21, 1994 by the Company to the
City of Johnstown, Pennsylvania and the County of Cambria, Pennsylvania, (iv)
the BID Security Agreement dated March 12, 1996 from the Company to the
Johnstown Industrial Development Corporation and (v) all security agreements,
mortgages, deeds of trust, pledges, collateral assignments and other instruments
evidencing or creating a Security Interest in favor of any Pennsylvania Lender
with respect to any Pennsylvania Lenders Secured Obligations in all or any
portion of the Collateral.
1.88 "Pledged Interests" means, collectively, (i) all membership
interests and/or partnership interests of the Company and each Restricted
Subsidiary (as defined in the Indenture), together with all rights, privileges,
authority and powers of each Pledgor in and to the equity interests in each such
person or under the membership or partnership agreement of such person and the
certificates, instruments and agreements, if any, representing such membership
or partnership interests, (ii) all issued and outstanding shares of capital
stock of the Company and each Restricted Subsidiary, including the certificates
representing such shares and any interest of any Pledgor in the entries on the
books of any financial intermediary pertaining to the such shares, (iii) all
additional membership interests, partnership interests and shares of capital
stock of any issuer of the interests and shares described in clauses (i) and
(ii) of this definition from time to time acquired by any
<PAGE>
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Pledgor in any manner and all membership interests and partnership interests and
issued and outstanding shares of capital stock of each person which, after the
date of this Agreement, is or becomes, as a result of any occurrence, a
Restricted Subsidiary, including any right relating to the equity or membership
or partnership interests in any such person or under the membership or
partnership agreement of any such person, from time to time acquired by such
Pledgor in any manner and the certificates, instruments and agreements, if any,
representing such additional interests, the certificates representing such
additional interests and shares and any interest of any Pledgor in the entries
on the books of any financial intermediary pertaining to such additional shares,
(iv) all dividends, cash, options, warrants, rights, instruments, distributions,
partnership distributions, returns of capital, income, profits and other
property, interests or proceeds from time to time received, receivable or
otherwise distributed to any Pledgor in respect of or in exchange for any or all
of such interests and shares, (v) all Intangibles to the extent relating to any
of the foregoing, (vi) all Documents to the extent relating to any of the
foregoing and (vii) all Proceeds of any of the foregoing.
1.89 "Pledgors" means, collectively, (i) the Company, (ii) Bliss
LLC, (iii) CDSC, (iv) RTI Capital, (v) Holdings, (vi) N&T and (vii) each other
person (a) required by the terms of any Debt Instrument to create a Lien in
favor of one or more of the Secured Creditors subject to the terms of this
Agreement or (b) required by the terms of the Credit Facility to create a Lien
on assets or property of such person thereunder. When used with respect to any
particular item of Collateral, Accounts, Inventory and the Pledged Interests, as
the case may be, "Pledgor" or "Pledgors" means only that Pledgor or those
Pledgors that have actually granted a Security Interest in that particular item
of Collateral, Accounts, Inventory, Intellectual Property and the Pledged
Interests, as the case may be, pursuant to one or more Security Documents.
1.90 "Proceeds" shall have the meaning assigned to the term
"proceeds" under the UCC and, in any event, shall include, without limitation,
any and all (i) proceeds of any insurance (except payments made to a person that
is not a party
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to this Agreement), indemnity, warranty, guarantee or claim payable to an Agent,
the Collateral Agent or to any Pledgor, as the case may be, from time to time
with respect to any item or type of Collateral, Accounts, Inventory,
Intellectual Property or the Pledged Interests, as the case may be, (ii)
payments (in any form whatsoever) made or due and payable to any Pledgor from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of any item or type of Collateral,
Accounts, Inventory, Intellectual Property or the Pledged Interests, as the case
may be, by any governmental authority (or any person acting under color of a
governmental authority), (iii) products of any item or type of Collateral,
Accounts, Inventory, Intellectual Property or the Pledged Interests, as the case
may be, and (iv) other amounts from time to time paid or payable under or in
connection with any item or type of Collateral, Accounts, Inventory,
Intellectual Property or the Pledged Interests, as the case may be.
1.91 "Real Estate" means, collectively, all estates, rights and
interests of the Company and the other applicable Pledgors in (i) the real
property located in (a) Johnstown, Pennsylvania (as more particularly described
in Schedule A-1 attached hereto), (b) Lackawanna, New York (as more particularly
described in Schedule A-2 attached hereto), (c) Harvey, Illinois (as more
particularly described in Schedule A-3 attached hereto), (d) Batavia, Illinois
(as more particularly described in Schedule A-4 attached hereto), (e) Medina,
Ohio (as more particularly described in Schedule A-5 attached hereto), (f)
Hamilton, Ontario, Canada (as more particularly described in Schedule A-6
attached hereto), and all appurtenances relating or appertaining thereto, (g)
Canton, Ohio (as more particularly described in Schedule A-7 attached hereto),
(h) Massillon, Ohio (as more particularly described in Schedule A-8 attached
hereto), (i) Chicago, Illinois (as more particularly described in Schedule A-9
attached hereto), (j) Gary, Indiana (as more particularly described in Schedule
A-10 attached hereto), (k) Beaver Falls, Pennsylvania (as more particularly
described in Schedule A-11 attached hereto), (l) Willimantic, Connecticut (as
more particularly described in Schedule A-12 attached hereto) and (m) Lorain,
Ohio (as more particularly de-
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scribed in Schedule A-13 attached hereto), (ii) all existing buildings,
structures and other improvements located or erected thereon, (iii) all Real
Estate Fixtures, (iv) all permits, licenses, franchises, certificates, consents,
approvals and authorizations furnished in respect of the real property and
improvements located thereon including, without limitation, building permits,
certificates of occupancy and environmental certificates, (v) all leases,
licenses and occupancy and concession agreements in respect of the real property
and improvements located thereon and all rents, receipts, fees and other amounts
payable thereunder, (vi) all Intangibles relating to any of the foregoing, (vii)
all Documents relating to any of the foregoing and (viii) all Proceeds of any of
the foregoing; provided, however, that Real Estate shall in no event include (A)
any item of property described in clauses (i) through (v) of this definition
which is integral to the manufacturing or other business operations conducted by
the Company or any other applicable Pledgor at any real property as opposed to
the occupancy (or customarily used by occupants in connection with the
occupancy) of the land or the operation of the buildings, structures and
improvements located thereon as such and (B) any Intangibles, Documents or
Proceeds relating to any property excluded from this definition by clause (A) of
this proviso.
1.92 "Real Estate Fixtures" means only such "equipment" as defined
in the UCC which is (i) affixed to any Real Estate, (ii) considered a fixture or
a part of the Real Estate under applicable law (other than under the assembled
economic unit or industrial plant doctrines which might otherwise be applicable
under the law of the Commonwealth of Pennsylvania with respect to equipment of
the Company located at the Johnstown and Beaver Falls, Pennsylvania facilities
of the Company) and (iii) integral to the occupancy or customarily used by
occupants in connection with the occupancy of the land or the operation of the
buildings, structures and improvements thereon as such, as opposed to
manufacturing or other business operations conducted therein or therefrom and,
in any event, shall include, without limitation, all switchboards, utility
systems, sprinkler and alarm systems or other fire prevention or extinguishing
apparatus and materials, HVAC equipment, boilers, oil boilers,
telecommunications equipment, refrigeration, elec-
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tronic monitoring, water or lighting systems, power, sanitation, waste removal,
pollution abatement or control, elevators, window cleaning, maintenance or other
systems or equipment, appliances or supplies, all heating apparatus, generators,
plumbing, lighting and gas fixtures, laundry, ventilating and air conditioning
equipment, all awnings, blinds, screens, storm sashes, pumping equipment,
electrical equipment, including transformers, radiators and piping, coal
stokers, plumbing and bathroom fixtures, washtubs, sinks, stoves, ranges, window
shades, motors, generators, dynamos, kitchen cabinets, incinerators, plants and
shrubbery and all other articles used or useful in connection with the use,
operation, maintenance or repair of any part of the Real Estate, together with
any and all modifications, renewals, improvements, alterations, repairs,
substitutions, attachments, additions, accessions and other property now or
hereafter affixed thereto or used in connection therewith, all replacements and
all parts therefor, and together with all substitutes for any of the foregoing.
Real Estate Fixtures shall not in any event include any of the equipment set
forth in an Appraisal Review from MB Valuation Services, Inc., dated June 8,
1994 attached to the Existing Intercreditor Agreement as Exhibit D or any of the
Modernization Equipment.
1.93 "Replaced Debt" means (i) the $91,609,000 principal amount of
13 1/2% Senior Secured Notes due 2001, Series A and Series B, issued by BarTech
and guaranteed by certain of the Guarantors under the related indenture and any
exchange notes issued in respect of such senior secured notes in accordance with
the terms of such indenture, as the same may have been amended, amended and
restated, supplemented or otherwise modified, (ii) the PIDA Loans (as defined in
the Existing Intercreditor Agreement), (iii) the Sunny Day Loans (as defined in
the Existing Intercreditor Agreement), (iv) the Indebtedness under the
Lackawanna Lenders Debt Instruments (as defined in the Existing Intercreditor
Agreement), (v) the Indebtedness under the Bethlehem Instruments (as defined in
the Existing Intercreditor Agreement), other than the instruments described in
subsections (i) through (v) and (viii) through (x) of such definition, (vi) the
Revolving Credit Facility (as defined in the Existing Intercreditor Agreement),
(vii) the RES Holding
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Company Credit Facility, RESI Credit Facility, RESI Bridge Facility and RESI
Refinanced State Debt (as each such term is defined in the Master Restructuring
Agreement) and (viii) the USS/Kobe Senior Notes, USS/Kobe Credit Facility and
USS/Kobe Refinanced State Debt (as each such term is defined in the Master
Restructuring Agreement).
1.94 "Responsible Officer" means, when used with respect to the
Collateral Agent, any officer in the Corporate Trust Department of the
Collateral Agent, including any vice president, assistant vice president,
assistant secretary, treasurer, assistant treasurer, or any other officer of the
Collateral Agent who customarily performs functions similar to those performed
by the persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of such officer's knowledge of
and familiarity with the particular subject assigned to the corporate trust
office of the Collateral Agent and also means, with respect to any particular
corporate trust matter, any other officer of the Collateral Agent to which such
matter is referred because of his knowledge of and familiarity with the
particular subject.
1.95 "Secured Creditors" means, collectively, the Collateral Agent,
the Trustee, any holders from time to time of Notes Secured Obligations, any
Agent, any holders from time to time of Pennsylvania Lenders Secured
Obligations, any holders from time to time of any Government Assisted
Indebtedness Obligations, any holders from time to time of Notes Refinancing
Indebtedness and any holders from time to time of the New Bar Mill Lenders
Secured Obligations.
1.96 "Secured Obligations" means, collectively, the Notes Secured
Obligations, the Pennsylvania Lenders Secured Obligations, the Government
Assisted Indebtedness Obligations, the Notes Refinancing Indebtedness
Obligations, the Credit Agreement Obligations and the New Bar Mill Lenders
Secured Obligations.
1.97 "Secured Senior Creditors" means, collectively, (i) the
Pennsylvania Lenders, the Trustee, the holders of the Senior Secured Notes, the
Government Lenders, the Notes Refi-
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nancing Lenders, the New Bar Mill Lenders and any other person who is a holder
of any Senior Debt secured by any Collateral, (ii) any Senior Creditor having a
Lien on Accounts and/or Inventory, (iii) any Senior Creditor having a Lien on
the Cast-Roll Facility and (iv) any Senior Creditor whose Senior Debt is secured
by any other property or assets of the Company, and their respective successors
and assigns.
1.98 "Security Documents" means, collectively, the Notes Security
Documents, the Pennsylvania Lenders Security Documents, the New Bar Mill Lenders
Security Documents, the Credit Facility Security Documents, any Government
Lender Security Documents and any Notes Refinancing Security Documents.
1.99 "Security Interests" means, collectively, the Liens on the
Collateral created by the Security Documents in favor of the Collateral Agent,
on behalf of each of the Secured Creditors.
1.100 "Senior Creditor" means each person who holds Senior Debt.
1.101 "Senior Debt" means (i) all of the Secured Obligations, (ii)
all obligations, liabilities and indebtedness of the Company for principal,
interest, premiums, fees, charges, indemnities and expenses at any time and from
time to time owed by the Company under the Credit Facility (including, without
limitation, under currency or interest rate protection agreements entered into
with lenders or their affiliates under the Credit Facility and reimbursement
obligations with respect to letters of credit thereunder) (collectively, "Credit
Agreement Obligations"), (iii) all obligations, liabilities and Indebtedness of
the Company for principal, interest, premiums, fees, charges, indemnities and
expenses at any time and from time to time owed by the Company to any person who
provides loans, letters of credit or other financial accommodations used to
replace, substitute for or refinance all or any portion of the Secured
Obligations or Credit Agreement Obligations and (iv) to the extent not referred
to in clauses (i)-(iii) above, all obligations, liabilities and Indebtedness of
the Company for principal, interest, premium, fees, charges, indemnities and
expenses at any time and from time to time owed by the Com-
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pany to (A) financial institutional lenders, (B) the governments of the United
States, the Commonwealth of Pennsylvania, any other State in which any Pledgor
owns assets or conducts its business or any department, agency, division or
instrumentality thereof, (C) persons not included in clauses (A) or (B) who
extend credit or make loans to enable the Company to acquire an interest in the
"Assets" and "Liabilities" (as defined in the Contribution Agreement) or real or
personal property to be used in connection with the ownership or operation of
the Company's business, and (D) any replacement, substitution or refinancing of
any of the foregoing described in clauses (A), (B) or (C), in each case, as the
same may be modified, extended or supplemented from time to time.
1.102 "Senior Secured Notes" means the $425,000,000 principal amount
of 13 3/4% Senior Secured Notes Due 2009, Series A and Series B, co-issued by
the Company and RTI Capital and guaranteed by the Guarantors under the Indenture
and any exchange notes issued in respect of the Senior Secured Notes in
accordance with the terms of the Indenture, as the same may have been amended,
amended and restated, supplemented or otherwise modified.
1.103 "Shared Collateral" means any Collateral in which an Existing
Secured Creditor had been granted an Existing Lien pursuant to the applicable
Security Documents, but excluding in any event (i) the New Collateral and (ii)
the Excluded Collateral (other than BarTech Intellectual Property, which is
intended to be Shared Collteral). It is intended that no Secured Creditor other
than the Trustee, the holders of the Senior Secured Notes and the holders of any
Notes Refinancing Indebtedness shall have any Security Interest (directly or
through the Collateral Agent or otherwise) in any assets or properties that
would constitute Non-Shared Collateral.
1.104 "Trademarks" means, collectively, all of the applicable
Pledgor's trademarks (including service marks), trademark registrations, trade
styles and trade names and applications therefor as may at any time be filed in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any State thereof, any political subdivision thereof or in
any other country, together with any
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and all (i) rights and privileges arising under applicable law with respect to
the applicable Pledgor's use of any trademarks, (ii) reissues, continuations,
extensions and renewals thereof, (iii) income, fees, royalties, damages and
payments now and hereafter due and/or payable under and with respect thereto,
including, without limitation, damages and payments for past or future
infringements thereof, (iv) rights corresponding thereto throughout the world
and (v) rights to sue for past, present and future infringements thereof.
1.105 "Trust Moneys" shall mean all cash or Cash Equivalents
received by the Collateral Agent in accordance with the terms of this Agreement,
the Debt Instruments and the Security Documents: (a) upon the release of
property from the Lien of any of the Security Documents, including, without
limitation, all moneys received in respect of the principal of all purchase
money, governmental and other obligations; or (b) as compensation for, or
proceeds of the sale of, all or any part of the Collateral taken by eminent
domain or purchased by, or sold pursuant to an order of, a governmental
authority or otherwise disposed of; or (c) as proceeds of insurance upon any,
all or part of the Collateral (other than any liability insurance proceeds
payable to the Collateral Agent for any loss, liability or expense incurred by
it); or (d) as proceeds of any other sale or other disposition of all or any
part of the Collateral by or on behalf of the Collateral Agent or any
collection, recovery, receipt, appropriation or other realization of or from all
or any part of the Collateral pursuant to the Security Documents or otherwise;
or (e) as elsewhere provided in any Debt Instrument or any Security Document, or
whose disposition is not elsewhere otherwise specifically provided for herein or
in any Security Document or any Debt Instrument and shall also include all money
or Cash Equivalents required by any Security Document or Debt Instrument to be
held by the Collateral Agent; provided that the Collateral Agent shall have
received notice of such requirements.
1.106 "UCC" means the Uniform Commercial Code as in effect from time
to time in any applicable jurisdiction.
2. RESTATEMENT OF EXISTING INTERCREDITOR AGREEMENT
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2.1 Each of the Pennsylvania Lenders and the Pledgors agrees that
this Agreement shall amend and restate the Existing Intercreditor Agreement to
the extent and as set forth herein.
3. APPOINTMENT OF COLLATERAL AGENT
3.1 The Trustee, on behalf of the holders of Notes Secured
Obligations, any Agent, the New Bar Mill Lenders and each Existing Secured
Creditor hereby designates and appoints the Collateral Agent, and the Collateral
Agent hereby accepts such designation and appointment to serve as Collateral
Agent for the Trustee and such other Secured Creditors in the manner and upon
the terms and conditions set forth herein and in the Security Documents. The
Trustee, on behalf of the holders of Notes Secured Obligations, any Agent, the
New Bar Mill Lenders and each Existing Secured Creditor hereby irrevocably
authorizes, and each other Secured Creditor, by its acceptance of any Senior
Secured Notes or of other instrument evidencing any Secured Obligations or the
benefit of any Debt Instrument, shall be deemed irrevocably to have authorized
the Collateral Agent, upon written instructions from the requisite Secured
Creditors provided for under Section 4.5, to take such action on behalf of such
Secured Creditors as such Secured Creditors may direct and as shall be permitted
to be taken under the provisions hereof and under the Security Documents,
including, without limitation, to foreclose or otherwise realize upon any
Collateral and, upon the specific direction of such Secured Creditors, to
otherwise enforce the Secured Creditors' rights in respect of the Collateral and
to initiate, prosecute and defend any and all legal proceedings against the
Pledgors or any other party (excluding the Secured Creditors) to any Security
Document relating to the Collateral.
4. SECURITY INTERESTS; PRIORITIES; REMEDIES
4.1 The Trustee, on behalf of the holders of Notes Secured
Obligations, any Agent, the New Bar Mill Lenders and each Existing Secured
Creditor hereby acknowledge that each such other Secured Creditor has been
granted a Lien upon some or all of the Collateral pursuant to the Security
Documents in effect on the date hereof, true and complete copies of which
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have been made available to such Secured Creditors and the Collateral Agent.
4.2 (a) Notwithstanding the order or time of attachment, or the
order, time or manner of perfection, or the order or time of filing or
recordation of any document or instrument, or other method of perfecting a Lien
in favor of any Secured Creditor in any of the Collateral, and notwithstanding
any provisions of the UCC or any other applicable law or decision or whether any
Secured Creditor holds possession of all or any part of the Collateral, or the
granting provisions of any mortgage, security instrument or the provisions of
any financing statement or any conflicting terms or conditions which may be
contained in any of the Debt Instruments and Security Documents, each Secured
Creditor hereby acknowledges and agrees to the Liens in favor of the Secured
Creditors set forth below and the relative priorities thereof in respect of the
following categories of Collateral and that upon the sale or other disposition
by the Collateral Agent or its agents or employees of the following items of
Collateral pursuant to any of the Security Documents, the proceeds of such sale
or disposition shall be delivered by the Collateral Agent to the extent the
Secured Creditor is secured by such category of Collateral in accordance with
the following priorities:
(i) with respect to the Miscellaneous Collateral pledged by the
Company:
FIRST: The Trustee, for itself and the holders of the
Senior Secured Notes, with respect to the Notes
Secured Obligations, until satisfaction in full of
all such Notes Secured Obligations.
SECOND: (A) the City of Johnstown, Pennsylvania, with
respect to its Secured Obligations under the EDP
Loans, (B) the City of Johnstown, Pennsylvania,
with respect to its Secured Obligations under the
ECP Loans, (C) the County of Cambria,
Pennsylvania, with respect to its Secured
Obligations under the CDBG
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Loans and (D) the City of Johnstown, Pennsylvania
and the County of Cambria, Pennsylvania, with
respect to their Secured Obligations under the
PA 108 Loans, until satisfaction in full of all
such Secured Obligations under the EDP Loans, the
ECP Loans, the CDBG Loans and the PA 108 Loans.
(ii) with respect to Modernization Equipment:
FIRST: The Trustee, for itself and the holders of the
Senior Secured Notes, with respect to the Notes
Secured Obligations, until satisfaction in full of
all such Notes Secured Obligations.
SECOND: The Johnstown Industrial Development Corporation,
with respect to its Secured Obligations under the
BID Loans, until satisfaction in full of all such
Secured Obligations under the BID Loans.
THIRD: (A) The City of Johnstown, Pennsylvania, with
respect to its Secured Obligations under the ECP
Loans, (B) the County of Cambria, Pennsylvania,
with respect to its Secured Obligations under the
CDBG Loans, and (C) the County of Cambria,
Pennsylvania, and the City of Johnstown,
Pennsylvania, with respect to their Secured
Obligations under the PA 108 Loans, until
satisfaction in full of all such Secured
Obligations under the ECP Loans, the CDBG Loans
and the PA 108 Loans.
(iii) with respect to Other Johnstown Equipment:
FIRST: The Trustee, for itself and the holders of Senior
Secured Notes, with re-
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spect to the Notes Secured Obligations, until
satisfaction in full of the Notes Secured
Obligations.
SECOND: (A) The City of Johnstown, Pennsylvania, with
respect to its Secured Obligations under the EDP
Loans, (B) the City of Johnstown, Pennsylvania,
with respect to its Secured Obligations under the
ECP Loans, (C) the County of Cambria,
Pennsylvania, with respect to its Secured
Obligations under the CDBG Loans, and (D) the City
of Johnstown, Pennsylvania, and the County of
Cambria, Pennsylvania, with respect to their
Secured Obligations under the PA 108 Loans, until
satisfaction in full of all such Secured
Obligations under the EDP Loans, the ECP Loans,
the CDBG Loans and the PA 108 Loans.
(iv) with respect to Johnstown Real Estate:
FIRST: The Trustee, for itself and the holders of the
Senior Secured Notes, and the Notes Secured
Obligations, until satisfaction in full of all
such Notes Secured Obligations.
SECOND: The Johnstown Industrial Development Corporation,
with respect to its Secured Obligations under the
BID Loans, until satisfaction in full of all such
Secured Obligations under the BID Loans, but only
to the extent of the Real Estate Fixtures in which
the Johnstown Industrial Development Corporation
has a Security Interest.
THIRD: (A) The City of Johnstown Pennsylvania, with
respect to its Secured Obligations under the EDP
Loans, (B) the
<PAGE>
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City of Johnstown, Pennsylvania, with respect to
its Secured Obligations under the ECP Loans,
(C) the county of Cambria, Pennsylvania, with
respect to its Secured Obligations under the CDBG
Loans, and (D) the City of Johnstown, Pennsylvania
and the County of Cambria, Pennsylvania, with
respect to their Secured Obligations under the PA
108 Loans, until satisfaction in full of all such
Secured Obligations under the EDP Loans, the ECP
Loans, the CDBG Loans and the PA 108 Loans.
(v) with respect to the Other Collateral:
FIRST: The Trustee, for itself and the holders of the
Senior Secured Notes, with respect to the Notes
Secured Obligations, until satisfaction in full of
all such Notes Secured Obligations.
(vi) with respect to the Acquisition Document Rights constituting
Shared Collateral (excluding, in any event, the Acquisition Document
Rights under or relating to the B&L Merger Agreement, the RES Merger
Agreement and the Master Restructuring Agreement):
FIRST: The Trustee, for itself and the holders of the
Senior Secured Notes, with respect to the Notes
Secured Obligations, until satisfaction in full of
all such Notes Secured Obligations.
SECOND: The Johnstown Industrial Development Corporation,
with respect to its Secured Obligations under the
BID Loans, until satisfaction in full of all such
Secured Obligations and the BID Loans.
THIRD: (A) The City of Johnstown, Pennsylvania, with
respect to its Secured Obli-
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gations under the EDP Loans, (B) the City of
Johnstown, Pennsylvania, with respect to its
Secured Obligations under the ECP Loans, (C) the
County of Cambria, Pennsylvania, with respect to
its Secured Obligations under the CDBG Loans, and
(D) the City of Johnstown, Pennsylvania, and the
County of Cambria, Pennsylvania, with respect to
their Secured Obligations under the PA 108 Loans,
until satisfaction in full of all such Secured
Obligations under the EDP Loans, the ECP Loans,
the CDBG Loans and the PA 108 Loans.
(vii) with respect to the Intellectual Property of the Company to the
extent constituting Shared Collateral:
FIRST: The Revolver Agent, with respect to the applicable
Credit Agreement Obligations, until satisfaction in
full of all such Credit Agreement Obligations.
SECOND: The Johnstown Industrial Development Corporation, with
respect to its Secured Obligations under the BID Loans,
until satisfaction in full of all such Secured
Obligations and the BID Loans.
THIRD: (A) The City of Johnstown, Pennsylvania, with respect to
its Secured Obligations under the EDP Loans, (B) the
City of Johnstown, Pennsylvania, with respect to its
Secured Obligations under the ECP Loans, (C) the County
of Cambria, Pennsylvania, with respect to its Secured
Obligations under the CDBG Loans, and (D) the City of
Johnstown, Pennsylvania, and the County of Cambria,
Pennsylvania, with respect to their Secured Obligations
under the PA 108 Loans, until satisfaction in full of
all such Secured Obligations under
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the EDP Loans, the ECP Loans, the CDBG Loans and the PA
108 Loans.
(viii) with respect to the Intellectual Property (other than the
Intellectual Property of the Company constituting Shared Collateral):
FIRST: The Revolver Agent or the Term Agent, as applicable,
with respect to the applicable Credit Agreement
Obligations, until satisfaction in full of all such
Credit Agreement Obligations.
(ix) with respect to the New Bar Mill:
FIRST: The New Bar Mill Lenders, with respect to the New Bar
Mill Lenders Secured Obligations, until satisfaction in
full of all such New Bar Mill Lenders Secured
Obligations.
SECOND: The Trustee, for itself and the holders of the Senior
Secured Notes, with respect to the Notes Secured
Obligations, until satisfaction in full of all such
Notes Secured Obligations.
(x) with respect to Collateral Accounts and Collateral Account
Funds:
Each Secured Creditor shall have the same Lien priority in the
Collateral Account and Collateral Account Funds held by the
Collateral Agent in respect of any category of Collateral as such
Secured Creditor has in the category of Collateral as to which such
Collateral Account and Collateral Account Funds relates.
(b) Notwithstanding anything contained in any Debt Instrument or
Security Document to the contrary, each Existing Secured Creditor hereby
expressly disclaims and releases any and all of its Security Interests in the
Non-Shared Collateral and the related Collateral Account and Collateral Account
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Funds. Each Existing Secured Creditor agrees to execute such documents and
instruments and make such filings, including, without limitation, UCC filings,
at the reasonable request of the Trustee to secure fully the purpose and intents
of this paragraph.
(c) To the extent that more than one Secured Creditor is listed with
respect to any of the priority rankings on any category of Collateral set forth
in Section 4.2(a), such Liens of each such Secured Creditor shall rank pari
passu (without any preference or priority whatsoever and on a pro rata basis)
among each Secured Creditor specified within a given priority ranking for such
category of Collateral.
4.3 The Lien priorities and provisions provided in Section 4.2(a)
shall not be altered or otherwise affected by any amendment, modification or
supplement to any Debt Instrument or Security Document nor by any action or
inaction which any Secured Creditor may take or fail to take in respect of the
Collateral or otherwise.
4.4 Each Secured Creditor shall be solely responsible for perfecting
and maintaining the perfection of its Lien in and to each item constituting the
Collateral in which such Creditor has been granted a Lien. Subject to Section
7.3, the Collateral Agent shall take all action reasonably requested in writing
by a Secured Party to perfect and maintain the Lien(s) of such Secured Party in
and to such Collateral. The Collateral Agent shall not file any amendments,
assignments or terminations with respect to any UCC financing statement without
the prior written consent of the applicable Secured Creditor; provided, however,
that the Existing Secured Creditors hereby authorize the Collateral Agent to
execute and file any continuations of and amendments to any applicable UCC
financing statements necessary to effect the provisions of this Agreement.
4.5 Notwithstanding anything to the contrary contained in any of the
Debt Instruments or Security Documents, as among the Secured Creditors, the
First Priority Majority Security Creditors as to any Collateral shall have the
exclusive right to direct the Collateral Agent to manage, perform and en-
<PAGE>
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force the terms of the Security Documents to which they are a party with respect
to all such Collateral, to exercise and enforce all privileges and rights
thereunder according to their discretion and the exercise of their business
judgment, including, without limitation, the exclusive right, as against the
other Secured Creditors, to take or retake control or possession of such
Collateral and to hold, prepare for sale, process, sell, lease, dispose of, or
liquidate such Collateral.
4.6 Notwithstanding anything to the contrary contained in any of the
Debt Instruments or Security Documents or herein, only the First Priority
Majority Secured Creditors with respect to an item of Collateral shall have the
right to direct the Collateral Agent to restrict or permit, or approve or
disapprove, the sale, transfer, lease, liquidation or other disposition of such
Collateral. Upon any such sale, transfer, lease, liquidation or other
disposition of Collateral, the proceeds therefrom, subject to Section 4.12
hereof, shall be delivered by the Collateral Agent to the Secured Creditors in
accordance with Section 4.2 within a reasonable time thereafter. Each other
Secured Creditor shall, immediately upon the request of the First Priority
Majority Secured Creditors with respect to an item of Collateral, release or
otherwise terminate its Liens on any or all such Collateral to the extent such
Collateral is sold or otherwise disposed of either by the Collateral Agent, its
agents, or, after an Event of Default under the Debt Instruments or Security
Documents to which such First Priority Majority Secured Creditors are a party,
by a Pledgor with the consent of such requesting First Priority Majority Secured
Creditors; and each other Secured Creditor shall immediately deliver such
release documents as the First Priority Majority Secured Creditors making the
release request may require in connection therewith.
4.7 Notwithstanding any rights or remedies available to a Secured
Creditor under any of the Debt Instruments or Security Documents, applicable law
or otherwise, the Secured Creditors (other than, with respect to an item of
Collateral, the First Priority Majority Secured Creditors by direction to the
Collateral Agent) shall not, directly or indirectly, (a) seek to foreclose or
realize upon (judicially or non-judicially) its Lien on any Collateral or assert
any claims or
<PAGE>
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interests therein (including, without limitation, by setoff or notification of
account debtors) or (i) take any other enforcement action against or in respect
of the Collateral. The foregoing shall not in any way limit or impair the right
of any Secured Creditor from (i) commencing, pursuing, discontinuing, settling
or compromising any legal action against Pledgors or any of them (A) seeking a
money judgment for payments owed under any Debt Instruments held by such Secured
Creditor, whether arising as a result of acceleration of maturity of such Debt
Instruments or otherwise, or (B) seeking declaratory or injunctive relief
against the Pledgors or any of them; (ii) commencing, pursuing, discontinuing,
settling or compromising any petition, action, suit or proceeding, howsoever
styled, relating to the Pledgors or any of them or any of the Debt Instruments
or holders thereof under any Bankruptcy Law; or (iii) bidding for and purchasing
Collateral at any private or judicial foreclosure upon such Collateral initiated
by any of the other Secured Creditors, as permitted herein.
4.8 Each of the Secured Creditors shall have the right, but not any
obligation, to cure for any Pledgor's account, any Event of Default, but without
thereby assuming any other or further obligation, liability or Indebtedness to
any other person.
4.9 Each Secured Creditor agrees that (i) all amounts realized or
recovered upon the enforcement by the Collateral Agent (as permitted herein) of
any Lien upon the Collateral shall be delivered to or shared among the Secured
Creditors in the order of their Lien priorities set forth in Section 4.2(a) as
to such Collateral giving rise to such amounts realized or recovered and (ii)
the Secured Creditors shall not, without the prior written consent of the First
Priority Majority Secured Creditors with respect to any item of Collateral,
commence, or, if already commenced with such consent, such Secured Creditors
shall immediately cease, any enforcement efforts by such Secured Creditors with
respect to any Collateral upon notice from the First Priority Majority Secured
Creditors with respect to such Collateral.
4.10 If any Government Assisted Refinancing Indebtedness refinances
any Secured Obligations of a Secured Creditor
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with respect to any item of Collateral secured by any Existing Liens, then, upon
the execution and delivery by the applicable Government Lender of the
Undertaking attached hereto as Exhibit A, such Government Lender shall become a
party hereto and shall be entitled to the same benefits, and shall have the same
obligations, hereunder with respect to such Collateral as the Secured Creditor
secured by such Existing Lien, and unless otherwise agreed by the parties hereto
(other than the Trustee whose consent need not be obtained solely by reason of
this Agreement), including the applicable Government Lender, such Government
Assisted Refinancing Indebtedness shall be secured by a Lien or Liens on such
Collateral of the same priority (subject to the proviso of the definition of
Government Assisted Refinancing Indebtedness) as the Existing Liens securing the
Secured Obligations so refinanced as set forth in Section 4.2. If any Pledgor
incurs any New Government Assisted Indebtedness which is to be secured (subject
to the proviso of the definition of New Government Assisted Indebtedness) by an
item of Collateral (and permitted by the applicable Debt Instruments and this
Agreement), then, upon execution and delivery by the applicable Government
Lender of the Undertaking attached hereto as Exhibit A, such Government Lender
shall be entitled to a priority junior in right of payment to all other Secured
Creditors secured by a Lien on such item of Collateral, which priority shall be
evidenced by such Undertaking and shall make such Government Lender subject to
all of the terms and provisions of this Agreement applicable to a Secured
Creditor with an interest in such item of Collateral and having the priority
evidenced in that Undertaking. No consent shall be required to effect the
Undertaking in respect of New Government Assisted Indebtedness.
4.11 If the Notes Refinancing Indebtedness refinances the Notes
Secured Obligations, then, upon execution and delivery by the Notes Refinancing
Lenders of the Undertaking attached hereto as Exhibit A, such Notes Refinancing
Lenders shall become a party hereto and shall be entitled to the benefits, and
shall have the obligations, hereunder as the Notes Representative and the
holders of Senior Secured Notes (as applicable) and unless otherwise agreed by
the parties hereto (including the Notes Refinancing Lenders), such Notes
Refinanc-
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ing Indebtedness shall be secured by Liens on each category of Collateral with
the same priority as the Liens securing the Notes Secured Obligations.
4.12 If the New Bar Mill Loans are made or to be made by the New Bar
Mill Lenders, then, upon execution and delivery by the New Bar Mill Lenders of
the Undertaking attached hereto as Exhibit A, such New Bar Mill Lenders shall
become a party hereto and shall be entitled to the benefits, and shall have the
obligations, set forth herein and unless otherwise agreed by the parties hereto
(including the New Bar Mill Lenders), the New Bar Mill Lenders Secured
Obligations shall be secured by Liens on each category of Collateral and with
the priority of the Lien securing such Collateral set forth in Section 4.2. No
consent shall be required to effect the Undertaking in respect of New Bar Mill
Lenders Secured Obligations.
4.13 Notwithstanding any other provision of this Section 4, the
proceeds from any sale or other disposition of Collateral shall be applied first
to the payment of any and all obligations of the Collateral Agent hereunder,
including obligations to compensate and indemnify the Collateral Agent pursuant
to Section 8 hereof.
4.14 If there remains any deficiency between (i) the aggregate
amount of the proceeds of the sale or other disposition of Collateral
indefeasibly paid in cash in reduction of Secured Obligations pursuant to
Section 4.2 and (ii) the aggregate of all Secured Obligations secured by such
Collateral, then the applicable Pledgor or any other obligor, as the case may
be, shall remain liable to the persons specified therein remaining unpaid to the
extent of such deficiency.
4.15 If any sale of Collateral by the Collateral Agent pursuant to
the terms hereof involves (i) more than one Category of Collateral (as defined
below) and (ii) yields proceeds which, depending upon the allocation of such
proceeds, may result in the partial satisfaction of Secured Obligations of any
Secured Creditor, then (x) the Secured Creditors who may be entitled to have
such proceeds applied to their Secured Obligations shall, for a period of 30
days following receipt of such proceeds by the Collateral Agent, negotiate in
good faith
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to reach agreement on the allocation of such proceeds among their Secured
Obligations and (y) if such Secured Creditors shall fail to reach agreement
during such 30-day period, any such Secured Creditor may thereafter require the
Collateral Agent to select an Independent Appraiser or, if such Collateral
consists in whole or in part of securities, an Independent Financial Advisor to
perform an appraisal (the "Appraisal") of the Fair Market Value of each Category
of Collateral (assuming each such Category of Collateral was sold separately and
was unrelated to each other Category of Collateral). The Appraisal shall be
binding upon each such Secured Creditor absent fraud. The proceeds of the sale
of such Collateral allocated to each Category of Collateral shall be equal to
the percentage obtained by dividing the Fair Market Value of such Category of
Collateral (as determined by the Appraisal) by the Fair Market Value of all the
Collateral sold (as determined by the Appraisal). As so allocated, the proceeds
shall be delivered to satisfy the Secured Obligations of the Secured Creditors
with Liens on each such Category of Collateral pursuant to the provisions of
Section 4.2 and Section 4.6.
As used herein, "Category of Collateral" means each of the
classifications of the Collateral set forth in Section 4.2(a)(i)-(x).
4.16 Limitations. Notwithstanding any other provision hereof to the
contrary, but subject to any direction from a court of competent jurisdiction
(which may be sought by the Collateral Agent at the Pledgors' expense), the
powers granted to the Collateral Agent hereunder shall not include, and shall
not be deemed or construed to include: (i) entering into or providing written
consent to any agreement, understanding or course of dealing under which any
payments are made upon a sale or disposition of Collateral (whether pursuant to
a liquidation of any Pledgor or otherwise) to the holder of any Secured
Obligations at a time when the holder of any other Secured Obligations having a
senior priority with respect to such Collateral pursuant to Section 4.2(a)
hereof has not received any payment due to it and to which it is entitled and
has notified the Collateral Agent in writing of such non-receipt; or (ii)
entering into or providing written consent to any agreement, understanding or
course of dealing purporting to release, compromise or
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otherwise adversely affect any rights the holder of any Secured Obligations
shall have with respect to any Collateral pursuant to a Security Document,
except pursuant to the direction of the holders of such Secured Obligations
given in accordance with Section 7.
5. COVENANTS AND WAIVERS
5.1 Waivers. Notice of acceptance hereof, the making of loans,
advances and extensions of credit or other financial accommodations to, and the
incurring of any expenses by or in respect of, any Pledgor by Secured Creditors,
and presentment, demand, protest, notice of protest, notice of nonpayment or
default and all other notices to which Secured Creditors and any Pledgor are or
may be entitled are hereby waived (except as expressly provided for herein or,
as to any Pledgor, in the respective Debt Instruments and Security Documents).
All of the Secured Obligations shall be deemed to have been made or incurred in
reliance upon this Agreement.
5.2 No Subrogation; Waiver of Marshaling. No Secured Creditor shall
be subrogated to, or be entitled to any assignment of, any Secured Obligations
or of any Collateral or guarantees or evidence of any thereof. Each Secured
Creditor hereby waives any and all rights to have any Collateral or any part
thereof granted to any of the Secured Creditors marshalled upon any foreclosure
or other disposition of such Collateral by any Secured Creditor or, after an
Event of Default under the Debt Instruments and Security Documents to which the
First Priority Majority Secured Creditors are a party, by a Pledgor with the
consent of the First Priority Majority Secured Creditors entitled under these
Debt Instruments and Security Documents to consent thereto.
6. NATURE OF DUTIES OF COLLATERAL AGENT
6.1 The Collateral Agent shall be responsible for taking only such
actions as are expressly set forth herein or in any written instructions
received from any Secured Creditor (subject to Sections 7 and 11 hereof)
pursuant to the terms hereof and any Security Document (and the Collateral Agent
shall be entitled to presume that any such instructions are
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given in compliance with the provisions of any such Security Document) and no
implied duties or obligations shall be read into this agreement or any such
instructions or Security Document. The entities of the Collateral Agent shall be
mechanical and administrative in nature; the Collateral Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Secured
Creditor. Notwithstanding any provision in any Secured Document, neither the
Collateral Agent nor any of its officers, directors, employees or agents shall
be liable for any claims, losses, damages, penalties, actions, judgments, suits,
liabilities, obligations, costs or expenses of any kind or nature whatsoever
resulting from any action the Collateral Agent takes or omits to take under any
Security Document or in connection herewith, unless determined by a court of
competent jurisdiction by final and nonappealable judgment to have been caused
by its or their gross negligence, bad faith or willful misconduct. The
Collateral Agent may perform any of its duties hereunder by or through its
agents or employees.
7. EXERCISE OF REMEDIES UNDER SECURITY DOCUMENTS
7.1 Notices. If the Trustee, on behalf of the holders of Senior
Secured Notes, or any other Secured Creditor has notice of (i) an Event of
Default under any of the Debt Instruments or (ii) any request from any other
Secured Creditor to declare the principal of any Secured Obligations held by
such Secured Creditor to be due and payable following the occurrence of an Event
of Default under any of the Debt Instruments governing Secured Obligations, the
Trustee and such other Secured Creditors shall promptly give notice to the other
Secured Creditors and to the Collateral Agent, and absent notice given in
accordance with the foregoing provisions, the Collateral Agent shall not be
deemed to have knowledge of any such Event of Default. During the occurrence and
continuance of an Event of Default, upon receipt by the Collateral Agent from
the First Priority Majority Secured Creditors of written instructions to the
Collateral Agent as to any actions to be lawfully taken by the Collateral Agent,
the Collateral Agent shall promptly, but in no event later than five Business
Days after receipt of such notice and instructions (to the extent practicable),
commence the taking of such actions toward collection or enforcement of any
Security Document and Collateral (or any portion thereof),
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including, without limitation, action toward foreclosure upon any Collateral, as
specifically instructed in writing by the First Priority Majority Secured
Creditors. The First Priority Majority Secured Creditors shall have the right to
select any counsel or other agents to be retained in connection with any action
relating to the Collateral; provided, that such counsel and agents are
reasonably satisfactory to the Collateral Agent. Any instructions given to the
Collateral Agent by the First Priority Majority Secured Creditors shall be
simultaneously given to all other Secured Creditors. The Collateral Agent, upon
receipt of any written notice from any Secured Creditor provided to it under
this subsection, shall immediately provide a copy thereof to the other Secured
Creditors and to each Pledgor. The Collateral Agent shall give notice of any
legal action or proceeding of which it has been notified in writing naming the
Collateral Agent as party relating to this Agreement, the Collateral or the
Collateral Agent's duties hereunder.
7.2 Duty to Instruct. Subject to Section 7.1 and this Section 7.2,
if the Collateral Agent is authorized under any Security Document to request
instructions from the Trustee, on behalf of the holders of Senior Secured Notes,
or any other Secured Creditor as to whether or not to take any action toward
enforcement of any Security Document, the Trustee and such other Secured
Creditors may, but shall not be obligated to, give such instructions, subject to
the terms of the applicable Debt Instruments. If an Event of Default has
occurred and is continuing under any Debt Instrument, and the First Priority
Majority Secured Creditors have given instructions pursuant to Section 7.1
hereof in connection therewith, such First Priority Majority Secured Creditors
shall continue to specifically instruct the Collateral Agent as to the actions
that should be taken by the Collateral Agent, if any, toward foreclosure or
otherwise on the Collateral that such First Priority Majority Secured Creditors
deem appropriate in their discretion or as requested by the Collateral Agent. In
no event shall any Secured Creditor direct the exercise by the Collateral Agent
of any remedy which would result in the discharge of any of the Secured
Obligations by reason of any anti-deficiency statute or
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law relating to sales of Collateral other than through judicial proceedings.
7.3 Rights of Collateral Agent.
(i) Right to Rely. The Collateral Agent may rely on any documents
reasonably believed by it to be genuine and to have been signed or presented by
the proper person. The Collateral Agent need not investigate any fact or matter
stated in any such document. Before the Collateral Agent acts or refrains from
acting it may consult with counsel and may require an Officers' Certificate or
an Opinion of Counsel. The Collateral Agent shall not be liable for any action
it takes or omits to take in good faith in reliance upon any such certificate or
opinion.
(ii) Attorneys/Agents. The Collateral Agent may act through its
attorneys and agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(iii) Good Faith Belief in Authority, Rights or Powers. The
Collateral Agent shall not be liable for any action it takes or omits to take in
the good faith belief that such act or omission was authorized or within its
rights or powers conferred upon it hereunder or under the Security Documents.
(iv) No Investigation. The Collateral Agent shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of Indebtedness or other
paper or document, but the Collateral Agent, upon specific written instructions
from any Secured Creditor, may make such further inquiry or investigation into
such facts or matters in accordance with such instructions.
(v) Obligation to Act upon Instructions. The Collateral Agent shall
be under no obligation to exercise any of the rights or powers vested in it by
any Security Document at the request, order or direction of any Secured
Creditor, unless the Collateral Agent shall have been provided security or
in-
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demnity satisfactory to the Collateral Agent in its sole discretion and from any
source acceptable to the Collateral Agent against the costs, expenses and
liabilities which might be incurred by it in compliance with such request, order
or direction. Upon receipt of such security or indemnity, however, and subject
to the other rights of the Collateral Agent under this Section 7, the Collateral
Agent shall act upon the specific instructions of Secured Creditors in
accordance with the provisions of this Agreement. Notwithstanding the foregoing,
the Collateral Agent shall not be obligated to take such action if such action
would violate the terms of this Agreement, the Debt Instruments or the Security
Documents or is contrary to law.
(vi) Right to Require Information. In order to ascertain whether or
not Secured Creditors giving any direction or instructions hereunder represent
the requisite principal amount of Secured Creditors or whether any Indebtedness
is outstanding at any time or to make any other determination relating to
actions to be taken or not taken under or in respect of any Debt Instrument or
Security Document, the Collateral Agent may, as a condition of taking any
action, require such Officers' Certificates from the Company or any other
Pledgor under the Security Documents or written information from any Secured
Creditors that is appropriate to make any such determination.
8. COMPENSATION AND INDEMNIFICATION
8.1 Compensation and Expenses. Each Pledgor agrees to pay, without
duplication, to the Collateral Agent, from time to time upon demand, reasonable
compensation for the services of the Collateral Agent hereunder and under the
Security Documents and all reasonable fees, costs and out-of-pocket expenses of
the Collateral Agent (including, without limitation, the reasonable expenses,
fees and disbursements of counsel, agents and experts of the Collateral Agent
upon presentation of reasonably detailed statements describing their services)
incurred by the Collateral Agent or arising in connection with (i) the
preparation, execution, delivery, administration, modification, amendment or
termination of this Agreement and each Security Document or the enforcement of
any of the provisions hereof or thereof,(ii) the custody or preservation and
protection of, or the sale of, collection from, or other realization upon, any
of
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the Collateral pursuant to this Agreement and any Security Document, (iii) the
preservation, protection, defense, exercise or enforcement of any of the rights
of the Collateral Agent under this Agreement and the Security Documents and in
and to the Collateral or (iv) the failure by a Pledgor to perform or observe any
of the provisions of this Agreement or any Security Document. When the
Collateral Agent incurs expenses or renders services after an Event of Default
specified in Section 6.1(k) or Section 6.1(l) of the Indenture or in any similar
provision of any other Debt Instrument, such expenses and the compensation for
such services are intended to constitute expenses of administration under any
Bankruptcy Law.
8.2 Stamp and Other Taxes. Each Pledgor hereby agrees to pay or to
indemnify the Collateral Agent and each Secured Creditor for, and hold each of
them harmless against, any present or future claim for liability for any stamp,
transfer or other similar tax and any penalties or interest with respect
thereto, which may be assessed, levied or collected by any jurisdiction in
connection with this Agreement or any Security Document or any Collateral.
8.3 Filing Fees, Excise Taxes, Etc. Each of the Pledgors hereby
agrees to pay or to reimburse the Collateral Agent for any and all amounts in
respect of all search, filing, recording and registration fees, taxes
(including, without limitation, any franchise taxes imposed upon the Collateral
Agent in any jurisdiction), excise taxes and other similar imposts which may be
payable or determined to be payable in respect of the execution, delivery,
performance and enforcement of this Agreement and each Security Document.
8.4 Indemnification of Collateral Agent. The Pledgors, jointly and
severally, agree to indemnify the Collateral Agent for, and hold it harmless
against, any and all claims, demands, expenses (including, but not limited to,
reasonable compensation, disbursements and out-of-pocket expenses of the
Collateral Agent's agents, experts and counsel upon presentation of reasonably
detailed statements thereof describing their services), losses, obligations,
damages, penalties, actions, judgments, suits, costs, liabilities or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by
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or asserted against the Collateral Agent in its capacity as such, in any way
relating to or arising out of or in connection with the acceptance and
administration of this Agreement, the Debt Instruments, the Security Documents
or any other documents contemplated by or referred to herein or therein or in
connection with any of its rights and duties hereunder or under any Security
Document or the transactions contemplated hereby or thereby or the enforcement
of any of the terms hereof or thereof or of any such other document or otherwise
arising or relating in any manner to the pledges and security interests
contemplated hereunder, under the Debt Instruments and the Security Documents.
The Collateral Agent shall notify the Pledgors promptly of any claim asserted
against the Collateral Agent for which it may seek indemnity; provided that the
Collateral Agent's failure to notify a Pledgor of any such claim shall not
affect the Collateral Agent's right to indemnification. The Pledgors shall
defend any such claim and the Collateral Agent shall provide reasonable
cooperation at the expense of the Pledgors in such defense. Except as set forth
in the following proviso, the Collateral Agent shall have separate counsel and
the Pledgors shall pay the reasonable fees and expenses of such counsel;
provided that the Pledgors will not be required to pay such fees and expenses if
it assumes the Collateral Agent's defense and provides the Collateral Agent with
an Opinion of Counsel that there is no conflict of interest between the Pledgors
and the Collateral Agent in connection with such defense and acknowledges in
writing its obligation to indemnify the Collateral Agent for all losses or
liabilities arising out of such claim. The Pledgors need not pay for any
settlement made without their written consent. The Pledgors need not reimburse
any expense or indemnify against any loss or liability to the extent incurred by
the Collateral Agent, its agents or attorneys through their gross negligence,
bad faith or willful misconduct. The Pledgors hereby agree to pay, and to hold
the Collateral Agent and the Secured Creditors harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
excise, sales or other taxes (including, without limitation, any franchise taxes
imposed upon the Collateral Agent in any jurisdiction) that may be payable or
determined to be payable with respect to any of the Collat-
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eral or in connection with any of the transactions contemplated by this
Agreement or any Security Document.
8.5 Survival of Obligations. All obligations set forth in this
Section 8 shall survive the execution, delivery and termination of this
Agreement and the Security Documents and the payment of all Secured Obligations.
9. COLLATERAL AGENT'S DEALINGS WITH THE PLEDGORS
9.1 The Collateral Agent may accept deposits from, lend money to, or
generally engage in any kind of banking, trust or other business with the
Pledgors or any of their Affiliates, in each case as if it were not the
Collateral Agent hereunder.
10. RESIGNATION BY OR REMOVAL OF THE COLLATERAL AGENT
10.1 Resignation, Removal. The Collateral Agent may resign from the
performance of all its functions and duties hereunder and under the Security
Documents at any time by giving 20 Business Days' prior written notice to the
Pledgors and the Secured Creditors. The Secured Creditors holding an aggregate
principal amount of Indebtedness representing a majority of the aggregate
principal amount of Indebtedness outstanding under the Debt Instruments, or
their authorized representatives (the "Majority Secured Creditors"), may, at any
time, remove the Collateral Agent by giving 20 Business Days' prior written
notice to the Collateral Agent, the Pledgors and each Secured Creditor.
Notwithstanding the giving of any notice provided for in this Section 10.1, such
resignation or removal shall take effect upon the appointment of a successor
Collateral Agent pursuant to Section 10.2 or 10.3 below or as otherwise provided
below.
10.2 Appointment of Successor. Upon any such notice of resignation
or removal, the Majority Secured Creditors shall appoint a successor Collateral
Agent hereunder, which shall be an Acceptable Bank. If a successor Collateral
Agent shall not have been so appointed within the period specified in Section
10.1, the Pledgors shall then appoint a successor Collateral Agent which shall
be an Acceptable Bank and which shall serve as Collateral Agent hereunder until
such time, if any, as the Majority Secured Creditors appoint a successor
Collateral
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Agent as provided above. If no successor Collateral Agent shall have been so
appointed by the Pledgors or the Majority Secured Creditors and accepted
appointment in the manner herein provided, the Collateral Agent or Secured
Creditors holding at least 25% of the aggregate outstanding principal amount of
Indebtedness outstanding under the Debt Instruments may petition any court of
competent jurisdiction for the appointment of a successor Collateral Agent.
10.3 Effectiveness of Resignation or Removal. A successor Collateral
Agent shall deliver a written acceptance of its appointment to the retiring
Collateral Agent, to the Pledgors and to each Secured Creditor. Immediately
thereafter, the retiring Collateral Agent shall transfer all property held by it
as Collateral Agent to the successor Collateral Agent, and shall execute and
deliver to the successor Collateral Agent such documents as are necessary to
perfect or maintain the Security Interests, including any documents necessary to
assign or transfer all interests of the retiring Collateral Agent in the
Collateral to the successor Collateral Agent, in the form or forms adequate for
proper filing or recording in such offices and such jurisdictions as are
necessary to put the successor Collateral Agent in the same position as was the
retiring Collateral Agent with respect to the Collateral. All expenses incurred
in connection with the resignation or removal of any Collateral Agent shall be
borne by the Pledgors. Thereafter, the resignation or removal of the retiring
Collateral Agent shall become effective and the successor Collateral Agent shall
have all the rights, powers and duties of the Collateral Agent under this
Agreement. Any successor Collateral Agent shall give or cause to be given notice
of its succession to each Secured Creditor as of the date of such succession.
10.4 Consolidation, Merger, Etc. If the Collateral Agent
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the resulting,
surviving or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is an Acceptable Bank, be
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the successor Collateral Agent. The transferring, merging or converting
Collateral Agent shall have all documents necessary to perfect or maintain the
Security Interests, including any documents necessary to assign or transfer all
interests of the transferring, merging or converting Collateral Agent in the
Collateral, executed and delivered to it in the form or forms adequate for
proper filing or recording in such offices and such jurisdictions as are
necessary to put the successor Collateral Agent in the same position as the
transferring, merging or converting Collateral Agent with respect to the
Collateral.
10.5 Compensation and Indemnification Continuing. Any Acceptable
Bank acting as Collateral Agent shall continue to be entitled to receive
compensation and indemnification as provided in Section 8 hereof so long as such
Acceptable Bank acts as Collateral Agent hereunder.
11. RELEASE OR SUBSTITUTION OF COLLATERAL; INVESTMENT OF CASH
COLLATERAL; INSURANCE PROCEEDS.
11.1 Instructions from the Secured Creditors; Segregation of
Proceeds, Etc. With respect to a release of Collateral other than pursuant to an
enforcement action with respect to Collateral pursuant to Section 4.6, the
Collateral Agent shall effect such release, or a substitution of Collateral, in
accordance with and upon receipt of (x) written instructions from the Trustee,
on behalf of the holders of Senior Secured Notes, and each other Secured
Creditor known to the Collateral Agent to hold a Security Interest in such
Collateral and (y) an Officers' Certificate of the applicable Pledgor to the
effect that such release or substitution would be permitted under the terms of
the Debt Instruments and Security Documents. The applicable Pledgor agrees to
give written notice of a proposed release or substitution of Collateral to the
Trustee, on behalf of the holders of Senior Secured Notes, and each other
Secured Creditor and the Collateral Agent at least 10 Business Days prior to any
release or substitution by the Collateral Agent specifying the Business Day upon
which such release or substitution is to be effected, which notice shall be
accompanied by the written instructions from the Secured Creditors and the
Officers' Certificate referred to above.
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11.2 Trust Moneys. The Collateral Agent shall establish and maintain
segregated Collateral Accounts with respect to each category of Collateral set
forth in Section 4.2 of this Agreement on behalf of the Secured Creditors having
a Lien on such category of Collateral as set forth in Section 4.2 of this
Agreement. All Trust Moneys received by the Collateral Agent in respect of any
category of Collateral set forth in Section 4.2 of this Agreement shall be held
in the appropriate Collateral Account on behalf of the Secured Creditors having
a Lien on such category of Collateral as set forth in Section 4.2 of this
Agreement. The Collateral Agent shall invest any Trust Moneys received by it
from time to time in such permitted investments in accordance with the specific
written direction received by the Company or another Pledgor in respect of such
permitted investment pursuant to the Debt Instruments governing the then
outstanding Secured Obligations. The Collateral Agent shall release Trust Moneys
held on behalf of the Secured Creditors in accordance with the provisions of
Section 11.1 applicable to Collateral generally.
12. TRUST MONEYS AND COLLATERAL ACCOUNTS
12.1 The Collateral Agent shall establish the Collateral Accounts in
The City of New York and shall hold all Trust Moneys and other cash and cash
equivalents relating to the Collateral in its name as Collateral Agent under
this Agreement in such Collateral Accounts, on behalf of the Secured Creditors
for whose benefit such Collateral Accounts are being established, and shall
maintain such Collateral Accounts and, subject to Section 11, administer the
funds in accordance with the specific direction of the Secured Creditors for
whose benefit such Collateral Accounts have been established; provided, however,
that in the event that any such Trust Moneys shall consist of Proceeds, such
Proceeds shall in each instance be (i) segregated from all other Trust Moneys
and (ii) maintained in one or more separate Collateral Accounts by the
Collateral Agent in the jurisdiction in which the Collateral to which such
Proceeds relate is, or was, as the case may be, located if necessary to preserve
the Collateral Agent's perfected security interest in such Proceeds under the
laws of such jurisdiction. The Collateral Agent may require an Opinion of
Counsel for the purpose of making the foregoing determination. In any event,
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subject also to the proviso of the second preceding sentence, the Collateral
Agent shall segregate from all other Trust Moneys and other amounts in separate
Collateral Accounts any Trust Moneys or other amounts required to be segregated
under Section 11 hereof. Whenever cash or cash equivalents are delivered by a
Pledgor or any of its Affiliates to be held by the Collateral Agent, such
Pledgor shall be required to notify the Collateral Agent, in writing, as to
which provisions of any Debt Instrument require the delivery of such cash or
cash equivalents and the specific purpose (if any) for which such cash or cash
equivalents are to be held by the Collateral Agent pursuant to the Debt
Instruments.
13. AGREEMENTS WITH AGENT
13.1 Each of Revolver Agent and Term Agent agrees that,
contemporaneously with the commencement of Enforcement with respect to the
Credit Facility and/or any security instruments relating thereto, it shall
deliver to the Collateral Agent an Enforcement Notice. The Collateral Agent, on
behalf of the Secured Parties, agrees that, contemporaneously with the
commencement of Enforcement with respect to any of the Debt Instruments and/or
any of the Security Documents, it shall deliver to the Revolver Agent and the
Term Agent an Enforcement Notice.
13.2 (a) For up to 210 days following issuance of an Enforcement
Notice, the Collateral Agent, the Term Loan Agent and the Pledgors agree that
the Revolver Agent may, at its option, without charge, at any time (i) enter
upon any or all of any Pledgor's premises, either leased or owned, in order to
inspect, collect, remove, sell or otherwise dispose of the Accounts, Inventory
and any other Excluded Collateral to which it is entitled, such right to
include, without limiting the generality of the foregoing, the right to conduct
one or more private sales or auctions thereon and (ii) use the Collateral to the
extent necessary or advisable to complete the manufacture of the Inventory,
collect the Accounts, and remove, sell or otherwise dispose of the Accounts,
Inventory and any other Excluded Collateral to which it is entitled; provided,
however, that the Revolver Agent shall compensate the Collateral Agent and the
Term Loan Agent in cash for any damage to the Collat-
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eral used by the Revolver Agent in connection with its entry into and use of the
Collateral as contemplated in this Section 13.2(a) and shall pay the Collateral
Agent and the Term Loan Agent for all their respective documented direct costs
and expenses relating to the provision of the access to the Collateral as
contemplated herein. During such 210-day period, if the Revolver Agent has
entered upon a Pledgor's premises as provided herein, the Collateral Agent and
the Term Loan Agent and their respective designees shall have unrestricted
access to the Collateral for the purpose of evaluating the Collateral and
showing it to potential purchasers; provided, however, that, without creating
any right hereunder in favor of a Pledgor, the access of the Collateral Agent
and the Term Loan Agent, respectively, and their designees shall not
unreasonably and materially interfere with the access of the Revolver Agent and
use of such Pledgor's premises and use of the Collateral to the extent necessary
or advisable to complete the manufacture of the Inventory, collect the Accounts
and to sell or otherwise dispose of the Inventory, Accounts and any other
Excluded Collateral to which it is entitled.
(b) Following the issuance of an Enforcement Notice, the Revolver
Agent, the Term Loan Agent and the Pledgors agree that the Collateral Agent and
the Pledgors shall have a perpetual license to use the Intellectual Property,
without charge, to the extent necessary or advisable to conduct the Company's
business in the ordinary course consistent with past practice and to sell or
otherwise dispose of the Collateral to which it is entitled and any sale of the
Intellectual Property shall be made subject to such perpetual license. To the
extent any Pledgor or the Collateral Agent has elected to use the Intellectual
Property, such use by any Pledgor or the Collateral Agent and its designees
shall not unreasonably and materially interfere with the use by the Revolver
Agent or the Term Agent of the Intellectual Property to the extent necessary or
advisable to complete the manufacture of the Inventory, collect the Accounts and
to sell or otherwise dispose of the Inventory or the Accounts.
14. [RESERVED]
15. REPRESENTATIONS AND WARRANTIES
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15.1 Each party hereto represents and warrants to each other party
hereto that (i) it has full power and authority to enter into this Agreement and
perform its obligations hereunder, (ii) all action has been taken by it to
authorize its execution, delivery and performance of this Agreement, (iii) its
execution, delivery and performance of this Agreement will not conflict with (a)
any law, decree, statute or regulation applicable to it, or (b) any contract,
commitment, agreement or restriction to which it is a party, or which is binding
upon it, which could restrict its ability to perform its obligations hereunder
in any material respect and (iv) this Agreement constitutes its legal, valid and
binding agreement, enforceable against it in accordance with the terms hereof.
16. AMENDMENTS AND MODIFICATIONS TO CERTAIN DEBT INSTRUMENTS AND
SECURITY DOCUMENTS
16.1 Each Senior Creditor hereby (i) consents to the issuance of the
Senior Secured Notes, the Combination Transactions, the entering into of the
Credit Facility, the transactions contemplated by the Indenture, the Senior
Secured Notes, the Guarantees, the Notes Security Documents, the Credit Facility
and the payment of any fee as described in or otherwise permitted by the
Indenture, (ii) consents to the direct and indirect transfers by BarTech of all
of its right, title and interest in and to any of the Collateral in connection
with the Combination Transactions, (iii) consents to the assumption by the
Company of all of the obligations of BarTech under each respective Debt
Instrument (other than the Senior Secured Notes, the Indenture and the
Guarantees) and (iv) the refinancing and extinguishment of the Replaced Debt
(the transactions described in (i) through (iv) above, collectively, the
"Transactions") and (v) agrees to execute and deliver to the Company any
document, agreement, release, financing statement or other instrument reasonably
necessary to effectuate any of the foregoing. Each Existing Secured Creditor
hereby assigns to the Collateral Agent all of its right, title, and interest in
and to each Security Document to which it is a party subject to the terms and
conditions of this Agreement, and each party hereto hereby undertakes to execute
and deliver to the appropriate party such assignments, documents or instruments
and to take such further actions (including filings and recordings) as the
Collateral
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Agent may deem necessary or appropriate in reliance on an Opinion of Counsel, to
effectuate and perfect such assignments in accordance with applicable law.
16.2 The Pennsylvania Lenders, with respect to the Pennsylvania
Lenders Security Documents and the Pennsylvania Lenders Debt Instruments, hereby
consent to, approve and agree that notwithstanding any provision therein to the
contrary, including, without limitation, any representation or warranty
contained therein or any covenant restricting or affecting the right of the
Company's stockholders to own capital stock of the Company through a holding
company structure or the right of any Pledgor to incur or guarantee debt, to
issue warrants, common stock or other equity, or to grant security interests in,
pledge, encumber or otherwise create or alter the priority of liens on any
assets: (i) the Pennsylvania Lenders Debt Instruments, the Pennsylvania Lenders
Security Documents are hereby amended and restated to the extent of any
inconsistency with any of the provisions, intent or purposes of this Agreement
and to permit the consummation of all of the Transactions; and (ii) each party
hereto hereby undertakes to execute and deliver to each other party hereto such
documents, waivers and instruments and to take such further actions as the
Collateral Agent or any Pledgor may deem reasonably necessary or appropriate to
effectuate the appointment of the Collateral Agent hereunder, and the
priorities, rights and remedies with respect to Collateral set forth herein.
16.3 Upon the execution of this Agreement, each reference in each
Security Document and each Debt Instrument to "this Agreement", "hereunder",
"hereof", "herein" or words of like import, and each reference in any document
related thereto, or executed in connection therewith or herewith, shall mean and
be a reference to the applicable Security Document or Debt Instrument as amended
by this Agreement, and such Security Document or Debt Instrument shall be read
together with this Agreement and construed as one single instrument. Except as
specifically set forth in Section 16.2, the Pennsylvania Lenders Debt
Instruments and the Pennsylvania Lenders Security Documents shall remain in full
force and effect and are hereby ratified and confirmed.
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16.4 Each Existing Secured Creditor hereby agrees to release or
disclaims any and all Security Interests and other Liens of such Secured
Creditor in or to any and all Accounts and Inventory, New Collateral and the
Excluded Collateral of the Pledgors or any other Subsidiary of the Company and
any subsidiary of any thereof and hereby undertakes to execute and deliver to
Agent and/or the Collateral Agent, as applicable, such documents, waivers and
instruments and to take such further action as such Agent and/or the Collateral
Agent, as applicable, may deem reasonably necessary or appropriate to effectuate
such releases.
17. FURTHER ASSURANCES
17.1 Each party hereto covenants to execute and deliver, in each
case at the expense of the Pledgors, such further instruments and to take such
further action as any Secured Creditor may at any time or times reasonably
request in order to carry out the provisions and intent of this Agreement.
18. MISCELLANEOUS
18.1 Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery or by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to the Company or another Pledgor:
Republic Technologies International, LLC
[ ]
Attention: President and Chief
Executive Officer
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
If to the Johnstown Industrial Development
<PAGE>
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Corporation:
c/o Johnstown Area Regional Industries
1ll Market Street
Johnstown, Pennsylvania 15901
Attention: John A. Skiavo
with a copy to the Secretary of Commerce as provided below
If to the City of Johnstown, Pennsylvania:
c/o Johnstown Area Regional Industries
1ll Market Street
Johnstown, Pennsylvania 15901
Attention: John A. Skiavo
with a copy to the Secretary of Commerce as provided below
If to the County of Cambria:
c/o Johnstown Area Regional Industries
111 Market Street
Johnstown, Pennsylvania 15901
Attention: John A. Skiavo
with a copy to the Secretary of Commerce as provided below
If to the Secretary of Commerce:
Secretary of Commerce
Commonwealth of Pennsylvania
433 Forum Building
Harrisburg, Pennsylvania 17120
with a copy to:
<PAGE>
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Office of Chief Counsel
Commonwealth of Pennsylvania
Department of Commerce
433 Forum Building
Harrisburg, Pennsylvania 17120
Attention: Chief Counsel
-and-
Executive Director
Pennsylvania Industrial Development
Authority
480 Forum Building
Harrisburg, Pennsylvania 17120
-and-
Secretary of Community Affairs
Commonwealth of Pennsylvania
317 Forum Building
Harrisburg, Pennsylvania 17120
-and-
Office of Chief Counsel
Commonwealth of Pennsylvania
Department of Community Affairs
334 Forum Building
Harrisburg, Pennsylvania 17120
Secretary of Commerce
Commonwealth of Pennsylvania
433 Forum Building
Harrisburg, Pennsylvania 17120
with a copy to:
Office of Chief Counsel
Commonwealth of Pennsylvania
Department of Commerce
433 Forum Building
Harrisburg, Pennsylvania 17120
Attention: Chief Counsel
<PAGE>
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If to the Agent:
[ ]
Attention: Treasurer
If to the Collateral Agent:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
Any party hereto may by notice to each other party designate such additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party hereto shall be deemed to have been given or made
as of the date so delivered, if personally delivered; and three calendar days
after mailing if sent by registered or certified mail (except that a notice of
change of address shall not be deemed to have been given until actually received
by the addressee). A copy of any notice given under this Agreement to any party
shall also be given to each other party hereto.
18.2 Binding Agreement; Assignment: Obligations Several. This
Agreement shall be binding upon the Pledgors, each of the respective successors
and assigns, and shall be binding upon and inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Collateral
Agent, each Secured Creditor and each of the Senior Creditors and each of their
respective successors, transferees and assigns and each Agent; no other persons
(including, without limitation, any other creditor of the Pledgors) shall have
any interest herein or any right or benefit with respect hereto. Without
limiting the generality of the foregoing clause, any Secured Creditor or any
Senior Creditor may assign or otherwise transfer any Indebtedness held by it to
any other person, and such other person shall thereupon become vested with all
the benefits granted, and be subject to all of the terms, hereof. Neither this
Agreement nor any interest herein or in the Collateral, or any part thereof,
except as otherwise permitted herein or in the Debt Instruments, may be assigned
by the
<PAGE>
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Pledgors; provided, however, that this Agreement may be assigned by a Pledgor to
any person that shall become an obligor under the Debt Instruments in compliance
therewith if such person executes and delivers an amendment hereto whereby it
expressly assumes all obligations of the applicable Pledgor hereunder as if it
were an original party hereto. This Agreement shall be deemed to be
automatically assigned by the Collateral Agent to any person who succeeds to the
Collateral Agent in accordance with Section 10 hereof, and such assignee shall
have all rights and powers of, and act as, the Collateral Agent hereunder, and
this Agreement shall be deemed to be automatically assigned by any of the
Secured Creditors to those persons who succeed to any of them in accordance with
the provisions of the applicable Debt Instrument. Except as otherwise expressly
provided herein, the obligations of each of the parties under this Agreement are
several and not joint, it being expressly agreed that no Secured Creditors shall
be liable for the failure of any other Secured Creditors to perform its duties
or obligations hereunder. Anything in this Agreement to the contrary
notwithstanding, no holder of any Government Assisted Indebtedness or Notes
Refinancing Indebtedness shall be entitled to any rights or benefits hereunder
unless and until (a) such Government Lender or Notes Refinancing Lender, as the
case may be, shall agree to be bound by all the terms and provisions of this
Agreement pursuant to a written undertaking in the form attached as Exhibit A
hereto and (b) the Company shall give written consent thereto.
18.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAW PRINCIPLES, EXCEPT TO THE EXTENT THAT THE LAWS OF ANY OTHER
JURISDICTION MAY BE MANDATORILY APPLICABLE; PROVIDED, HOWEVER, THAT ANY REMEDIES
HEREIN PROVIDED WHICH SHALL BE VALID UNDER THE LAWS OF THE JURISDICTION WHERE
PROCEEDINGS FOR THE ENFORCEMENT HEREOF SHALL BE TAKEN SHALL NOT BE AFFECTED BY
ANY INVALIDITY HEREOF UNDER THE LAWS OF THE STATE OF NEW YORK. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO
ACCEPTS FOR ITSELF AND
<PAGE>
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IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS.
18.4 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT.
18.5 Disclosures; Non-Reliance. Each Existing Secured Creditor has
the means to, and shall in the future remain, fully informed as to the financial
condition and other affairs of the Pledgors and no Secured Creditor or Senior
Creditor shall have any obligation or duty to disclose any such information to
any other Secured Creditor or Senior Creditor. Except as expressly set forth in
this Agreement, the Debt Instruments or the Security Documents, the parties
hereto have not otherwise made to each other nor do they hereby make to each
other any warranties, express or implied, nor do they assume any liability to
each other with respect to: (a) the enforceability, validity, value or
collectability of any of the Secured obligations or Senior Debt or any guarantee
or security which may have been granted to any of them in connection therewith,
or (b) any other matter except as expressly set forth in this Agreement, the
Debt Instruments or the Security Documents.
18.6 Insolvency. This Agreement shall be applicable both before and
after the filing of any petition by or against a Pledgor under any Bankruptcy
Law and all converted or succeeding cases in respect thereof, and all references
herein to a Pledgor shall be deemed to apply to a trustee for such Pledgor and a
Pledgor as a debtor-in-possession. The relative rights of the Secured Creditors
in any Collateral and proceeds of Collateral shall continue after the filing
thereof on the same basis as prior to the date of the petition.
18.7 Effectiveness; Termination. This Agreement shall become
effective on the date on which all of the parties hereto shall have signed a
copy hereof (whether the same or different copies) and shall have delivered the
same to the Collateral Agent. This Agreement shall remain effective until, and
terminate when, all Secured Obligations and Senior Debt are indefeasibly paid in
full in cash in accordance with the terms of the Debt Instruments. Upon
indefeasible payment in full in
<PAGE>
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cash of all Secured Obligations in accordance with the terms of the Debt
Instruments, the Collateral Agent shall reassign and redeliver to the applicable
Pledgor its Collateral which has not been sold, disposed of, retained or applied
by the Collateral Agent in accordance with the terms hereof or of any Security
Document and shall execute and deliver all documents and instruments reasonably
deemed necessary by each Pledgor to evidence the termination of the Security
Interests created hereunder. Such reassignment and redelivery shall be without
warranty by or recourse to the Collateral Agent, and shall be at the expense of
the Pledgors.
18.8 Amendment, Supplements and Waivers. This Agreement may be
amended, changed, waived, discharged or terminated with the written consent of
each party hereto (who shall only grant such consent in accordance with the
relevant provisions of the appropriate Debt Instrument); provided, however, that
no such consent shall be required of any Secured Party to the extent that all
Secured Obligations of such Secured Party have been irrevocably and indefeasibly
paid in full; provided, further, that no such consent shall be required of any
Secured Creditors to the extent that any such amendment, change, waiver,
discharge or termination would not have an adverse effect on the type, scope or
nature of the Collateral pledged to such Secured Creditors or the priority or
enforceability of the lien on security interest in such Collateral. If in the
opinion of the Collateral Agent any document required to be executed pursuant to
the terms of this Section 18.8 affects any interest or right or duty or immunity
or indemnity in favor of the Collateral Agent under this Agreement or any
Security Document, the Collateral Agent may in its discretion decline to execute
such document. Subject to the immediately preceding sentence, in no event shall
the consent of the Trustee be required to amend this Agreement to reflect the
provision of additional or substituted Collateral as required by terms of the
Indenture. In addition, this Agreement may be amended without the written
consent of the Trustee to (i) permit Government Lenders to be a party hereto and
recognize the Liens of such persons, (ii) permit the substitution or addition of
Collateral in accordance with the Indenture, (iii) permit changes in the
priority of Liens of Secured Parties (other than the Trustee
<PAGE>
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and the holders of Senior Secured Notes) with respect to the Collateral;
provided that such changes relate only to Liens junior in priority to the Liens
of the Trustee and the holders of Senior Secured Notes with respect to such
Collateral and such Liens do not extend to or cover the Intellectual Property,
the Acquisition Document Rights, the Other Collateral or the Excluded
Collateral. Any additional Pledgor required to become a party hereto pursuant to
the terms of the Debt Instruments or Security Documents shall execute such
instruments or documents as are reasonably requested by the Collateral Agent to
effectuate its becoming a party hereto.
18.9 Inconsistent Provisions. If any provision of this Agreement
shall be inconsistent with, or contrary to, any provision in any Debt Instrument
or Security Document, such provision of this Agreement shall be controlling, and
shall supersede such inconsistent provision to the extent necessary to give full
effect to all provisions contained in this Agreement.
18.10 Severability. In the event that any provision contained in
this Agreement shall for any reason be held to be illegal or invalid under the
laws of any jurisdiction, such illegality or invalidity shall in no way impair
the effective-ness of any other provision hereof or of such provision under the
laws of any other jurisdiction; provided, however, that in the construction and
enforcement of such provisions under the laws of the jurisdiction in which such
holding of illegality or invalidity exists, and to the extent only of such
illegality or invalidity, this Agreement shall be construed and enforced as
though such illegal or invalid provision had not been contained herein.
18.11 Headings. Section headings used herein and the title of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
18.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
and all of which shall together constitute one and the same instrument.
<PAGE>
-68-
18.13 Authority. Each of the parties hereto represents and warrants
to all other parties hereto that (i) the execution, delivery and performance by
or on behalf of such party to this Agreement (a) has been duly authorized by all
necessary action, corporate or otherwise, (b) does not violate any provision of
law or governmental regulation or any agreement or instrument by which such
party is bound and (c) requires no governmental or other consent that has not
been obtained and is not in full force and effect and (ii) this Agreement is a
valid and binding obligation of such parties, enforceable against each such
party in accordance with the terms hereof.
18.14 Execution by Pledgors. By executing this Agreement, the
Pledgors agree to be bound by the provisions hereof as they relate to the
relative rights of the Secured Creditors; provided, however, that, solely as
between each of the Pledgors, on the one hand, and the Secured Creditors, on the
other hand, nothing in this Agreement shall amend, modify, change or supersede
the terms of any Debt Instrument or Security Document, as between each Secured
Creditor and Pledgor signatory thereto, and in the event of any such conflict or
inconsistency between the terms of this Agreement and such Debt Instrument or
Security Document, the terms of such Debt Instrument or Security Document, as
the case may be, shall govern the relationship between such Secured Creditor and
Pledgor. Each Pledgor further agrees that except as expressly provided herein
(i) the terms of this Agreement shall not give such Pledgor any substantive
rights against the Secured Creditors and (ii) if any Secured Creditor shall
enforce its rights or remedies in violation of the terms of this Agreement, such
Pledgor shall neither raise such violation as a defense to the enforcement by
any other Secured Creditor under its respective Debt Instruments and Security
Documents, nor assert such violation as a counterclaim or basis for setoff or
recoupment against any Secured Creditor.
18.15 Agent for Perfection. Each Secured Creditor hereby appoints
each other Secured Creditor as agent for purposes of perfecting their respective
security interests in and Liens on Collateral which is of a type such that
perfection of a security interest therein may be accomplished only by posses-
<PAGE>
-69-
sion thereof by the secured party. To the extent that any Secured Creditor
(other than the Collateral Agent) obtains possession of any Collateral, the
Secured Creditor having possession shall notify the Collateral Agent of such
fact and shall deliver such Collateral to the Collateral Agent as soon as
practicable.
18.16 Insurance. Notwithstanding anything to the contrary herein or
in any agreement referred to herein, the Pledgors shall obtain satisfactory
lender's loss payable endorsements or mortgagee endorsements naming the
Collateral Agent as loss payee or mortgagee thereunder with respect to policies
which insure Collateral. The Collateral Agent shall have the sole and exclusive
right to adjust settlement of such insurance policy in the event of any loss to
the Collateral and to exercise the rights provided in any Security Document to
waive or amend insurance requirements or to give consents relating to the
application of any proceeds of insurance, including, without limitation,
consents relating to restoration of Collateral following a casualty, all in
accordance with appropriate instructions received by the Collateral Agent in
writing from the appropriate First Priority Majority Secured Creditors pursuant
to this Agreement. All proceeds of such policy shall be paid to the Collateral
Agent and disbursed in accordance with Section 11.1 of this Agreement. Each
party hereto agrees that the allocation of property or casualty insurance
proceeds payable in respect of loss, damage to or destruction of any Collateral
which affects more than one Category of Collateral shall be as finally
determined by the applicable insurance carrier in its allowance of any filed
proof of loss with respect to such loss, damage or destruction.
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC (as successor
to Bar Technologies Inc., for-
merly known as BRW Steel Corporation)
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ________, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
______________________), personally known and acknowledged himself/herself to me
(or proved to me on the basis of satisfactory evidence) to be the
____________________ of REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC (as successor
to Bar Technologies Inc., formerly known as BRW Steel Corporation), and that as
such officer, being duly authorized to do so pursuant to its bylaws or a
resolution of its board of directors, executed, subscribed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
the corporation by himself/herself in his/her authorized capacity as such
officer as his/her free and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
<PAGE>
________________________________
Notary Public
[NOTARIAL SEAL] My Commission Expires:
________________________________
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
REPUBLIC TECHNOLOGIES
INTERNATIONAL HOLDINGS, LLC
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ______, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
________________________), personally known and acknowledged himself/herself to
me (or proved to me on the basis of satisfactory evidence) to be the
____________________ of REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC and
that as such officer, being duly authorized to do so pursuant to its bylaws or a
resolution of its board of directors, executed, subscribed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
the corporation by himself/herself in his/her authorized capacity as such
officer as his/her free and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
<PAGE>
[NOTARIAL SEAL] My Commission Expires:
________________________________
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
RTI CAPITAL CORP.
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ______, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
________________________), personally known and acknowledged himself/herself to
me (or proved to me on the basis of satisfactory evidence) to be the
____________________ of RTI CAPITAL CORP., and that as such officer, being duly
authorized to do so pursuant to its bylaws or a resolution of its board of
directors, executed, subscribed and acknowledged the foregoing instrument for
the purposes therein contained, by signing the name of the corporation by
himself/herself in his/her authorized capacity as such officer as his/her free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
[NOTARIAL SEAL] My Commission Expires:
<PAGE>
________________________________
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
BLISS & LAUGHLIN, LLC
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ______, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
________________________), personally known and acknowledged himself/herself to
me (or proved to me on the basis of satisfactory evidence) to be the
____________________ of BLISS & LAUGHLIN, LLC, and that as such officer, being
duly authorized to do so pursuant to its bylaws or a resolution of its board of
directors, executed, subscribed and acknowledged the foregoing instrument for
the purposes therein contained, by signing the name of the corporation by
himself/herself in his/her authorized capacity as such officer as his/her free
and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
[NOTARIAL SEAL] My Commission Expires:
<PAGE>
________________________________
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
CANADIAN DRAWN STEEL COMPANY,INC.
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ______, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
________________________), personally known and acknowledged himself/herself to
me (or proved to me on the basis of satisfactory evidence) to be the
____________________ of CANADIAN DRAWN STEEL COMPANY, INC. and that as such
officer, being duly authorized to do so pursuant to its bylaws or a resolution
of its board of directors, executed, subscribed and acknowledged the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself/herself in his/her authorized capacity as such officer as
his/her free and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
[NOTARIAL SEAL] My Commission Expires:
<PAGE>
________________________________
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
NIMISHILLEN & TUSCARAWAS, LLC
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ______, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
________________________), personally known and acknowledged himself/herself to
me (or proved to me on the basis of satisfactory evidence) to be the
____________________ of NIMISHILLEN & TUSCARAWAS, LLC, and that as such officer,
being duly authorized to do so pursuant to its bylaws or a resolution of its
board of directors, executed, subscribed and acknowledged the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself/herself in his/her authorized capacity as such officer as
his/her free and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
[NOTARIAL SEAL] My Commission Expires:
<PAGE>
________________________________
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ______, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
________________________), personally known and acknowledged himself/herself to
me (or proved to me on the basis of satisfactory evidence) to be the
____________________ of UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, and
that as such officer, being duly authorized to do so pursuant to its bylaws or a
resolution of its board of directors, executed, subscribed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
the corporation by himself/herself in his/her authorized capacity as such
officer as his/her free and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
<PAGE>
[NOTARIAL SEAL] My Commission Expires:
________________________________
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
JOHNSTOWN INDUSTRIAL DEVELOPMENT CORPORATION
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ______, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
________________________), personally known and acknowledged himself/herself to
me (or proved to me on the basis of satisfactory evidence) to be the
____________________ of JOHNSTOWN INDUSTRIAL DEVELOPMENT CORPORATION, and that
as such officer, being duly authorized to do so pursuant to its bylaws or a
resolution of its board of directors, executed, subscribed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
the corporation by himself/herself in his/her authorized capacity as such
officer as his/her free and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
[NOTARIAL SEAL] My Commission Expires:
<PAGE>
________________________________
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
CITY OF JOHNSTOWN, PENNSYLVANIA
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ______, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
________________________), personally known and acknowledged himself/herself to
me (or proved to me on the basis of satisfactory evidence) to be the
____________________ of CITY OF JOHNSTOWN, PENNSYLVANIA, and that as such
officer, being duly authorized to do so pursuant to its bylaws or a resolution
of its board of directors, executed, subscribed and acknowledged the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself/herself in his/her authorized capacity as such officer as
his/her free and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
[NOTARIAL SEAL] My Commission Expires:
<PAGE>
________________________________
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
COUNTY OF CAMBRIA, PENNSYLVANIA
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ______, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
________________________), personally known and acknowledged himself/herself to
me (or proved to me on the basis of satisfactory evidence) to be the
____________________ of COUNTY OF CAMBRIA, PENNSYLVANIA, and that as such
officer, being duly authorized to do so pursuant to its bylaws or a resolution
of its board of directors, executed, subscribed and acknowledged the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself/herself in his/her authorized capacity as such officer as
his/her free and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
[NOTARIAL SEAL] My Commission Expires:
<PAGE>
________________________________
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
BANKBOSTON, N.A., as Agent
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ______, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
________________________), personally known and acknowledged himself/herself to
me (or proved to me on the basis of satisfactory evidence) to be the
____________________ of BANKBOSTON, N.A., as Agent, and that as such officer,
being duly authorized to do so pursuant to its bylaws or a resolution of its
board of directors, executed, subscribed and acknowledged the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself/herself in his/her authorized capacity as such officer as
his/her free and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
[NOTARIAL SEAL] My Commission Expires:
<PAGE>
________________________________
<PAGE>
FILING SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its authorized representative as of the date
first written above.
WITNESSES:
_____________________
[SEAL]
_____________________
Print/Type Name
UNITED STATES TRUST COMPANY OF NEW YORK,
as Collateral Agent
By:__________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On this _______ day of ______, 1999 before me, the undersigned
officer, personally appeared ____________________ (residing at
________________________), personally known and acknowledged himself/herself to
me (or proved to me on the basis of satisfactory evidence) to be the
____________________ of UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral
Agent, and that as such officer, being duly authorized to do so pursuant to its
bylaws or a resolution of its board of directors, executed, subscribed and
acknowledged the foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself/herself in his/her authorized
capacity as such officer as his/her free and voluntary act and deed of said
corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________
Notary Public
<PAGE>
[NOTARIAL SEAL] My Commission Expires:
________________________________
<PAGE>
Schedule A
Legal Descriptions
<PAGE>
FORM OF UNDERTAKING OF
HOLDER OF GOVERNMENT ASSISTED
INDEBTEDNESS/NOTES REFINANCING INDEBTEDNESS/NEW BAR LOANS
The undersigned, being a [Government Lender] [Notes Refinancing
Lender] [New Bar Mill Lender] [describe holders of applicable Government
Assisted Indebtedness/Notes Refinancing Indebtedness/New Bar Loans and
applicable Debt Instrument], hereby undertakes to be bound by all the terms and
provisions of the Amended and Restated Intercreditor and Subordination Agreement
dated as of [ ], 1999 by and among [ ] (the "Intercreditor Agreement").
For purposes of Section 18.1 of the Intercreditor Agreement, any
notice or other communications to the undersigned, as a [Government Lender]
[Notes Refinancing Lender] [New Bar Mill Lender], required or permitted shall be
sent to the following address:
[Insert applicable notice information.]
Capitalized terms used herein but not defined herein shall have the
meanings set forth in the Intercreditor Agreement.
Upon execution of this undertaking, the undersigned shall be
entitled to all rights and benefits of a [Government Lender] [Notes Refinancing
Lender] [New Bar Mill Lender] under the Intercreditor Agreement.
By:______________________________
Name:
Title:
Date: _____________________
<PAGE>
The undersigned Pledgor[s] hereby acknowledge and consent to the
interest of the [Government Lender] [Notes Refinancing Lender] [New Bar Mill
Lender] identified above under the Intercreditor Agreement.
[ ]
By:______________________________
Name:
Title:
Date: _____________________
<PAGE>
PLEDGE INTERCREDITOR AGREEMENT
PLEDGE INTERCREDITOR AGREEMENT ("Agreement"), dated as of August 13,
1999, among the Secured Parties (as defined below) and UNITED STATES TRUST
COMPANY OF NEW YORK, a bank and trust company organized under the New York
Banking Law, as collateral agent (the "Collateral Agent") for the Secured
Parties.
RECITALS:
A. Reference is made to (i) the Credit Agreement, dated as of August
13, 1999 (as amended, amended and restated, supplemented or otherwise modified
from time to time, including any refinancing, refunding, replacement or
extension thereof or a portion thereof and whether by the Lenders (as
hereinafter defined) or any other lender or group of lenders, the "Credit
Agreement"), among Republic Technologies International, LLC, a Delaware limited
liability company (the "Company"), the financial institutions party thereto as
lenders (the "Lenders"), BankBoston, N.A., as an agent for the Lenders (in such
capacity, the "Administrative Agent"; together with the Lenders, the "Credit
Agreement Parties"), and (ii) the Indenture, dated as of August, 13 1999 (as
amended or modified from time to time, the "Indenture"), among United States
Trust Company of New York, a bank and trust company organized under the New York
Banking Law, as trustee (in such capacity, the "Indenture Trustee") for the
holders of the Senior Notes (as defined below) from time to time (the "Senior
Note Holders"), the Company and RTI Capital Corp., a Delaware corporation, as
issuers (the "Issuers"), and the Guarantors party thereto.
B. The Lenders have agreed to make Revolving Credit Loans (as
defined in the Credit Agreement and which term will include any loans,
revolving, term or otherwise, made under the Credit Agreement) to, and issue
Letters of Credit (as defined in the Credit Agreement) for the account of, the
Borrower in an aggregate principal amount of up to $425,000,000 upon the terms
and subject to the conditions specified in the Credit Agreement. Pursuant to the
Indenture, the Issuers are issuing $425,000,000 aggregate principal amount of
their 133/4% Senior Secured Notes due 2009 (together with any substantially
identical notes of the Issuers issued in exchange therefor in accordance with
the Indenture, the "Senior Notes").
C. Pursuant to the Credit Agreement and the Indenture, the Issuers,
Republic Technologies International Holdings, LLC (the "Parent Guarantor") and
the Guarantors are entering into the Master Pledge Agreement, dated as of the
date hereof (the "Master Pledge Agreement"), under which they are granting to
the Collateral Agent a lien on and security interest in the Collateral (as
defined therein) to secure the Obligations (as defined below).
D. To induce the Senior Note Holders to purchase the Senior Notes,
the Administrative Agent, on behalf of itself and each of the Credit Agreement
Parties, is willing to enter into this Agreement. To induce each Lender to
extend credit to the Company pursuant to the Credit Agreement, the Indenture
Trustee, on behalf of itself and each of the Senior Note Holders, is willing to
enter into this Agreement.
E. Each of the Secured Parties desires to provide for their
respective rights in respect of the Collateral and certain collections from the
Issuers and the Guarantors and to make certain other commitments and
undertakings in connection with the Senior Credit Documents, the obligations
incurred by the Parent Guarantor, the Issuers and the Subsidiaries of the
Company under such agreements and the rights of the Secured Parties under such
agreements.
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AGREEMENT:
Accordingly, each of the Secured Parties and the Collateral Agent
hereby agrees as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definition of Terms Used Herein. All capitalized terms
used but not defined herein shall have the meanings set forth in the Credit
Agreement, the Indenture and the Master Pledge Agreement, as appropriate. All
references to specific Sections in the Credit Agreement shall be deemed to also
be references to the parallel provision of any other credit agreement included
within the definition of "Credit Agreement."
SECTION 1.02. Definitions of Certain Terms Used Herein. As used
herein, the following terms shall have the meanings set forth below:
"Availability" shall have the meaning assigned to such term in the
Credit Agreement.
"Business Day" shall mean any day (other than a day that is a
Saturday, a Sunday or a legal holiday in the State of New York) on which banks
are open for business in New York City.
"Collateral" shall have the meaning given such term in the Master
Pledge Agreement.
"Collateral Accounts" shall have the meaning set forth in Section
4.01.
"Credit Agreement Collateral Account" shall have the meaning set
forth in Section 4.01.
"Enforcement" shall mean the exercise of rights and remedies under
Article IV of the Master Pledge Agreement and shall include all aspects of and
decisions or determinations required in connection with the management,
performance and enforcement of such right and remedies and the rights and
remedies described in Section 2.04(ii) and 2.04(iii) of the Master Pledge
Agreement.
"Enforcement Notice" shall mean a written notice delivered by any
Secured Party to the Collateral Agent and the other Secured Parties, stating
that an Event of Default (as defined in the Master Pledge Agreement) has
occurred and that the Secured Party delivering such notice intends to realize
upon its security interest in the Collateral. An Enforcement Notice shall be
deemed to have been given when the Enforcement Notice has been sent to the
Collateral Agent and the other Secured Parties by certified U.S. mail, return
receipt requested, and to have been rescinded when the Collateral Agent and the
other Secured Parties have received satisfactory evidence that such Event of
Default has been cured or when such Event of Default has been effectively waived
for purposes of this Agreement. An Enforcement Notice shall be deemed to be
outstanding at all times after such Notice has been given until such time, if
any, as such Notice has been rescinded.
"Guarantee Agreements" shall mean the "Guaranties" as defined in the
Credit Agreement and the Indenture.
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"Indemnitees" shall have the meaning set forth in Section 5.05.
"Lead Secured Party" shall have the meaning set forth in Section
3.02(b).
"Letter of Credit Collateral Account" shall have the meaning set
forth in Section 4.01.
"L/C Parties" shall mean the Lenders that hold participations in
Letters of Credit.
"Majority Secured Party" shall mean, as of the date the Collateral
Agent receives any Enforcement Notice, the Secured Party that represents the
holders of at least a majority of the Voting Obligations.
"Minority Secured Party" shall mean, as of the date of the
Collateral Agent receives any Enforcement Notice, the Secured Party that
represents the holders of a minority of the Voting Obligations.
"Obligations" shall have the meaning given such term in the Master
Pledge Agreement.
"Outstanding Credit Agreement Obligations" shall mean, at any time,
the sum (without duplication) of (i) the aggregate principal amount of the
Revolving Credit Loans at such time and the aggregate amount of accrued and
unpaid interest thereon at such time, (ii) any Unfunded L/C Exposure, (iii) the
aggregate amount of all Letters of Credit not yet reimbursed to the L/C Parties
and accrued and unpaid interest thereon at such time, (iv) the aggregate amount
of all other monetary obligations that are accrued and owing at such time to the
Credit Agreement Parties or any of them under the Credit Agreement, the Security
Documents and the Guarantees, including fees, costs, expenses, indemnities and
premiums, if any and (v) the aggregate amount of all monetary obligations of the
Pledgors under all Rate Protection Agreements entered into with any counterparty
that was a Lender at the time such Rate Protection Agreement was entered into.
"Outstanding Obligations" shall mean, at any time, the sum of (i)
the Outstanding Credit Agreement Obligations at such time and (ii) the
Outstanding Senior Note Obligations at such time.
"Outstanding Senior Note Obligations" shall mean, at any time, the
sum (without duplication) of (i) the aggregate principal amount of the
outstanding Senior Notes at such time and the aggregate amount of accrued and
unpaid interest thereon at such time and (ii) the aggregate amount of all other
monetary obligations that are accrued and owing at such time to the Senior Note
Creditors or any of them under the Indenture, the Security Documents and
Guarantees, including fees, costs, expenses, indemnities and premiums, if any.
"Permitted Investments" shall mean (i) direct obligations of the
United States of America or any agency thereof or obligations guaranteed by the
United States of America or any agency thereof; (ii) time deposit accounts,
certificates of deposit and money market deposits maturing within 180 days of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state thereof or
any foreign country recognized by the United States of America having capital,
surplus and undivided profits aggregating in excess of $250,000,000 (or the
foreign currency equivalent thereof) and whose long-term debt, or whose parent
holding company's long-term debt, is rated A (or such similar equivalent rating)
or higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act of 1933, as amended); (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above; (iv) commercial
paper, maturing not more than 180 days after the date of acquisition, issued by
a corporation (other than an affiliate of the Company) organized and in
existence under the laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time as of which
any investment therein is made of P-1 (or higher) according to Moody's,
<PAGE>
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or A-1 (or higher) according to S&P; (v) securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed by an
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least A by S&P
or A by Moody's; (vi) mutual funds whose investment guidelines restrict such
funds' investments to those satisfying the provisions of clauses (i) through (v)
above; and (vii) time deposit accounts, certificates of deposit and money market
deposits in an aggregate face amount not in excess of 1/2 of 1% of total assets
of the Issuers and the Guarantors, on a consolidated basis, as of the end of the
Company's most recently completed fiscal year.
"Reimbursement Obligations" shall have the meaning set forth in
Section 4.01.
"Required Lenders" shall mean the "Majority Banks" (as such term is
defined in the Credit Agreement).
"Required Secured Parties" shall mean the holders of Voting
Obligations representing at least a majority of the Voting Obligations.
"Secured Parties" shall mean the Administrative Agent, on behalf of
the Credit Agreement Parties, and the Indenture Trustee, on behalf of the Senior
Note Creditors, and their respective successors and permitted assigns under the
Credit Agreement or the Indenture, as the case may be.
"Senior Credit Documents" shall mean the Credit Agreement, the
Indenture and the Support Documents.
"Senior Note Collateral Account" shall have the meaning set forth in
Section 4.01.
"Senior Note Creditors" shall mean the Senior Note Holders and the
Indenture Trustee.
"Support Documents" shall mean the Master Pledge Agreement and the
Guarantee Agreements.
"Unfunded L/C Exposure" shall mean, at any time, the aggregate
undrawn amount of all outstanding Letters of Credit at such time.
"Voting Actions" shall mean all amendments and modifications to, and
waivers of any provisions of, and consents granted under this Agreement and the
Master Pledge Agreement.
"Voting Credit Agreement Obligations" shall mean, at any time
(without duplication), (i) the aggregate principal amount of the Revolving
Credit Loans outstanding at such time, (ii) the Unfunded L/C Exposure at such
time, (iii) the aggregate amount of unreimbursed disbursements under Letters of
Credit ("L/C Disbursements") and (iv) the aggregate principal amount of funds
available to the Company under the Credit Agreement at such time; provided,
however, that the amount referred to in clause (iv) above shall not include any
portion of such available amount that is not made available to the Company by
the Lenders as a result of a failure of a condition to borrowing under the
Credit Agreement, except to the extent such failure is waived by the Lenders.
"Voting Obligations" shall mean the Voting Credit Agreement
Obligations and the Voting Senior Note Obligations.
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"Voting Senior Note Obligations" shall mean, at any time, the
aggregate principal amount of the outstanding Senior Notes at such time.
SECTION 1.03. Terms Generally. The definitions in Section 1.02 shall
apply equally to both 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".
All references herein to Articles and Sections shall be deemed references to
Articles and Sections of this Agreement unless the context shall otherwise
require.
ARTICLE II
ACTS OF SECURED PARTIES; AMOUNTS OF OBLIGATIONS
SECTION 2.01. Acts of Secured Parties. Any request, demand,
authorization, direction, notice, consent, waiver or other action permitted or
required by this Agreement to be given or taken by the Secured Parties or any
portion thereof (including the Required Secured Parties and the Lead Secured
Party, as applicable) may be and, at the request of the Collateral Agent, shall
be embodied in and evidenced by one or more instruments reasonably satisfactory
in form to the Collateral Agent and signed by or on behalf of such persons and,
except as otherwise expressly provided in any such instrument, any such action
shall become effective when such instrument or instruments shall have been
delivered to the Collateral Agent. The instrument or instruments evidencing any
action (and the action embodied therein and evidenced thereby) are sometimes
referred to herein as an "Act" of the persons signing such instrument or
instruments. The Collateral Agent shall be entitled to rely absolutely upon an
Act of any Secured Party if such Act purports to be taken by or on behalf of
such Secured Party, and nothing in this Section 2.01 or elsewhere in this
Agreement shall be construed to require any Secured Party to demonstrate that it
has been authorized to take any action that it purports to be taking, the
Collateral Agent being entitled to rely conclusively, and being fully protected
in so relying, on any Act of such Secured Party.
SECTION 2.02. Determination of Amounts of Obligations. (a) Whenever
the Collateral Agent is required to determine the existence or amount of any of
the Outstanding Obligations or Voting Obligations or any portion thereof or the
existence of any Event of Default for any purposes of this Agreement, it shall
be entitled to make such determination on the basis of one or more certificates
of the Indenture Trustee (with respect to the Obligations owed to the Senior
Note Creditors) or the Administrative Agent (with respect to the Obligations
owed to the Credit Agreement Parties); provided, however, that if,
notwithstanding the request of the Collateral Agent, the Indenture Trustee or
the Administrative Agent, as applicable, shall fail or refuse within five
Business Days of such request to certify as to the existence or amount of any
Outstanding Obligations or Voting Obligations or any portion thereof owed to the
Senior Note Creditors or the Credit Agreement Parties, respectively, or the
existence of any Event of Default, the Collateral Agent shall be entitled to
determine such existence or amount by such reasonable method as the Collateral
Agent may, in its sole discretion, determine; provided, further, that, promptly
following determination of any such existence or amount, the Collateral Agent
shall notify the Indenture Trustee or the Administrative Agent, as applicable,
of such determination and thereafter shall correct any error that the Indenture
Trustee or the Administrative Agent, as applicable, brings to the attention of
the Collateral Agent. Upon any request of the Collateral Agent, the Company
shall, and by countersigning this Agreement the Company agrees to, as promptly
as practicable furnish a certificate to the Collateral Agent as to the existence
or amount of any Outstanding Obligation or Voting Obligation or as to the
existence of any Event of Default. For all purposes of this Agreement, to the
extent any Outstanding Obligation has been taken into account for purposes of
determining the amount to which any Secured Party is entitled in any
distribution
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hereunder, any guarantee of such Outstanding Obligation that is itself an
Outstanding Obligation shall not be taken into account for such purpose.
(b) Notwithstanding the foregoing provisions, each of the
Administrative Agent and the Indenture Trustee agrees to provide to the
Collateral Agent such information, reasonably available to the Administrative
Agent or the Indenture Trustee, as the case may be, as the Collateral Agent may
reasonably request for purposes of determinations to be made under this
Agreement, including information with respect to Outstanding Obligations, Voting
Obligations and matters provided for in Article IV.
SECTION 2.03. Restrictions on Actions. Each Secured Party agrees
that, as long as any Outstanding Obligations exist, the provisions of this
Agreement shall provide the exclusive method by which any Secured Party may
exercise any Enforcement under or with respect to the Master Pledge Agreement.
Therefore, each Secured Party shall, for the mutual benefit of all Secured
Parties, except as permitted under this Agreement:
(a) refrain from taking or filing any action, judicial or otherwise,
to enforce any rights or pursue any remedies under the Master Pledge
Agreement, except for delivering notices hereunder; and
(b) refrain from exercising any rights or remedies under the Master
Pledge Agreement that may be exercisable as a result of an Event of
Default;
provided, however, that the foregoing shall not prevent (i) any Secured Party
from imposing a default rate of interest in accordance with the Credit Agreement
or the Indenture, as applicable, (ii) any Secured Party from raising any
defenses in any action in which it has been made a party defendant or has been
joined as a third party, (iii) any Secured Party from exercising its rights and
remedies as a general creditor in accordance with the Senior Credit Documents
and applicable law, including the right to commence legal proceedings to collect
any Outstanding Obligation due and payable to such Secured Party and remaining
unpaid, to obtain a judgment and to enforce such judgment, in each case to the
same extent as if such Secured Party were an unsecured creditor, or (iv) any
Secured Party as a secured creditor from taking or filing any action or
exercising any rights or remedies with respect to any collateral (other than the
Pledged Securities of any Pledgor or Person whose equity interests are pledged
as collateral security under the Master Pledge Agreement).
ARTICLE III
DUTIES OF COLLATERAL AGENT
SECTION 3.01. Notices to Secured Parties. The Collateral Agent shall
promptly notify the Indenture Trustee and the Administrative Agent in the event
it shall receive any Enforcement Notice, or certificate rescinding an
Enforcement Notice or any request by any party hereto or by the Issuers, the
Parent Guarantor or the Guarantors for any consent, waiver or amendment with
respect hereto or the Master Pledge Agreement.
SECTION 3.02. Actions Under Master Pledge Agreement. (a) The
Collateral Agent shall not take any action under this Agreement or the Master
Pledge Agreement except for the performance of such duties as are specifically
set forth herein or therein.
(b) Upon the occurrence and during the continuance of an Event of
Default under the applicable Senior Credit Documents, each Secured Party shall
have the non-exclusive right to deliver an Enforcement Notice to the other
Secured Party and the Collateral Agent. For a period of 45 days after delivery
of such En-
<PAGE>
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forcement Notice, the Majority Secured Party shall have the exclusive right to
direct the Collateral Agent to commence Enforcement and, to the extent such
direction is so given, shall thereafter have the exclusive right to direct the
Collateral Agent in the management, exercise and performance of the Enforcement.
To the extent such direction is not given by such Majority Secured Party within
such 45 day period, the Minority Secured Party may direct the Collateral Agent
to commence Enforcement and shall thereafter have the exclusive right to direct
the Collateral Agent in the management, exercise and performance of the
Enforcement. Any Secured Party directing the Collateral Agent pursuant to this
Section 3.02(b) (the "Lead Secured Party") shall use reasonable judgment and
efforts to maximize the proceeds from the Enforcement for the benefit of the
Secured Parties and each holder of Outstanding Obligations and shall pursue
Enforcement in a commercially reasonable, expeditious manner. All actions by the
Collateral Agent pursuant to this Section 3.02(b) shall be subject to the
provisions of Article V and Section 7.03.
(c) Subject to the provisions of Section 3.02(b), Article V and
Section 7.03, the Collateral Agent shall take any action, including any Voting
Action, under or with respect to the Master Pledge Agreement that is requested
by the Required Secured Parties and which is not inconsistent with or contrary
to the provisions of this Agreement or the Master Pledge Agreement. The
Collateral Agent may take, but shall have no obligation to take, any and all
such actions under the Master Pledge Agreement or otherwise as it shall deem to
be in the best interests of the Secured Parties in order to maintain the
Collateral and protect and preserve the Collateral and the rights of the Secured
Parties; provided, however, that, except as provided in paragraph (d) below or
the last sentence of Section 5.03(c), in the absence of written instructions
(which may relate to the exercise of specific remedies or to the exercise of
remedies in general) from the Lead Secured Party, the Collateral Agent shall not
foreclose any Lien on the Collateral or exercise any other remedies available to
it under the Master Pledge Agreement with respect to the Collateral or any part
thereof.
(d) Notwithstanding paragraph (b) above, if the Collateral Agent has
requested instructions from the Majority Secured Party at a time when an
Enforcement Notice shall be outstanding and the Majority Secured Party has not
responded to such request within 45 days thereafter, the Collateral Agent may
request instructions from the Minority Secured Party. If the Minority Secured
Party has not responded to such request within 45 days thereafter, the
Collateral Agent may take, but shall have no obligation to take, any and all
actions under the Master Pledge Agreement, including any Enforcement, as the
Collateral Agent, in good faith, shall determine to be in the interests of the
Secured Parties and to maximize both the value of the Collateral and the present
value of the recovery by each of the Secured Parties on the Outstanding
Obligations; provided, however, that, if instructions are thereafter received
from the Lead Secured Party, then the actions of the Collateral Agent shall be
subject to paragraph (b) above.
SECTION 3.03. Meetings; Voting. (a) When the Collateral Agent
receives an Enforcement Notice, the Collateral Agent shall give prompt notice
thereof to the Administrative Agent and Indenture Trustee and, upon the request
of the Administrative Agent or the Indenture Trustee, shall schedule a meeting
of all Secured Parties to be held at the offices of the Collateral Agent, or
another location in New York, New York specified by the Collateral Agent, and
any Secured Party may participate via telephone. Without limiting Section
3.02(b), at such meeting the Secured Parties shall consult with one another in
an attempt to determine a mutually acceptable course of conduct regarding the
Issuers and the Subsidiaries, the collection of the Outstanding Obligations and
the exercise of rights and remedies under the Master Pledge Agreement.
(b) The Collateral Agent shall notify the Administrative Agent and
the Indenture Trustee whenever it is necessary to take any Voting Action. Upon
receipt of such notice, the Administrative Agent and the Indenture Trustee, as
applicable, shall (i) notify each Credit Agreement Party and Senior Note
Creditor entitled to participate in such proposed Voting Action, (ii) collect
instructions from such Credit Agreement Parties and Senior Note Creditors
regarding such Voting Action and (iii) notify all Credit Agreement Parties and
Senior
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Note Creditors of the results of such Voting Action. Nothing in this Section
3.03(b) shall be construed to limit the Lead Secured Party's rights pursuant to
Section 3.02(b).
SECTION 3.04. Records. The Collateral Agent shall maintain records
regarding Voting Actions, determinations of the amounts of the Outstanding
Obligations and Voting Obligations for any purpose, the allocation of deposits
to the Collateral Accounts and any distributions therefrom. The information
contained in such records shall be made available to any Secured Party upon
request.
ARTICLE IV
PROCEEDS RECEIVED UNDER THE MASTER PLEDGE AGREEMENT
SECTION 4.01. Collateral Accounts. (a) The Collateral Agent shall
establish and maintain at its principal banking office in New York City three
accounts into which it shall (except as otherwise explicitly provided in the
Master Pledge Agreement) deposit all amounts received by it in its capacity as
Collateral Agent (and not in any other capacity) in respect of the Collateral
upon an Event of Default, including all monies received on account of any sale
of or other realization upon any of the Collateral pursuant to the Master Pledge
Agreement. One of the three accounts referred to in the preceding sentence shall
be established and maintained for the benefit of the Credit Agreement Parties in
respect of the Outstanding Credit Agreement Obligations (the "Credit Agreement
Collateral Account"), the second account shall be established and maintained for
the benefit of the Senior Note Creditors (the "Senior Note Collateral Account")
and the third such account shall be established and maintained for the benefit
of the L/C Parties (the "Letter of Credit Collateral Account" and, together with
the Credit Agreement Collateral Account and the Senior Note Collateral Account,
the "Collateral Accounts"). All amounts deposited in the respective Collateral
Accounts shall be held by the Collateral Agent subject to the terms hereof and
of the Master Pledge Agreement, it being understood that any such amounts may be
released to the Issuers to the extent required by the Master Pledge Agreement
(any amounts so released to be released from the respective Collateral Accounts
pro rata in accordance with the aggregate amounts deposited in such accounts
during the term of this Agreement; provided, however, that the aggregate amounts
deposited in the Letter of Credit Collateral Account shall be deemed to have
been reduced by any amounts released from such Account pursuant to paragraph (d)
below). None of the Issuers or the Guarantors shall have any rights with respect
to, and the Collateral Agent shall have exclusive dominion and control over, the
Collateral Accounts.
(b) Except as set forth in paragraphs (d) and (g) below, all amounts
that the Collateral Agent is required at any time to deposit in the respective
Collateral Accounts pursuant to paragraph (a) above shall be allocated as among,
and deposited in, the Credit Agreement Collateral Account and the Senior Note
Collateral Account pro rata in accordance with the aggregate amount of
Outstanding Credit Agreement Obligations and Outstanding Senior Note
Obligations.
(c) The Collateral Agent shall establish sub-accounts in the Letter
of Credit Collateral Account with respect to each outstanding Letter of Credit.
All amounts deposited in the Letter of Credit Collateral Account shall be
allocated among, and deposited in, the respective sub-accounts therein pro rata
in accordance with the Unfunded L/C Exposure with respect to the related Letters
of Credit. If, on or after the date on which any funds are deposited in the
Letter of Credit Collateral Account pursuant to paragraph (b) above, any Letter
of Credit is drawn upon by the beneficiary thereof, the Collateral Agent shall,
upon the written request of the Administrative Agent, apply any funds in the
sub-account with respect to such Letter of Credit to the reimbursement of such
L/C Disbursement as if such reimbursement were being made by the Borrowers
pursuant to the Credit
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Agreement (but not in an amount in excess of the amount of such drawing plus
accrued and unpaid interest thereon from the date of draw to the date of
payment).
(d) At the time of any expiration or cancellation of any outstanding
Letter of Credit, or any other reduction in the amount of Unfunded L/C Exposure
thereunder (other than as a result of an L/C Disbursement), the amount of funds
in the sub-account with respect to such Letter of Credit (or, in the case of any
partial reduction in the amount of Unfunded L/C Exposure thereunder, a pro rata
portion of such funds) shall be released from such sub-account, and the funds so
released shall be allocated among, and deposited in, the Credit Agreement
Collateral Account, the Senior Note Collateral Account and the Letter of Credit
Collateral Account pro rata in accordance with the aggregate amount of the
Outstanding Credit Agreement Obligations, Outstanding Senior Note Obligations
and Unfunded L/C Exposure, respectively, at such time.
(e) The Collateral Agent shall have the right at any time and from
time to time to apply any amounts in the Collateral Accounts to the payment of
the reasonable out-of-pocket costs and expenses (including disbursements and, in
the case of the Collateral Agent, reasonable attorney fees) incurred by the
Collateral Agent, the Administrative Agent and the Indenture Trustee in
administering and carrying out their respective obligations under this Agreement
or the Master Pledge Agreement, in exercising or attempting to exercise any
right or remedy hereunder or thereunder or in taking possession of, protecting,
preserving or disposing of any item of Collateral, and all amounts against or
for which the Collateral Agent, the Administrative Agent and the Indenture
Trustee is to be indemnified or reimbursed hereunder (excluding any such costs,
expenses or amounts that have theretofore been reimbursed) until all of such
costs, expenses and amounts have been paid in full; provided, however, that any
such application shall be allocated as among the Credit Agreement Collateral
Account, the Letter of Credit Collateral Account (provided that the aggregate
amounts deposited in the Letter of Credit Collateral Account shall be deemed to
have been reduced by any amounts released from such Account pursuant to
paragraph (d) above) and the Senior Note Collateral Account ratably in
accordance with the aggregate amounts deposited in such Accounts during the term
of this Agreement. The Collateral Agent shall reimburse any Credit Agreement
Creditor or Senior Note Creditor, as the case may be, prior to applying any
amounts in the Collateral Accounts pursuant to Section 4.02 for any and all
losses with respect to any amounts expended with respect to any indemnity
provided in accordance with Section 5.03(d) by such Credit Agreement Creditor or
Senior Note Creditor by application of funds in the Collateral Accounts in the
same manner as provided in the proviso to the preceding sentence.
(f) For purposes of determining allocations and deposits of funds
(but not distributions of funds) pursuant to this Section 4.01 and Section 4.02,
any Outstanding Obligations shall be deemed to be reduced by the amount, if any,
held by the Collateral Agent in the Collateral Account (or sub-account therein)
from which distributions are to be paid in respect of such Outstanding
Obligations.
(g) If, at any time that the Collateral Agent receives any amounts
to be deposited in the Collateral Accounts, any portion of the Outstanding
Obligations consists of out-of-pocket costs and expenses (including attorney
fees and disbursements) or other claims in respect of any indemnification or
expense reimbursement obligations of any of the Parent Guarantor, the Company or
the Subsidiaries under any of the Senior Credit Documents (collectively,
"Reimbursement Obligations"), then, prior to allocating such amounts among the
Collateral Accounts, the Collateral Agent shall, to the extent it shall have
received notice of such Reimbursement Obligations, apply such amounts to pay
such Reimbursement Obligations (pro rata among such Reimbursement Obligations,
in the event that the amount to be so applied is insufficient to pay all such
Reimbursement Obligations in full); provided, however, that the aggregate
cumulative amount applied pursuant to this paragraph (g) to pay Reimbursement
Obligations to Secured Parties (other than the Collateral Agent or otherwise in
respect of amounts referred to in paragraph (e) above) shall not exceed
$2,000,000.
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SECTION 4.02. Application of Proceeds. (a) Amounts deposited in the
Credit Agreement Collateral Account shall be applied in the following order of
priority:
First, to the payment of all Outstanding Credit Agreement
Obligations that consist of costs and expenses incurred in connection with
the enforcement or protection of the rights of the Credit Agreement
Parties and other fees and expenses of the Administrative Agent;
Second, to the Credit Agreement Parties in respect of the
Outstanding Credit Agreement Obligations pro rata in accordance with the
aggregate amounts of the Outstanding Credit Agreement Obligations at such
time, until the Outstanding Credit Agreement Obligations shall have been
paid in full;
Third, if there is any Unfunded L/C Exposure to the Letter of Credit
Collateral Account in an amount equal to such Unfunded L/C Exposure;
Fourth, if there are any Outstanding Senior Note Obligations to the
Senior Note Collateral Account in an amount equal to such outstanding
Senior Note Obligations; and
Fifth, the balance, if any, to the Company or such other person or
persons as shall be entitled thereto.
(b) Amounts deposited in the Senior Note Collateral Account shall be
applied in the following order of priority:
First, to the payment of all Outstanding Senior Note Obligations
that consist of costs and expenses incurred in connection with the
enforcement or protection of the rights of the Senior Note Creditors and
other fees and expenses of the Indenture Trustee;
Second, to the Senior Note Creditors pro rata in accordance with the
aggregate amounts of the Outstanding Senior Note Obligations at such time,
until the Outstanding Senior Note Obligations shall have been paid in
full;
Third, if there are any Outstanding Credit Agreement Obligations (or
if the Lenders shall have any remaining commitments to lend under the
Credit Agreement), or if there is any Unfunded L/C Exposure (or if the
Lenders shall have any remaining commitments to participate in the
issuance of Letters of Credit), to the Credit Agreement Collateral Account
and the Letter of Credit Collateral Account pro rata in accordance with
the respective amounts of such Outstanding Obligations; and
Fourth, the balance, if any, to the Company or such other person or
persons as shall be entitled thereto.
(c) All amounts deposited in any sub-account in the Letter of Credit
Collateral Account shall be applied as provided in Sections 4.01(c) and (d).
(d) Each Secured Party agrees that, notwithstanding any provision of
this Agreement or the other Senior Credit Documents, any sums and amounts
received by such Secured Party pursuant to this Section 4.02 shall be applied to
the payment of its Outstanding Obligations as follows: first, to the payment of
all Outstanding Obligations owed to such Secured Party, other than principal,
premium, interest and obligations in respect of reimbursement of L/C
Disbursements; second, to the payment of all Outstanding Obligations owed to
such Secured Party consisting of accrued interest; and third, to the payment of
all Outstanding Obligations owed
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to such Secured Party consisting of principal, premium and obligations in
respect of reimbursement of L/C Disbursements.
SECTION 4.03. Time of Payments. Unless the Collateral Agent shall
have received written instructions from the Required Secured Parties as to the
times at which any amounts are to be distributed pursuant to Section 4.02, all
distributions under Section 4.02 shall be made at such times and as promptly as
the Collateral Agent shall determine to be reasonable and practicable under the
circumstances, subject to Section 4.04; provided, however, that any
distributions from the Credit Agreement Collateral Account and the Senior Note
Collateral Account shall be made substantially simultaneously.
SECTION 4.04. Application of Amounts Not Distributable. If the
Administrative Agent or Indenture Trustee shall inform the Collateral Agent that
there is no provision under the Credit Agreement or the Indenture, as the case
may be, for the application of amounts that are to be distributed to the parties
to the Credit Agreement or the Indenture pursuant to Section 4.02 (whether by
virtue of the applicable Outstanding Obligations thereunder not being then due
and payable or otherwise) or for the holding of such amounts by or on behalf of
such parties pending application thereof, then the Collateral Agent shall invest
the amounts in the applicable Collateral Account in investments permitted by
Section 4.05 and shall hold such amounts and all proceeds of such investments in
such Collateral Account for the benefit of such Secured Party until the
Administrative Agent or Indenture Trustee, as the case may be, shall request the
delivery thereof by the Collateral Agent for application against such
Outstanding Obligations or shall notify the Collateral Agent that such
Outstanding Obligations have been paid in full.
SECTION 4.05. Investment of Amounts in Collateral Accounts. Pending
the disbursement thereof pursuant to the terms of this Agreement, all amounts in
the Collateral Accounts shall (to the extent the Collateral Agent deems
practical) be invested by the Collateral Agent in Permitted Investments. The
Collateral Agent shall, to the extent that the timing of distributions to be
made from any Collateral Account is known or can be reasonably anticipated,
select Permitted Investments for such Collateral Account that mature prior to
the anticipated date of any distribution to be made from such Collateral
Account. The Collateral Agent shall not discriminate between Collateral Accounts
in the selection of Permitted Investments; provided, however, that the foregoing
shall not be construed to prevent the selection of longer-term investments for
the Letter of Credit Collateral Account if distributions from such Account are
expected to be made at a later date than distributions from the other Collateral
Accounts and the Administrative Agent has notified the Collateral Agent of such
later distribution. The Collateral Agent shall not be liable for any loss
resulting from any investment made in accordance with the provisions of this
Section 4.05, except to the extent such loss was the result of the Collateral
Agent's gross negligence or willful misconduct.
ARTICLE V
CONCERNING THE COLLATERAL AGENT
SECTION 5.01. Appointment of Collateral Agent. Each of the Secured
Parties appoints United States Trust Company of New York to act as Collateral
Agent pursuant to the terms of the Master Pledge Agreement and this Agreement
and authorizes the Collateral Agent to execute the Master Pledge Agreement in
the name of and for the benefit of the Secured Parties, and United States Trust
Company of New York agrees to act as Collateral Agent for such Secured Parties,
pursuant to the terms of the Master Pledge Agreement and this Agreement.
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SECTION 5.02. Limitations on Responsibility of Collateral Agent. The
Collateral Agent shall not be responsible in any manner whatsoever for the
correctness of any recitals, statements, representations or warranties contained
herein or in any other Senior Credit Document, except for those expressly made
by it herein or therein. The Collateral Agent makes no representation as to the
value or condition of the Collateral or any part thereof, as to the title of the
Pledgors in and to the Collateral, as to the security afforded by this Agreement
or the Master Pledge Agreement or, except as expressly set forth in Article VI,
as to the validity, execution, enforceability, legality or sufficiency of this
Agreement or any other Senior Credit Document, and the Collateral Agent shall
incur no liability or responsibility in respect of any such matters. The
Collateral Agent shall not be responsible for insuring the Collateral, for the
payment of taxes, charges, assessments or liens upon the Collateral or otherwise
as to the maintenance of the Collateral, except as provided in the immediately
following sentence when the Collateral Agent has possession of the Collateral.
The Collateral Agent shall have no duty to any of the Issuers, the Guarantors or
the Secured Parties as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of the Collateral Agent or any
income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto, except the duty to accord such of the
Collateral as may be in its possession or control substantially the same care as
it accords its own assets and the duty to account for monies received by it. The
Collateral Agent shall not be required to ascertain or inquire as to the
performance by any of the Issuers or the Guarantors of any of the covenants or
agreements contained herein or in the other Senior Credit Documents. Neither the
Collateral Agent nor any agent thereof shall be liable for any action taken or
omitted to be taken by any such person in connection with this Agreement or the
Master Pledge Agreement except for its or such person's own gross negligence or
willful misconduct. Neither the Collateral Agent nor any agent thereof shall be
liable for any action taken by it or any such person in accordance with any
notice given by the requisite number of Secured Parties hereunder entitled to
give such notice, even if, at the time such action is taken by it or any such
person, the Secured Parties that gave the notice to take such action are no
longer Secured Parties and the Collateral Agent has not received written notice
of such fact. The Collateral Agent may execute any of the powers granted under
this Agreement or the Master Pledge Agreement and perform any duty hereunder or
thereunder either directly or by or through agents or attorneys-in-fact, and
shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care and without gross
negligence or willful misconduct.
SECTION 5.03. Reliance by Collateral Agent; Indemnity Against
Liabilities; etc. (a) The Collateral Agent may consult with counsel and shall be
fully protected in taking any action hereunder in good faith in accordance with
any advice of such counsel to the extent the Collateral Agent exercised
reasonable care in good faith in the selection of such counsel and such advice
or opinion is within the scope of such counsel's professional competence. The
Collateral Agent shall have the right but not the obligation at any time to seek
instructions concerning the administration of this Agreement, the duties created
hereunder or the Collateral from any court of competent jurisdiction.
(b) The Collateral Agent shall be fully protected in relying upon
any resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order or other paper or document that it reasonably believes
to be genuine and to have been signed or presented by the proper party or
parties. In the absence of its gross negligence or willful misconduct or actual
notice to the contrary, the Collateral Agent may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any certificate or opinions furnished to the Collateral Agent pursuant to
this Agreement.
(c) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect notice or knowledge of the occurrence of any
Event of Default unless and until the Collateral Agent shall have received an
Enforcement Notice or a notice from any of the Issuers or the Guarantors to the
Collateral Agent in its capacity as Collateral Agent indicating that an Event of
Default has occurred. The Collateral Agent shall have no obligation whatsoever
either prior to or after receiving such a notice to inquire whether an Event of
Default
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has, in fact, occurred and shall be entitled to rely conclusively, and shall be
fully protected in so relying, on any notice so furnished to it. The Collateral
Agent may (but shall not be obligated to) take action hereunder on the basis of
an Event of Default of the type specified in Section 13.1(g) or (h) of the
Credit Agreement or clause (k) or (1) of Section 6.1 of the Indenture,
regardless of whether the Collateral Agent has received an Enforcement Notice;
provided, however, that any such action taken by the Collateral Agent without
direction from the Required Secured Parties or Lead Secured Party, as
applicable, shall be limited to actions that the Collateral Agent determines to
be necessary to protect and preserve the Collateral and the rights of the
Secured Parties.
(d) If the Collateral Agent has been requested to take any specific
action pursuant to any provision of this Agreement, the Collateral Agent shall
not be under any obligation to exercise any of the rights or powers vested in it
by this Agreement in the manner so requested unless it shall have been provided
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by it in compliance with such request or direction.
SECTION 5.04. Resignation of the Collateral Agent. The Collateral
Agent may at any time, by giving 30 days' prior written notice to the Issuers
and each Secured Party, resign and be discharged from the responsibilities
hereby created, such resignation to become effective upon the earlier of (i) the
acceptance of the appointment of a successor pursuant to the next sentence of
this Section 5.04 or (ii) the appointment of a successor by the Required Secured
Parties (or, if a Co-Collateral Agent has been appointed pursuant to Section
5.06, then by the holders of a majority of the Voting Senior Note Obligations)
and the acceptance of such appointment by such successor. If no successor shall
be appointed and approved pursuant to clause (ii) above within 30 days after the
date of any such resignation, the Collateral Agent may apply to any court of
competent jurisdiction to appoint a successor to act until a successor shall
have been appointed by the Required Secured Parties (or the holders of a
majority of the Voting Senior Note Obligations, as applicable) as above provided
or may, on behalf of the Secured Parties, appoint a successor Collateral Agent.
Any successor Collateral Agent shall be a bank with an office in New York, New
York, having a combined capital and surplus of at least $500,000,000 that is
authorized to perform the functions of the Collateral Agent hereunder.
SECTION 5.05. Expenses and Indemnification by Issuers. By
countersigning this Agreement, the Issuers agree (i) to reimburse each of the
Collateral Agent, the Administrative Agent and the Indenture Trustee, on demand,
for any reasonable expenses incurred by such person, including reasonable (1)
counsel fees, (2) other charges and (3) disbursements and compensation of
agents, arising out of, in any way connected with, or as a result of, the
execution or delivery of this Agreement or the Master Pledge Agreement or any
agreement or instrument contemplated hereby or thereby or the performance by the
parties hereto or thereto of their respective obligations hereunder or
thereunder or in connection with the enforcement or protection of the rights of
the Collateral Agent, the Administrative Agent and the Indenture Trustee and the
Secured Parties under this Agreement and the Master Pledge Agreement and (ii) to
indemnify and hold harmless the Collateral Agent, the Administrative Agent and
the Indenture Trustee and each of their respective directors, officers,
employees and agents (each such person being called an "Indemnitee"), on demand,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Collateral Agent, the Administrative Agent and the Indenture Trustee
in their respective capacities or any of them in any way relating to or arising
out of this Agreement or the Master Pledge Agreement or any action taken or
omitted by them under this Agreement or the Master Pledge Agreement; provided,
however, that the Issuers shall not be liable to any Indemnitee for any such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent they are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee.
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SECTION 5.06. Co-Collateral Agent. (a) If an Event of Default has
occurred, the Required Lenders may, by notice to the Collateral Agent, appoint a
co-collateral agent (a "Co-Collateral Agent"), which shall be an institution
that would otherwise qualify as a successor Collateral Agent. Except as set
forth below, any Co-Collateral Agent so appointed shall have all the rights,
powers, duties and obligations of the Collateral Agent. Upon the appointment of
a Co-Collateral Agent, except as expressly provided below, all rights, powers,
duties and obligations of the Collateral Agent hereunder shall be exercised and
performed jointly by the Collateral Agent and the Co-Collateral Agent (or by one
of such Agents with the consent of the other). The Collateral Agent shall
execute and deliver all such instruments and agreements as shall be necessary or
proper to provide to any Co-Collateral Agent joint rights and powers with
respect to the Collateral.
(b) Any Co-Collateral Agent shall, to the extent permitted by law,
be appointed and act as such, subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred upon the
Collateral Agent in respect of the custody, control and management of
moneys, papers or securities shall be exercised solely by the Collateral
Agent; and
(ii) all other rights, powers, duties and obligations conferred upon
the Collateral Agent or the Co-Collateral Agent shall be exercised jointly
by the Co-Collateral Agent and the Collateral Agent (or by one of such
Agents with the consent of the other).
(c) Neither the Collateral Agent nor the Co-Collateral Agent shall
be liable by reason of any act or omission of the other.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Each of the Collateral Agent, the Administrative Agent and the
Indenture Trustee represents and warrants to the other parties hereto that (i)
the execution, delivery and performance of this Agreement (1) have been duly
authorized by all requisite corporate action on its part and (2) will not
contravene any provision of its charter or by-laws or any order of any court or
other Governmental Authority having applicability to it or any applicable law
and (ii) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation.
The Collateral Agent represents and warrants to the Secured Parties
that:
(a) the Collateral Agent is a bank and trust company duly organized
under the laws of the State of New York, and has all requisite corporate
power and authority to enter into and perform its obligations under the
Master Pledge Agreement;
(b) the execution, delivery and performance by the Collateral Agent
of the Master Pledge Agreement to which it is a party have been duly and
validly authorized by all necessary corporate action on the part of the
Collateral Agent;
(c) neither the execution and delivery by the Collateral Agent of
the Master Pledge Agreement nor the consummation of the transactions
contemplated hereby or thereby, nor the compliance by the
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Collateral Agent with any of the respective terms or provisions hereof or
thereof, nor the performance by the Collateral Agent of its obligations
hereunder or thereunder, will contravene the charter or by-laws of the
Collateral Agent or any law, judgment, rule, regulation or order of the
United States of America or the State of New York regulating the banking
or trust business of the Collateral Agent;
(d) no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental or public body
or authority of the United Sates or of the State of New York is required
to be obtained by the Collateral Agent for its execution and delivery by
the Collateral Agent of this Agreement or the Master Pledge Agreement; and
(e) the Master Pledge Agreement has been duly executed and delivered
by a duly authorized officer of the Collateral Agent and constitutes the
legal, valid and binding obligation of the Collateral Agent.
ARTICLE VII
INTERCREDITOR ARRANGEMENTS
SECTION 7.01. Security Interests. The Collateral Agent and each of
the Secured Parties hereby agree that the liens and security interests granted
to the Collateral Agent under the Master Pledge Agreement shall be treated, as
among the Secured Parties, as having equal priority and shall at all times be
shared by the Secured Parties as provided herein. Nothing contained in this
Agreement shall be construed to affect any of the Secured Parties' rights with
respect to any collateral other than the Collateral.
SECTION 7.02. Turnover of Collateral and Certain Payments. If any
Secured Party acquires custody, control or possession of any Collateral or
proceeds therefrom other than pursuant to the terms of this Agreement, then such
Secured Party shall promptly cause such Collateral, proceeds or payments to be
delivered to or put in the custody, possession or control of the Collateral
Agent for disposition or distribution in accordance with the provisions of
Sections 4.01 and 4.02. Until such time as the provisions of the immediately
preceding sentence have been complied with, such Secured Party shall be deemed
to hold such Collateral, proceeds or payments in trust for the parties entitled
thereto hereunder. Notwithstanding the foregoing, no Secured Party shall be
required to deliver to or put in the custody, possession or control of the
Collateral Agent or to hold in trust as specified in the preceding sentence any
amount of any Outstanding Obligation paid or prepaid by the Issuers to it (and
not obtained by it through any sale of or other realization upon any Collateral
or by enforcement of its rights as provided herein and in the Master Pledge
Agreement) in accordance with the terms of the Credit Agreement or the
Indenture, as applicable.
SECTION 7.03. Release of Collateral. (a) Upon the satisfaction of
the provisions of the Credit Agreement and the Indenture that permit any
Collateral to be released, such Collateral shall be released upon the receipt of
evidence required by the Credit Agreement and the Indenture and satisfactory to
the Collateral Agent that such provisions have been satisfied in full (and, if
such release is made in connection with the sale, transfer or other disposition
of the Collateral, the proceeds of such transaction have been or will be applied
to repay or prepay Outstanding Obligations to the extent required by the Credit
Agreement and the Indenture).
(b) Collateral may be released in connection with the exercise of
any rights, powers or remedies by the Collateral Agent pursuant to and in
accordance with Section 3.02 and such release shall not require any approval
under this Section 7.03.
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(c) The Secured Parties hereby authorize the Collateral Agent to
execute releases and other documents in form and substance satisfactory to the
Collateral Agent in respect of any release of Collateral permitted under this
Section 7.03.
SECTION 7.04. Purchase of Collateral. Any Secured Party may purchase
Collateral at any public sale of such Collateral pursuant to the Master Pledge
Agreement and may make payment on account thereof by using any Outstanding
Obligation then due and payable to such Secured Party from the person that
granted a security interest in such Collateral as a credit against the purchase
price to the extent, but only to the extent, approved by the Required Lenders
and holders of a majority of the Voting Senior Note Obligations.
SECTION 7.05. Further Assurances, etc. Each party hereto shall
execute and deliver such other documents and instruments, in form and substance
reasonably satisfactory to the other parties hereto, and shall take such other
actions, in each case as any other party hereto may reasonably have requested
(at the cost and expense of the Issuers which, by countersigning this Agreement,
agree to pay such costs and expenses), to effectuate and carry out the
provisions of this Agreement, including by recording or filing in such places as
the requesting party may deem reasonably necessary, this Agreement or such other
documents or instruments.
ARTICLE VIII
APPROVAL BY THE ISSUERS AND GUARANTORS
By countersigning the Agreement, each of the Issuers and the
Guarantors although not a party hereto, acknowledges and consents to and agrees
to perform and be bound by the provisions hereof.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. No Individual Action. No Secured Party may require the
Collateral Agent to take or refrain from taking any action hereunder or under
the Master Pledge Agreement or with respect to any of the Collateral except as
and to the extent expressly set forth in this Agreement.
SECTION 9.02. Successors and Assigns. (a) This Agreement shall be
binding on and inure to the benefit of the Collateral Agent, each of the Secured
Parties and their respective successors and permitted assigns (including any
assignee of any Lender in accordance with the Credit Agreement and the holders
from time to time of the Senior Notes); provided, however, that, except as
provided in the next sentence, no Credit Agreement Creditor or Senior Note
Creditor may assign its rights or obligations hereunder. The rights and
obligations of any Credit Agreement Creditor or Senior Note Creditor under this
Agreement shall be assigned automatically, without the need for the execution of
any document or any other action, to, and the term "Credit Agreement Creditor"
or "Senior Note Creditor" as used in this Agreement shall include, any assignee,
transferee or successor of such Secured Party under the Credit Agreement or the
Indenture, as the case may be, in accordance with the terms of and upon the
effectiveness of an assignment pursuant to Section 19 of the Credit Agreement or
a transfer of Senior Notes pursuant to Section 2.6 of the Indenture. Except as
specifically set forth above and in paragraph (b) below, this Agreement is not
intended to confer any benefit on, or create any obligation of the Collateral
Agent or any Secured Party to, any of the Issuers or the Guarantors or any third
party.
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(b) The provisions of Section 7.03 (and the provisions of this
paragraph (b) and clause (c) of Section 9.06) are intended to confer a benefit
upon the Issuers and the Guarantors shall be enforceable by the Issuers and the
Guarantors.
SECTION 9.03. Notices. 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 provided
in Section 5.01 of the Master Pledge Agreement. 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
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 9.03 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.03.
SECTION 9.04. Termination. (a) This Agreement shall terminate
automatically upon the indefeasible payment in full of the Outstanding Credit
Agreement Obligations or the Outstanding Senior Note Obligations; provided,
however, that (i) Articles I, II, III, IV, V, VIII and IX, and Sections 7.01,
7.02 and 7.03, shall survive, and remain operative and in full force and effect,
as long as there are any Outstanding Obligations that are secured by the Master
Pledge Agreement and (ii) this Section 9.04 and Sections 5.05, 5.06 and 9.05 of
this Agreement shall survive, and remain operative and in full force and effect,
regardless of the termination of this Agreement.
SECTION 9.05. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.06. Modification of Agreement. No modification or
amendment of any provision of this Agreement shall in any event be effective
unless the same shall be in writing and signed by or on behalf of the Required
Lenders and holders of a majority of the Voting Senior Note Obligations;
provided, however, that (i) no such modification or amendment shall adversely
affect any of the Collateral Agent's rights, immunities or rights to
indemnification hereunder or under the Master Pledge Agreement or expand its
duties hereunder or under the Master Pledge Agreement, without the prior written
consent of the Collateral Agent, (ii) no such modification or amendment shall
modify any provision hereof that is intended to provide for the equal and
ratable security of all Outstanding Obligations without the prior written
consent of all Secured Parties, (iii) no such modification or amendment shall be
made to Section 5.05 or 7.03 or to the definition of the term "Required Secured
Parties" for purposes of such Sections, or to Section 9.02(b) or to this clause
(iii), without the prior written consent of the Issuers, the Parent Guarantor
and the Guarantors and (iv) no such modification or amendment shall change the
definition of the term "Required Secured Parties" or this Section or Sections
7.02 or 7.03 without the prior written consent of all Secured Parties. No waiver
of any provision of this Agreement and no consent to any departure by any party
hereto from the provisions hereof shall be effective unless such waiver or
consent shall be set forth in a written instrument executed by the party against
which it is sought to be enforced, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any party hereto in any case shall entitle such party to
any other or further notice or demand in the same, similar or other
circumstances.
SECTION 9.07. Waiver of Rights. Neither any failure nor any delay on
the part of any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, and a single or partial exercise
thereof shall not preclude any other or further exercise or the exercise of any
other right, power or privilege.
<PAGE>
-18-
SECTION 9.08. Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties hereto 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 9.09. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.10. Section Headings. The Article and Section headings
used herein are for convenience of reference only and are not to affect the
construction of or be taken into consideration in interpreting this Agreement.
SECTION 9.11. Complete Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior representations, negotiations, writings,
memoranda and agreements. To the extent any provision of this Agreement
conflicts with any other Senior Credit Document, the provisions of this
Agreement shall be controlling, except as otherwise required by law.
<PAGE>
-19-
IN WITNESS WHEREOF, the Collateral Agent, the Administrative Agent
and the Indenture Trustee have caused this Agreement to be duly executed by
their duly authorized officers, all as of the day and year first above written.
UNITED STATES TRUST COMPANY OF NEW YORK,
as Collateral Agent
By:_____________________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Indenture Trustee
By:_____________________________________
Name:
Title:
BANKBOSTON, N.A.,as Administrative Agent
By:_____________________________________
Name:
Title:
ACCEPTED AND AGREED:
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC,
By: ___________________________________
Name:
Title:
RTI CAPITAL CORP.
By: ___________________________________
Name:
Title:
<PAGE>
-20-
REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC,
By: ___________________________________
Name:
Title:
BLISS & LAUGHLIN, LLC
By: ___________________________________
Name:
Title:
CANADIAN DRAWN STEEL COMPANY INC.
By: ___________________________________
Name:
Title:
NIMISHILLEN & TUSCARAWAS, LLC
By: ___________________________________
Name:
Title:
<PAGE>
REVOLVING CREDIT AGREEMENT
by and among
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
BANKBOSTON, N.A.
as Administrative Agent and Co-Book Manager
BANK OF AMERICA, N.A.
as Syndication Agent and Co-Book Manager
and
THE CHASE MANHATTAN BANK
as Documentation Agent and Co-Book Manager
and the Lending Institutions listed on Schedule 1 hereto
as Banks
with
BANCBOSTON ROBERTSON STEPHENS INC.
and
BANK OF AMERICA, N.A.,
as Co-Arrangers
August 13, 1999
<PAGE>
TABLE OF CONTENTS
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.............................1
Section 1.1. Definitions...................................................1
Section 1.2. Rules of Interpretation......................................27
Section 2. THE REVOLVING CREDIT FACILITY......................................28
Section 2.1. Commitment to Lend...........................................28
Section 2.2. Commitment Fee...............................................29
Section 2.3. Reduction of Total Commitment................................29
Section 2.4. The Revolving Credit Notes...................................29
Section 2.5. Interest on Revolving Credit Loans...........................30
Section 2.6. Requests for Revolving Credit Loans..........................30
2.6.1. General........................................................30
2.6.2. Swing Line.....................................................30
Section 2.7. Conversion Options...........................................31
2.7.1. Conversion to Different Type of Revolving Credit Loan..........31
2.7.2. Continuation of Type of Revolving Credit Loan..................31
2.7.3. Eurodollar Rate Loans..........................................32
Section 2.8. Funds for Revolving Credit Loan..............................32
2.8.1. Funding Procedures.............................................32
2.8.2. Advances by Agent..............................................32
2.8.3. Settlements....................................................33
2.8.3.1. General..................................................33
2.8.3.2. Failure to Make Funds Available..........................33
2.8.3.3. No Effect on Other Banks.................................34
Section 2.9. Change in Borrowing Base.....................................34
Section 2.10. Canadian Subfacility........................................34
Section 3. REPAYMENT OF THE REVOLVING CREDIT LOANS............................34
Section 3.1. Maturity.....................................................34
Section 3.2. Mandatory Repayments of Revolving Credit Loans...............34
Section 3.3. Optional Repayments of Revolving Credit Loans................36
Section 3.4. Automatic Repayments of Revolving Credit Loans Prior
to Event of Default...........................................................37
3.4.1. Credit for Funds Transferred from Swept Accounts...............37
3.4.2. Application of Automatic Payments Prior to Event of Default....37
Section 3.5. Automatic Repayments of Revolving Credit Loans After
Event of Default..............................................................38
Section 4. LETTERS OF CREDIT..................................................38
Section 4.1. Letter of Credit Commitments.................................38
4.1.1. Commitment to Issue Letters of Credit..........................38
4.1.2. Letter of Credit Applications..................................39
4.1.3. Terms of Letters of Credit.....................................39
4.1.4. Reimbursement Obligations of Banks.............................39
4.1.5. Participation of Banks.........................................39
Section 4.2. Reimbursement Obligation of the Borrower.......................39
Section 4.3. Letter of Credit Payments......................................40
Section 4.4. Obligations Absolute...........................................41
Section 4.5. Reliance by Issuer.............................................41
Section 4.6. Letter of Credit Fee...........................................42
Section 5. CERTAIN GENERAL PROVISIONS.........................................42
<PAGE>
-ii-
Section 5.1. Fees.........................................................42
Section 5.2. Funds for Payments...........................................42
5.2.1. Payments to Agent..............................................42
5.2.2. No Offset, Etc.................................................42
Section 5.3. Computations.................................................44
Section 5.4. Inability to Determine Eurodollar Rate.......................44
Section 5.5. Illegality...................................................45
Section 5.6. Additional Costs, Etc........................................45
Section 5.7. Capital Adequacy.............................................46
Section 5.8. Certificate..................................................47
Section 5.9. Indemnity....................................................47
Section 5.10. Interest After Default......................................47
5.10.1. Overdue Amounts...............................................47
5.10.2. Amounts Not Overdue...........................................47
5.10.3. Maximum Interest..............................................47
5.11. Replacement Banks...................................................48
Section 6. SECURITY AND GUARANTY..............................................48
Section 6.1. Collateral Security..........................................48
Section 6.2. Guaranty.....................................................49
Section 6.2.1. Guaranty of Payment and Performance......................49
Section 6.2.2. Guarantors' Agreement to Pay Enforcement Costs, etc......49
Section 6.2.3. Waivers by Guarantors; Bank's Freedom to Act.............50
Section 6.2.4. Unenforceability of Obligations Against Borrower.........51
6.2.5. Subrogation; Subordination.....................................51
6.2.5.1. Waiver of Rights Against Borrower........................51
6.2.5.2. Subordination............................................51
6.2.5.3. Provisions Supplemental..................................51
6.2.6. Setoff.........................................................52
6.2.7. Further Assurances.............................................52
6.2.8. Termination; Reinstatement.....................................52
6.2.9. Successors and Assigns.........................................52
Section 7. REPRESENTATIONS AND WARRANTIES.....................................52
Section 7.1. Corporate Authority..........................................53
7.1.1. Incorporation; Good Standing...................................53
7.1.2. Authorization..................................................53
7.1.3. Enforceability.................................................53
Section 7.2. Governmental Approvals.......................................53
Section 7.3. Title to Properties; Leases..................................53
Section 7.4. Financial Statements and Projections.........................54
7.4.1. Financial Statements...........................................54
7.4.2. Projections....................................................54
Section 7.5. No Material Changes, Etc.....................................54
Section 7.6. Franchises, Patents, Copyrights, Etc.........................55
Section 7.7. Litigation...................................................55
Section 7.8. No Materially Adverse Contracts, Etc.........................55
Section 7.9. Compliance with Other Instruments, Laws, Etc.................55
Section 7.10. Tax Status..................................................56
Section 7.11. No Event of Default.........................................56
<PAGE>
-iii-
Section 7.12. Holding Company and Investment Company Acts.................56
Section 7.13. Absence of Financing Statements, Etc........................56
Section 7.14. Perfection of Security Interest.............................56
Section 7.15. [Intentionally Omitted].....................................57
Section 7.16. Employee Benefit Plans......................................57
7.16.1. In General....................................................57
7.16.2. Guaranteed Pension Plans......................................57
7.16.3. Multiemployer Plans...........................................57
Section 7.17. Regulations U and X...........................................57
Section 7.18. Environmental Compliance......................................58
Section 7.19. Subsidiaries, Etc.............................................59
Section 7.20. Bank Accounts.................................................59
Section 7.21. Fiscal Year...................................................59
Section 7.22. Disclosure....................................................59
Section 7.23. Year 2000 Problem.............................................60
Section 7.24. Ownership of Assets of Constituent Companies..................60
Section 7.25. Ineligible Securities.........................................60
Section 8. AFFIRMATIVE COVENANTS OF THE BORROWER..............................60
Section 8.1. Punctual Payment.............................................60
Section 8.2. Maintenance of Office........................................60
Section 8.3. Records and Accounts.........................................61
Section 8.4. Financial Statements, Certificates and Information...........61
Section 8.5. Notices......................................................64
8.5.1. Defaults.......................................................64
8.5.2. Environmental Events...........................................64
8.5.3. Notification of Claim against Collateral.......................64
8.5.4. Notice of Litigation and Judgments.............................64
8.5.5. Notices Concerning Inventory Collateral........................65
Section 8.6. Existence; Maintenance of Properties.........................65
Section 8.7. Insurance....................................................65
Section 8.8. Taxes, Etc...................................................67
Section 8.9. Inspection of Properties and Books, Etc......................67
8.9.1. General........................................................67
8.9.2. Commercial Finance Examinations................................68
8.9.3. Communications with Accountants................................68
8.9.4. Environmental Assessments......................................68
Section 8.10. Compliance with Laws, Contracts, Licenses, and Permits......68
Section 8.11. Employee Benefit Plans......................................69
Section 8.12. Use of Proceeds.............................................69
Section 8.13. Bank Accounts; Agency Account Arrangements..................69
Section 8.13.1. Bank Accounts. Commencing on or prior to the
Sweep Deadline,...............................................................69
Section 8.13.2. Agency Account Arrangements...........................69
Section 8.14. Borrowing Base..............................................70
Section 8.15. Further Assurances..........................................71
Section 9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.........................71
Section 9.1. Restrictions on Indebtedness.................................71
Section 9.2. Restrictions on Liens........................................74
Section 9.3. Restrictions on Investments..................................76
<PAGE>
-iv-
Section 9.4. Change in Terms of Capital Stock; Distributions and
other Restricted Payments.....................................................78
Section 9.5. Merger and Consolidation.....................................79
Section 9.6. Sale and Leaseback; Disposition of Assets....................80
Section 9.7. Compliance with Environmental Laws...........................80
Section 9.8. Indebtedness in respect of the Notes.........................81
Section 9.9. Employee Benefit Plans.......................................81
Section 9.10. Bank Accounts...............................................81
Section 9.11. Limitation on Issuance of Shares of Subsidiaries;
Disposition of Shares and Indebtedness of Subsidiaries........................82
Section 9.12. Intentionally Omitted.......................................82
Section 9.13. No Material Changes, Etc....................................82
Section 9.14. No Subsidiaries.............................................82
Section 9.15. Transactions with Affiliates................................82
Section 9.16. Parent......................................................83
Section 10. FINANCIAL COVENANTSOFTHEBORROWER..................................83
Section 10.1. Capital Expenditures........................................83
Section 10.2. Minimum Fixed Charge Coverage Ratio.........................84
Section 11. CONCERNING THE EFFECTIVE DATE; CONDITIONS TO EFFECTIVENESS........84
Section 11.1. Loan Documents..............................................84
Section 11.2. NoteDocuments; Restructuring Documents; Warrant Documents...84
Section 11.3. Certified Copies of Charter Documents.......................84
Section 11.4. Corporate or Limited Liability Company Action...............85
Section 11.5. Incumbency Certificate......................................85
Section 11.6. Validity of Liens...........................................85
Section 11.7. Perfection Certificates and UCC Search Results..............85
Section 11.8. Certificates of Insurance...................................85
Section 11.9. Borrowing Base Report.......................................85
Section 11.10. Opinions of Counsel........................................86
Section 11.11. Payment of Fees............................................86
Section 11.12. Payment of Interest and Fees under Prior Credit Agreement..86
Section 11.13. [Intentionally Omitted.]...................................86
Section 11.14. Commercial Finance Examination.............................86
Section 11.15. Indebtedness in respect of the Notes.......................86
Section 11.16. Equity Contribution........................................86
Section 11.17. Restructuring..............................................86
Section 11.18. EBITDA.....................................................87
Section 11.19. Reports by Deloitte & Touche, Hatch Engineering and
Metal Strategies, Inc.........................................................87
Section 11.20. Hazardous Waste Assessments................................87
Section 11.21. Labor Agreements...........................................87
Section 11.22. Excess Availability........................................87
Section 11.23. Solvency Opinion...........................................87
Section 11.24. Appraisal of Canton Cast-Roll Facility.....................87
Section 11.25. Survey and Taxes...........................................87
Section 11.26. Title Insurance............................................87
Section 12. CONDITIONS TO ALL BORROWINGS......................................88
Section 12.1. Representations True........................................88
Section 12.2. No Legal Impediment.........................................88
Section 12.3. Governmental Regulation.....................................88
<PAGE>
-v-
Section 12.4. Proceedings and Documents...................................88
Section 12.5. Borrowing Base Report.......................................88
Section 13. EVENTS OF DEFAULT; ACCELERATION; ETC..............................88
Section 13.1. Events of Default and Acceleration..........................89
Section 13.2. Termination of Commitments..................................91
Section 13.3. Remedies....................................................92
Section 13.4. Distribution of Collateral Proceeds.........................92
Section 14. SETOFF............................................................93
Section 15. THE AGENT.........................................................94
Section 15.1. Authorization.................................................94
Section 15.2. Employees and Agents..........................................94
Section 15.3. No Liability..................................................94
Section 15.4. No Representations............................................94
Section 15.5. Payments......................................................95
15.5.1. Payments to Agent.............................................95
15.5.2. Distribution by Agent.........................................95
15.5.3. Delinquent Banks..............................................95
Section 15.6. Holders of Revolving Credit Notes...........................96
Section 15.7. Indemnity...................................................96
Section 15.8. Agent as Bank...............................................96
Section 15.9. Resignation.................................................96
Section 15.10. Notification of Defaults and Events of Default.............97
Section 15.11. Duties in the Case of Enforcement..........................97
Section 16. EXPENSES..........................................................97
Section 17. INDEMNIFICATION...................................................98
Section 18. SURVIVAL OF COVENANTS, ETC........................................99
Section 19. ASSIGNMENT AND PARTICIPATION......................................99
Section 19.1. Conditions to Assignment by Banks...........................99
Section 19.2. Certain Representations and Warranties; Limitations;
Covenants....................................................................100
Section 19.3. Register...................................................100
Section 19.4. New Revolving Credit Notes.................................101
Section 19.5. Participations.............................................101
Section 19.6 [Intentionally Omitted]....................................101
Section 19.7. Assignee or Participant Affiliated with the Borrower.......101
Section 19.8. Miscellaneous Assignment Provisions........................102
Section 19.9. Assignment by Borrower.....................................102
Section 20. NOTICES, ETC.....................................................102
Section 21. GOVERNING LAW....................................................103
Section 22. HEADINGS.........................................................103
Section 23. COUNTERPARTS.....................................................103
Section 24. ENTIRE AGREEMENT, ETC............................................103
Section 25. WAIVER OF JURY TRIAL.............................................103
Section 26. CONSENTS, AMENDMENTS, WAIVERS, ETC...............................104
Section 27. SEVERABILITY.....................................................105
Section 28. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION....................105
Section 28.1. Sharing of Information with Section 20 Subsidiary..........105
Section 28.2. Confidentiality............................................105
Section 28.3. Prior Notification ............................................106
<PAGE>
-vi-
Section 28.4. Other .........................................................106
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of the 13th day of August,
1999, by and among REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a Delaware limite d
liability company having its principal place of business at 3770 Embassy
Parkway, Akron, OH 44333 (the "Borrower"), Republic Technologies International
HOLDINGS, LLC, a Delaware limited liability company, RTI Capital Corp., a
Delaware corporation, Bliss & Laughlin, LLC, a Delaware limited liability
company, Canadian Drawn Steel Company Inc. a Canadian corporation and
Nimishillen & Tuscarawas, LLC, a Delaware limited liability company
(collectively, the "Guarantors"), BANKBOSTON, N.A. ("BKB"), BANK OF AMERICA,
N.A. ("BofA"), THE CHASE MANHATTAN BANK ("Chase"), the other lending
institutions from time to time listed on Schedule 1 hereto (the "Banks"), BofA
as syndication agent (as such, the "Syndication Agent") and co-book manager (as
such, a "Co-Book Manager"), Chase as documentation agent (as such, the
"Documentation Agent") and co-book manager (as such, a "Co-Book Manager") and
BKB as administrative agent for itself and the Banks (as such, the "Agent") and
co-book manager (as such, a "Co-Book Manager"). BofA, Chase and BKB are referred
to herein collectively as the "Co-Agents".
RES and BarTech wish to consolidate and combine their operations and to
include certain divisions of USS/Kobe in such consolidations and combinations
pursuant to the Restructuring, and, in connection therewith, the Borrower is
assuming certain of the assets and liabilities of RES, BarTech and USS/Kobe. The
Borrower has requested, and the Banks and the Agent have agreed subject to the
terms and conditions specified herein, to extend credit to the Borrower as
provided for herein. Accordingly, the parties hereto agree as follows:
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.
Section 1.1. Definitions. The following terms shall have the meanings set
forth in this Section 1 or elsewhere in the provisions of this Credit Agreement
referred to below:
Accounts Receivable. All rights of the Borrower or any of the Subsidiary
Guarantors to payment for goods sold, leased or otherwise marketed in the
ordinary course of business and all rights of the Borrower or any of the
Subsidiary Guarantors to payment for services rendered in the ordinary course of
business and all sums of money or other proceeds due thereon pursuant to
transactions with account debtors recorded on books of account in accordance
with generally accepted accounting principles. Solely for the purpose of
calculating the Borrowing Base, Accounts Receivable shall not include that
portion of the sum of money or other proceeds due thereon that relate to sales,
use or property taxes in conjunction with such transactions with account
debtors.
Acquired Portions of USS/Kobe. Those assets and liabilities of USS/Kobe
that are acquired by the Borrower pursuant to the Restructuring, including,
without limitation, the "USS/Kobe Bar Business" as such term is defined in the
Master Restructuring Agreement.
Affected Bank. See Section 5.11.
<PAGE>
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Affiliate. Any Person that would be considered to be an affiliate of the
Borrower under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
Agent. See preamble.
Agent's Head Office. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
Agent's Special Counsel. Bingham Dana LLP or such other counsel as may be
approved by the Agent.
Agency Agreement. See Section 8.13.2.
Applicable Margin. On any date, Applicable Margin shall be the applicable
margin set forth below with respect to the Borrower's Excess Availability and
Availability Block on such date:
<TABLE>
<CAPTION>
=======================================================================================
Letter of Credit
Base Rate Eurodollar Rate Fee
Applicable Applicable Applicable
Excess Availability Margin Margin Margin
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
Excess Availability is greater than
or equal to $45,000,000 and
Availability Block is $35,000,000 1.25% 3.25% 3.25%
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Excess Availability is less than
$45,000,000 or Availability
Block is greater than $35,000,000 1.50% 3.50% 3.50%
- ---------------------------------------------------------------------------------------
=======================================================================================
</TABLE>
Assignment and Acceptance. See Section 19.1.
Availability. As of any date of determination, the lesser of (a) the Total
Commitment and (b) the remainder of the Borrowing Base, minus the Rate
Protection Exposure.
Availability Block. As of the date of determination, an amount determined
by the Agent, in each case determined in accordance with adjustments set forth
below, provided, however, that (i) the Availability Block shall not be less than
$35,000,000 at any time, (ii) the Availability Block shall not be greater than
the Availability Block Cap at any time and (iii) the Availability Block on the
Effective Date shall be $35,000,000. In determining the Availability Block at
any time, the following adjustments shall be made:
<PAGE>
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(a) If, on any date, given the amount of the Availability Block on such
date prior to any adjustment of the Borrowing Base pursuant hereto, Excess
Availability is within the ranges set forth in the column below labeled
"Pre-Adjustment Excess Availability", the Availability Block shall be adjusted
upwards to the amounts set forth in the column below labeled "Post-Adjustment
Availability Block" (provided, however, that upon the Availability Block's being
adjusted upwards pursuant to this clause (a), (i) if Excess Availability returns
within two Business Days to the range corresponding to the Availability Block
amount which existed before such upward adjustment, the Availability Block shall
be readjusted downwards pursuant to this clause (a) to such amount and (ii) the
Availability Block may be subject to further adjustment downwards pursuant to
clause (b) below):
- --------------------------------------------------------------------------------
Pre-Adjustment Excess Availability: Post-Adjustment Availability Block:
- ----------------------------------- -----------------------------------
- --------------------------------------------------------------------------------
Greater than or equal to $45,000,000 $35,000,000
- --------------------------------------------------------------------------------
Greater than or equal to $30,000,000 and
less than $45,000,000 $42,500,000
- --------------------------------------------------------------------------------
Less than $30,000,000 $50,000,000
- --------------------------------------------------------------------------------
(b) If, on any date, Excess Availability has remained within one of the
ranges set forth in the column below labeled "Thirty-Day Excess Availability"
for the period of 30 consecutive days ending on such day, the Availability Block
shall be adjusted downwards to the amounts set forth in the column below labeled
"Post-Adjustment Availability Block":
- --------------------------------------------------------------------------------
Thirty Day Excess Availability: Post Adjustment Availability Block:
- ------------------------------- -----------------------------------
- --------------------------------------------------------------------------------
Greater than or equal to $55,000,000 $35,000,000
- --------------------------------------------------------------------------------
Greater than or equal to $40,000,000 and
less than $55,000,000 $42,500,000
- --------------------------------------------------------------------------------
Availability Block Cap. An amount equal to $50,000,000, provided that on
each day on which the Eligible Fixed Asset Cap is reduced in accordance with the
schedule set forth in the definition of Eligible Fixed Asset Cap, the
Availability Block Cap shall be reduced on the same day by $4,500,000, provided
further that any such reduction of the Availability Block Cap on any such day
shall be made only if no Event of Default is continuing on such date.
Banks. See preamble.
BarTech Balance Sheet Date. January 2, 1999.
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by BKB at its head office in Boston, Massachusetts, as its "base
rate" and (b) one-half of one percent (1/2%) above the Federal Funds Effective
Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall
mean for any day, the rate per annum equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published
<PAGE>
-4-
for such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average of the quotations
for such day on such transactions received by the Agent from three funds brokers
of recognized standing selected by the Agent.
Base Rate Loans. Revolving Credit Loans bearing interest calculated by
reference to the Base Rate.
BKB. See preamble.
Blackstone. (A) Blackstone Capital Partners II Merchant Banking Fund, L.P.
a Delaware limited partnership, (B) Blackstone Capital Partners III Merchant
Banking Fund L.P., a Delaware limited partnership (C), Blackstone Offshore
Capital Partners II L.P., a Cayman Islands exempted limited partnership, (D)
Blackstone Family Investment Partnership II L.P., a Delaware limited
partnership, (E) each general partner of any of the foregoing who is a partner
or employee of The Blackstone Group, L.P. and (F) any Affiliates of any of the
foregoing.
Blocked Account. See Section 8.13.2.
Blocked Account Bank. See Section 8.13.2.
BofA. See preamble.
Borrower. As defined in the preamble hereto.
Borrowing Base. As of any date of determination, an amount determined by
the Agent by reference to the most recent Borrowing Base Report which is equal
to:
(a) 85% of Eligible Accounts Receivable for which invoices have been
issued and are payable; plus
(b) 60% of the net book value (determined on a first-in first-out basis at
lower of cost or market) of Eligible Inventory; provided, that in no event shall
the amount of the Borrowing Base allocable to Eligible Inventory exceed
$190,000,000; plus
(c) 67% of Eligible Fixed Assets; provided, that in no event shall the
amount of the Borrowing Base allocable to Eligible Fixed Assets exceed the
Eligible Fixed Asset Cap; minus
the Availability Block;
provided however, the Agent reserves the right to change, upon five (5)
business days notice to and consultation with the Borrower but without its
consent, eligibility criteria contained in the definitions of Eligible Accounts
Receivable, Eligible Finished Goods Inventory, Eligible Raw Materials, Eligible
Work-in-Process, Eligible Fixed Assets and Canton Cast-Roll Facility and to
change and/or establish reserves taken in connection with any of the foregoing
from time to time based upon the results of any commercial finance examination
conducted pursuant to Section 8.9.2, any appraisals or other sources of
<PAGE>
-5-
information which demonstrate in the Agent's reasonable judgment based on due
inquiry a change in the collectability of Accounts Receivable and/or the
marketability of inventory and/or the value or marketability of the Canton
Cast-Roll Facility not reflected in reserves taken by the Borrower, provided,
further, however, that the value of Eligible Fixed Assets shall not be adjusted
after the Effective Date and prior to March 31, 2001 based on any appraisal of
the Canton Cast-Roll Facility.
Borrowing Base Report. A Borrowing Base Report signed by the treasurer or
other authorized financial officer of the Borrower and the Subsidiary Guarantors
and in substantially the form of Exhibit A hereto.
Business Day. Any day on which banking institutions in Boston,
Massachusetts, are open for the transaction of banking business and, in the case
of Eurodollar Rate Loans, also a day which is a Eurodollar Business Day.
Canadian Dollars or C$. Dollars designated as lawful currency in Canada.
Canadian IP Assignment. The Assignment of Intellectual Property dated as
of the date hereof, and as amended and in effect from time to time, between
Canadian Drawn Steel Company Inc. and the Agent.
Canadian Security Agreement. The Security Agreement dated as of the date
hereof and as amended and in effect from time to time, between Canadian Drawn
Steel Company and the Agent.
Canton Cast Roll Facility. The cast-roll facility and related assets of
the Borrower located in Canton, Ohio at the premises described in Exhibit A to
the Mortgage, including, without limitation, all equipment, fixtures, goods and
other fixture and personal property located from time to time at such premises
and related property.
Canton Indebtedness. See Section 9.1.
Capital Assets. Fixed assets (such as land, buildings, fixtures, machinery
and equipment) and intangible assets (such as patents, copyrights, trademarks,
franchises and goodwill); provided that Capital Assets shall not include any
item customarily charged directly to expense or depreciated over a useful life
of twelve (12) months or less in accordance with generally accepted accounting
principles.
Capital Expenditures. Amounts paid or Indebtedness incurred by the
Borrower or any of its Subsidiaries in connection with (a) the purchase or lease
by the Borrower or any of its Subsidiaries of Capital Assets that would be
required to be capitalized and shown on the balance sheet of such Person in
accordance with generally accepted accounting principles or (b) the lease of any
assets by the Borrower or any of its Subsidiaries as lessee under any synthetic
lease referred to in clause (vi) of the definition of the term "Indebtedness" to
the extent that such assets would have been Capital Assets had the synthetic
lease been treated for accounting purposes as a Capitalized Lease; provided,
however, that Capital Expenditures for the Borrower and its Subsidiaries shall
not include (i) expenditures of proceeds of insurance settlements, condemnation
awards and other settlements in respect of lost, destroyed, damaged or condemned
assets, equipment or
<PAGE>
-6-
other property to the extent such expenditures are made to replace or repair
such lost, destroyed, damaged or condemned assets, equipment or other property
or otherwise to acquire assets or properties useful in the business of the
Borrower and its Subsidiaries within 180 days of receipt of such proceeds, (ii)
expenditures that are accounted for as Capital Expenditures of such person and
that actually are paid for by a third party (excluding Borrower or any
Subsidiary thereof) and for which neither the Borrower nor any Subsidiary
thereof has provided any consideration or obligation to such third party or
(iii) the book value of any asset owned by such Person prior to or during such
period to the extent that such book value is included as a capital expenditure
during such period as a result of such person reusing or beginning to reuse such
asset during such period without a corresponding expenditure actually having
been made in such period or committed to be made in a later period, provided
that any expenditure necessary in order to permit such asset to be reused shall
be included as a Capital Expenditure during the period that such expenditure
actually is made and such book value shall have been included in Capital
Expenditures when such asset was originally acquired.
Capitalized Interest. For any period, the aggregate amount of interest
paid or accrued, without duplication as to any previous period, by the Borrower
during such period in respect of the financing of any Capital Expenditures and
required to be capitalized in accordance with generally accepted accounting
principles.
Capitalized Leases. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
CERCLA. See Section 7.18.
Change of Control. At any time, the occurrence of one or more of the
following events: (i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all the assets of the Borrower and its
Subsidiaries, taken as a whole, to a person other than the Permitted Holders; or
(ii) (A) the acquisition by any person or group (within the meaning of Section
13(d) (3) or Section 14(d) (2) of the Exchange Act, or any successor provision),
including any group acting for the purpose of acquiring, holding or disposing of
securities (within the meaning of Rule 13d-5(b) (1) under the Exchange Act),
other than the Permitted Holders, in a single transaction or in a related series
of transactions, by way of merger, consolidation or other business combination
or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision), of 35% or more of the total voting
power of the capital stock or membership interests of the Borrower and (B) the
Permitted Holders beneficially own (as defined above), directly or indirectly,
in the aggregate a lesser percentage of the total voting power of the Voting
Stock of the Borrower than such other Person or group and do not have the right
or ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors or similar governing body of the
Borrower; or (iii) Blackstone shall own, beneficially, directly or indirectly,
less than 20% of the total voting and economic interest of the capital stock or
membership interests of the Borrower; or (iv) directors elected by Blackstone
shall cease to represent a majority of the members of the board of directors or
similar governing body of the Borrower.
<PAGE>
-7-
Chase. The Chase Manhattan Bank.
Chase Letter of Credit. The Letter of Credit in the amount of $3,852,000
dated December 5, 1996 issued by Chase for the benefit of U.S. Bank Trust
National Association as Trustee under the Indenture of Trust between the
Development Authority of Cartersville and the U.S. Bank Trust National
Association as Trustee. The Chase Letter of Credit is a Letter of Credit
hereunder.
Closed Facilities. Upon their shut down or closure and subsequent sale,
scrapping or other disposition, the No. 4 blast Furnace, the No. 1 Billet Caster
and the 4 Stand Billet Mill at the Lorain facility, the No. 4(B) and No. 4(C)
Electric Arc Furnaces, the Blooming Mill and the ingot teeming facility in the
Canton, Ohio facility, the 12" bar mill in Canton, Ohio, the cold-finishing
facilities in Medina, Ohio and Batavia; Illinois, the 18" bar mill in Masillon,
Ohio and the 11" bar mill in Chicago, Illinois and one additional cold-finishing
facility, in each case to the extent (i) separable and identifiable and not in
impairment in any material respect of any other Collateral, and (ii) not
constituting the Cast Roll Facility.
Co-Agents. See preamble.
Code. The Internal Revenue Code of 1986, as amended from time to time.
Collateral. All accounts, inventory, instruments, documents and
intellectual property of the Borrower and each of the Guarantors (including,
without limitation, patents, copyrights, trademarks, franchises and goodwill),
in each case as provided in the Security Documents; the Canton Cast-Roll
Facility; the outstanding stock or other equity interests of the Borrower and
its Subsidiaries; and all general intangibles related to the foregoing and all
other properties, rights and assets of the Borrower or any Guarantor that are or
that are intended to be subject to the security interests and mortgages created
by the Security Documents.
Commitment. With respect to each Bank, the amount set forth on Schedule 1
hereto as the amount of such Bank's commitment to make Revolving Credit Loans
to, and to participate in the issuance, extension and renewal of Letters of
Credit for the account of, the Borrower in accordance with and subject to the
terms hereof, as the same may be reduced from time to time pursuant to the
provisions hereof; or if such commitment is terminated pursuant to the
provisions hereof, zero.
Commitment Percentage. With respect to each Bank, the percentage set forth
on Schedule 1 hereto as such Bank's percentage of the aggregate Commitments of
all of the Banks, as such percentages may be adjusted for assignments from time
to time.
Compliance Certificate. See Section 8.4(d).
Concentration Account. Account #531-32381 maintained by the Agent in the
name of the Borrower.
Consolidated or consolidated. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
<PAGE>
-8-
Consolidated Cash Interest Expense. For any period, the aggregate amount
of interest required to be paid in cash by the Borrower and its Subsidiaries
during such period on all Indebtedness of the Borrower and its Subsidiaries
outstanding during all or any part of such period, including payments consisting
of interest in respect of any Capitalized Lease, or any synthetic lease referred
to in clause (vi) of the definition of the term "Indebtedness," and including
commitment fees, agency fees, facility fees and similar fees or expenses in
connection with the borrowing of money.
Consolidated Earnings Before Interest, Taxes, Depreciation and
Amortization or EBITDA. With respect to the Borrower and its Subsidiaries for
any period, the Consolidated Net Income of the Borrower and its Subsidiaries for
such period, after all expenses and other proper charges, plus, without
duplication and to the extent deducted from the calculation of Consolidated Net
Income for such period (a) payment or provision for any income and other taxes
based on income for such period, (b) interest expense for such period, (c)
depreciation and amortization for such period and (d) pension curtailment and
severance expenses and other pension and post-retirement benefit expenses, in
each case determined on a consolidated basis for the Borrower and its
Subsidiaries in accordance with generally accepted accounting principles.
Notwithstanding the foregoing, for purposes of calculating EBITDA, Marked to
Market Materials Cost of Sales and Marked to Market Manufacturing and Conversion
Cost of Sales shall be deducted as expenses in the calculation of Consolidated
Net Income (rather than such expenses calculated in accordance with generally
accepted accounting principles).
Consolidated Net Income. With respect to the Borrower and its Subsidiaries
for any period, the consolidated net income (or deficit) of the Borrower and its
Subsidiaries for such period, after deduction of all expenses, taxes, and other
proper charges, including, without limitation, minority interest, determined on
a consolidated basis for such Persons in accordance with generally accepted
accounting principles, after eliminating therefrom all extraordinary
nonrecurring items of income or loss (subtracting, in the case of income and
adding, in the case of loss), provided that there shall be no elimination of
losses or one-time provisions to the extent the same shall result in cash
expenditures in such period or relate to anticipated cash expenditures in a
future period.
Consolidated Operating Cash Flow. For any period, an amount equal to (i)
EBITDA for such period, less (ii) the sum of (A) cash payments actually made for
all taxes paid or tax distributions during such period, plus (B) to the extent
not already deducted in the determination of EBITDA for such period, Capital
Expenditures made during such period to the extent permitted by Section 10.1,
plus (C) to the extent not already deducted in the determination of EBITDA for
such period, cash charges related to pension curtailment and severance expenses
and other pension and post-retirement benefit expenses.
Consolidated Total Debt Service. For any period, Consolidated Cash
Interest Expense for such period plus all mandatory principal payments on
Indebtedness scheduled to be paid during such period by the Borrower and its
Subsidiaries, including payments of principal in respect of any Capitalized
Lease, less, to the extent included in Consolidated Total Debt Service for such
period, any required repayments of the Revolving Credit Loans during such period
to the extent that such repayments were made as a result of any reduction in the
Eligible Fixed Asset Cap.
<PAGE>
-9-
Conversion Request. A notice given by the Borrower to the Agent of the
Borrower's election to convert or continue a Revolving Credit Loan in accordance
with Section 2.7.
Credit Agreement. This Revolving Credit Agreement, including the Schedules
and Exhibits hereto, all as amended and in effect from time to time.
Default. See Section 13.1.
Delinquent Bank. See Section 15.5.3.
Distribution. With respect to any Person, the declaration or payment of
any dividend on or in respect of any shares of any class of capital stock,
membership interests or other equity interests of such Person, other than
dividends payable solely in shares of common equity interests of such Person;
the purchase, redemption, or other retirement of, any shares of any class of
capital stock, membership interests or other equity interests of such Person,
directly or indirectly through a Subsidiary of such Person or otherwise; the
return of capital by such Person to its shareholders or other equity holders as
such; or any other distribution on or in respect of any shares of any class of
capital stock, membership interests or other equity interests of such Person.
Documentation Agent. See preamble.
Dollars or $. Dollars in lawful currency of the United States of America.
Dollar Equivalent. With respect to an amount of Canadian Dollars on any
date, the amount of Dollars that may be purchased with such amount of Canadian
Dollars at the Exchange Rate; with respect to an amount of Dollars on any date,
such amount in Dollars.
Domestic Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
located within the United States that will be making or maintaining Base Rate
Loans.
Domestic Security Agreement. The Security Agreement dated as of the date
hereof and as further amended and in effect from time to time, among the
Borrower, the Guarantors other than Canadian Drawn Steel Company and the Agent.
Drawdown Date. The date on which any Revolving Credit Loan is made or is
to be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with Section 2.7.
Effective Date. The first date on which the conditions set forth in
Section 11 and Section 12 have been satisfied or waived in writing by each of
the Banks and any Revolving Credit Loans are to be converted or made or any
Letter of Credit is to be issued hereunder.
Eligible Accounts Receivable. On any date, the Dollar Equivalent of the
aggregate of the unpaid portions of Accounts Receivable (net of any credits,
setoffs, deductions, discounts, counterclaims, rebates, offsets, holdbacks,
contras or other adjustments or commissions payable to third parties that are
adjustments to such Accounts Receivable) as to which the Borrower has furnished
reasonably detailed information to the Banks in a
<PAGE>
-10-
Borrowing Base Report (i) that the Borrower reasonably and in good faith
determines to be collectible; (ii) that are with account debtors that (A) (x)
are not factors or Affiliates of the Borrower or (y) are American Axle or USX or
other Affiliates approved by the Agent (each of American Axle and USX and such
other approved Affiliates being an "Exempted Affiliate") and either the relevant
date of determination is a date on or prior to thirty (30) days after the
Effective Date or the Agent has received an executed letter in form and
substance satisfactory to the Agent from such Exempted Affiliate, as to the
arms-length nature of the transaction giving rise to the Account Receivable owed
by such Exempted Affiliate, waiving set-off rights and containing such other
provisions as the Agent may reasonably require, (B) purchased the goods or
services giving rise to the relevant Account Receivable in an arm's length
transaction, (C) are not insolvent or involved in any case or proceeding,
whether voluntary or involuntary, under any bankruptcy, reorganization,
arrangement, insolvency, adjustment of debt, dissolution, liquidation or similar
law of any jurisdiction and (D) are, in the Agent's reasonable judgment,
creditworthy (in the event the Agent determines that any account debtor is not
creditworthy, the Agent shall endeavor to notify the Borrower as to such account
debtor); (iii) that are in payment of obligations that have been fully
performed, do not consist of progress billings or bill and hold invoices and are
not subject to dispute, or any other similar claims that would reduce the cash
amount payable therefor; (iv) that are not subject to any pledge, restriction,
security interest or other lien or encumbrance other than those created by the
Loan Documents; (v) in which the Agent has a valid and perfected first priority
security interest; (vi) that are neither more than thirty (30) days past due
under the original terms of the sale nor outstanding more than ninety (90) days
past the invoice date therefor; (vii) that are not due from an account debtor
located in Minnesota unless the Borrower (A) has received a certificate of
authority to do business and is in good standing in such state or (B) has filed
a notice of business activities report with the appropriate office or agency of
such state for the current year; (viii) that are not due from any single account
debtor if more than fifty percent (50%) of the aggregate amount of all Accounts
Receivable owing from such account debtor would otherwise not be Eligible
Accounts Receivable; (ix) that are payable in Dollars or Canadian Dollars; (x)
that are not due from the United States of America or any department, agency or
instrumentality thereof, except for those Accounts Receivable for which the
Borrower or its Subsidiaries has complied with the Federal Assignment of Claims
Act; (xi) that are not with account debtors whose obligation to pay is
conditional or subject to a repurchase obligation or right to return, including
bill and hold sales, guaranteed sales, sale or return transactions, sales on
approval or consignment sales; (xii) that are not due from any single account
debtor to the extent that after giving effect to the inclusion of such Accounts
Receivable (or a portion thereof) in the Borrowing Base more than twenty percent
(20%) of the Eligible Accounts Receivable included in the Borrowing Base are
owed by such account debtor and (xiii) that are not payable from an office
outside of the United States or Canada unless such account debtor has provided
to the Borrower an irrevocable letter of credit from a financial institution
reasonably satisfactory to the Agent to secure such account debtor's obligations
to the Borrower (but only to the extent of the amount of such letter of credit
and such Letter of Credit is immediately assigned to, and delivered into the
possession of, the Agent).
Eligible Assignee. Any of (a) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (b) a
savings and loan association or
<PAGE>
-11-
savings bank organized under the laws of the United States, or any State thereof
or the District of Columbia, and having a net worth of at least $100,000,000,
calculated in accordance with generally accepted accounting principles; (c) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having total assets in excess of
$1,000,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD; (d) the central bank of any country which is a member of
the OECD; and (e) any other bank, insurance company, commercial finance company
or other financial institution approved by the Agent, such approval not to be
unreasonably withheld.
Eligible Finished Goods Inventory. On any date, with respect to the
Borrower and the Subsidiary Guarantors, the Dollar Equivalent of the gross book
value, determined in accordance with the first-in, first-out method of inventory
accounting, as reflected on the Borrower's or a Subsidiary Guarantor's books in
accordance with generally accepted accounting principles consistently applied,
of finished goods inventory owned by the Borrower or the Subsidiary Guarantors
and as to which the Borrower has furnished reasonably detailed information to
the Banks in a Borrowing Base Report; provided that Eligible Inventory shall not
include any inventory (i) held on consignment by the Borrower or one of the
Subsidiary Guarantors, or not otherwise owned by the Borrower or the Subsidiary
Guarantors, or of a type no longer sold by the Borrower or the Subsidiary
Guarantors, (ii) which has been returned by a customer and is not in saleable
condition or is damaged or subject to any legal encumbrance, (iii) which is not
located on property owned by the Borrower or one of the Subsidiary Guarantors
unless such inventory is (A) held by the Borrower or a Subsidiary Guarantor on
properties leased by the Borrower or the Subsidiary Guarantors as to which the
Agent has received a waiver from the lessor of such property in form and
substance satisfactory to the Agent, unless the relevant date of determination
is on or prior to thirty (30) days after the Effective Date, (B) not in the
possession of the Borrower or the Subsidiary Guarantors and is not in transit
and (x) the Agent has received a waiver from the party in possession of such
inventory in form and substance satisfactory to the Agent, (y) the Agent has
reduced the value of such inventory by reserves reasonably deemed adequate by
the Agent, and in any event in an amount equal to all obligations of the
Borrower and its Subsidiaries to the party in possession or (z) the relevant
date of determination is prior to thirty (30) days after the Effective Date or
(C) in transit from one location in which the Agent had a perfected security
interest in such inventory to a second location where the Agent has taken all
steps necessary to obtain a perfected security interest in inventory at such
location, and has been in transit for a period of less than ten (10) days, (iv)
as to which the Agent does not have a valid and perfected first priority
security interest, (v) which is not located within the United States of America
or Canada, (vi) which the Agent reasonably deems to be obsolete or not
marketable, (vii) which constitutes supplies or spare parts of the Borrower or
its Subsidiaries, or (viii) which constitutes, railroad inventory or conversion
inventory, in each case as such is reflected on the Borrower's books. Finished
goods inventory immediately loses the status of Eligible Finished Goods
Inventory if and when the Borrower or one of the Subsidiary Guarantors sells it,
otherwise passes title thereto, or consumes it or the Agent releases or
transfers its security interest therein, or if and when an Eligible Account
Receivable arises by virtue of constituting proceeds of such inventory.
Notwithstanding
<PAGE>
-12-
the foregoing, but without duplication, Eligible Finished Goods Inventory shall
be reduced by the amount of any specific reserve established by the Borrower
with respect to any Eligible Finished Goods Inventory other than the LIFO
reserve maintained by the Borrower in accordance with generally accepted
accounting principles.
Eligible Fixed Asset Cap. With respect to any period, the amount set forth
below opposite such period:
---------------------------------------------------------------
Period: Eligible Fixed
------- --------------
Asset Cap:
----------
---------------------------------------------------------------
---------------------------------------------------------------
Effective Date - December 31, 2000 $125,000,000
---------------------------------------------------------------
January 1, 2001 - March 31, 2001 $120,500,000
---------------------------------------------------------------
April 1, 2001 - June 30, 2001 $116,000,000
---------------------------------------------------------------
July 1, 2001 - September 30, 2001 $111,500,000
---------------------------------------------------------------
October 1, 2001 - December 31, 2001 $107,000,000
---------------------------------------------------------------
January 1, 2002 - March 31, 2002 $102,500,000
---------------------------------------------------------------
April 1, 2002 - June 30, 2002 $98,000,000
---------------------------------------------------------------
July 1, 2002 - September 30, 2002 $93,500,000
---------------------------------------------------------------
October 1, 2002 - December 31, 2002 $89,000,000
---------------------------------------------------------------
January 1, 2003 - March 31, 2003 $84,500,000
---------------------------------------------------------------
April 1, 2003 - June 30, 2003 $80,000,000
---------------------------------------------------------------
July 1, 2003 - September 30, 2003 $75,500,000
---------------------------------------------------------------
October 1, 2003 - December 31, 2003 $71,000,000
---------------------------------------------------------------
January 1, 2004 - March 31, 2004 $66,500,000
---------------------------------------------------------------
April 1, 2004 - June 30, 2004 $62,000,000
---------------------------------------------------------------
July 1, 2004 - Maturity Date $57,500,000
---------------------------------------------------------------
Eligible Fixed Assets. The appraised liquidation in-place value of the
Canton Cast-Roll Facility in which the Agent, for the benefit of the Banks, has
a first priority perfected security interest, as determined by the Agent at the
Borrower's expense, provided that the value of Eligible Fixed Assets shall not
be adjusted downward based on any revaluation (other than the amortization of
the Eligible Fixed Asset Cap) prior to March 31, 2001, provided further that in
no event shall the amount of the Borrowing Base allocable to Eligible Fixed
Assets exceed the Eligible Fixed Asset Cap.
Eligible Inventory. Eligible Finished Goods Inventory, Eligible
Work-in-Process and Eligible Raw Materials.
Eligible Raw Materials. On any date, an amount equal to the Dollar
Equivalent of the gross book value, determined in accordance with the first-in,
first-out method of inventory accounting, as reflected on the Borrower's or a
Subsidiary Guarantor's books in accordance with generally accepted accounting
principles consistently applied, of raw materials used to produce the Borrower's
or one of the Subsidiary Guarantor's inventory, including any finished goods
inventory returned by a customer or no longer sold by the Borrower or the
Subsidiary Guarantors and (a) which has been converted into Eligible Raw
Materials, (b) which is (i) located on property owned by the Borrower or the
Subsidiary
<PAGE>
-13-
Guarantors, (ii) held by the Borrower or a Subsidiary Guarantor on properties
leased by the Borrower or the Subsidiary Guarantors as to which the Agent has
received a waiver from the lessor of such property in form and substance
satisfactory to the Agent, unless the relevant date of determination is on or
prior to thirty (30) days after the Effective Date, (iii) not in the possession
of the Borrower or the Subsidiary Guarantors and is not in transit and (X) the
Agent has received a waiver from the party in possession of such inventory in
form and substance satisfactory to the Agent, (Y) the Agent has reduced the
value of such inventory by reserves reasonably deemed adequate by the Agent, and
in any event in an amount equal to all obligations of the Borrower and its
Subsidiaries to the party in possession or (Z) the relevant date is on prior to
thirty (30) days after the Effective Date or (iv) is in transit from one
location in which the Agent had a perfected security interest in such inventory
to a second location where the Agent has taken all steps necessary to obtain a
perfected security interest in inventory at such location, and has been in
transit for a period of less than ten (10) days, (c) as to which the Borrower or
one of the Subsidiary Guarantors has acquired title and the Agent has a valid
and perfected first-priority security interest under all applicable law, and (d)
as to which the Borrower has furnished reasonably detailed information to the
Banks in a Borrowing Base Report, after taking into account all charges and
liens (other than those of the Agent and carrier, warehouse, customs and similar
statutory liens arising in the ordinary course of business) of all kinds against
such raw materials. Without limiting the generality of the foregoing, Eligible
Raw Materials shall not include any raw materials covered by a document of title
until the document of title has been delivered to the Agent or which the Agent
reasonably deems to be obsolete or not useable raw materials. Raw material
immediately loses the status of Eligible Raw Material if and when the Borrower
or one of the Subsidiary Guarantors sells it, otherwise passes title thereto,
consumes it, or materially changes it in the course of processing the same, or
the Agent releases or transfers its security interest therein. Notwithstanding
the foregoing, but without duplication, Eligible Raw Materials shall be reduced
by the amount of any specific reserve established by the Borrower with respect
to any Eligible Raw Materials other than the LIFO reserve maintained by the
Borrower in accordance with generally accepted accounting principles.
Eligible Work-in-Process. On any date, an amount equal to the Dollar
Equivalent of the gross book value, as reflected on the Borrower's or a
Subsidiary Guarantor's books in accordance with generally accepted accounting
principles consistently applied, of usable work-in-process of the Borrower and
the Subsidiary Guarantors and as to which the Borrower has furnished reasonably
detailed information to the Banks in a Borrowing Base Report in connection with
the manufacture of its products in the ordinary course of its business,
including any finished goods inventory returned by a customer or no longer sold
by the Borrower or the Subsidiary Guarantors and which has been converted into
Eligible Work-in-Process, which is (a) (i) located on property owned by the
Borrower or the Subsidiary Guarantors, (ii) held by the Borrower or a Subsidiary
Guarantor on properties leased by the Borrower or the Subsidiary Guarantors as
to which the Agent has received a waiver from the lessor of such property in
form and substance satisfactory to the Agent, unless the relevant date of
determination is on or prior to thirty (30) days after the Effective Date, (iii)
not in the possession of the Borrower or the Subsidiary Guarantors and is not in
transit and (X) the Agent has received a waiver from the party in possession of
such inventory in form and substance satisfactory to the Agent, (Y) the Agent
has reduced the value of such inventory by reserves reasonably deemed adequate
by the Agent, and in
<PAGE>
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any event in an amount equal to all obligations of the Borrower and the
Subsidiary Guarantors to the party in possession or (Z) the relevant date of
determination is on or prior to thirty (30) days after the Effective Date or
(iv) is in transit from one location in which the Agent had a perfected security
interest in such inventory to a second location where the Agent has taken all
steps necessary to obtain a perfected security interest in such inventory at
such location, and has been in transit for a period of less than ten (10) days,
and (b) as to which the Borrower or one of the Subsidiary Guarantors has title
and the Agent has a valid and perfected first-priority security interest.
Without limiting the generality of the foregoing, Eligible Work-in-Process shall
not include work-in-process which the Agent reasonably deems to be obsolete or
not marketable. Work-in-process immediately loses the status of Eligible
Work-in-Process if and when the Borrower or one of the Subsidiary Guarantors
sells it, otherwise passes title thereto, consumes it, or the Agent releases or
transfers its security interest therein. Notwithstanding the foregoing, but
without duplication, Eligible Work-in-Process shall be reduced by the amount of
any specific reserves established by the Borrower with respect to any Eligible
Work-in-Process other than the LIFO reserve maintained by the Borrower in
accordance with generally accepted accounting principles.
Employee Benefit Plan. Any employee benefit plan within the meaning
of Section 3(3) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Laws. See Section 7.18(a).
Equityholders Agreement. The Equityholders Agreement amended and restated
as of August, 1999 by and among the investors in RTII and the Parent, RTII, the
Parent and RES Holding Corporation, in the form delivered to the Agent on the
Effective Date.
Equity Documents. The Equityholders Agreement, the Master Restructuring
Agreement and the documents delivered pursuant thereto.
ERISA. The Employee Retirement Income Security Act of 1974, as amended and
in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer with the
Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar Rate
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
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Eurodollar Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Agent in its sole
discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank designated
as such in Schedule 1 hereto; thereafter, such other office of such Bank, if
any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar Rate
Loan, the rate of interest equal to (a) the arithmetic average of the rates per
annum for each Reference Bank (rounded upwards to the nearest 1/16 of one
percent) of the rate at which such Reference Bank's Eurodollar Lending Office is
offered Dollar deposits two (2) Eurodollar Business Days prior to the beginning
of such Interest Period in the interbank eurodollar market where the eurodollar
and foreign currency and exchange operations of such Eurodollar Lending Office
are customarily conducted, for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to the
amount of the Eurodollar Rate Loan of such Reference Bank to which such Interest
Period applies, divided by (b) a number equal to 1.00 minus the Eurocurrency
Reserve Rate, if applicable.
Eurodollar Rate Loans. Revolving Credit Loans bearing interest calculated
by reference to the Eurodollar Rate.
Event of Default. See Section 13.1.
Excess Availability. As of any date of determination, the result of (a)
the Availability as of such date, minus (b) the sum of (i) the outstanding
amount of the Revolving Credit Loans as of such date plus (ii) the Maximum
Drawing Amount plus (iii) all Unpaid Reimbursement Obligations.
Exchange Rate. With respect to any amount in Dollars the rate of exchange
as quoted by the Bank of Canada as the noon rate of Canadian Dollars for Dollars
on or about 12:00 p.m. (noon) Toronto time on the Business Day on which the
determination is required to be made.
Fee Letters. See Section 5.1.
Fixed Charge Coverage Ratio. At the end of any fiscal period of the
Borrower, the ratio of Consolidated Operating Cash Flow for such period to
Consolidated Total Debt Service for such period.
generally accepted accounting principles. (a) When used in Section 10,
whether directly or indirectly through reference to a capitalized term used
therein, means (i) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect on the RES Balance Sheet Date, and (ii) to the extent
consistent with such principles, the accounting practice of RES reflected in its
financial statements for the year ended on the RES Balance Sheet Date, and (b)
when used in general, other than as provided above, means principles that are
(i) consistent with the
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principles promulgated or adopted by the Financial Accounting Standards Board
and its predecessors, as in effect from time to time, and (ii) consistently
applied with past financial statements of the Borrower adopting the same
principles, provided that in each case referred to in this definition of
"generally accepted accounting principles" a certified public accountant would,
insofar as the use of such accounting principles is pertinent, be in a position
to deliver an unqualified opinion (other than a qualification regarding changes
in generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.
Government Assisted Indebtedness. Indebtedness of the Borrower or any of
its Subsidiaries incurred from any federal, state or local governmental
authority, agency or instrumentality, or for which any such authority, agency or
instrumentality provides direct or indirect credit support, including under any
industrial revenue bonds.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guaranty. The Guaranty made by the Guarantors in favor of the Banks and
the Agent pursuant to Section 6.2 hereof, pursuant to which the Guarantors
guaranty to the Banks and the Agent the payment and performance of the
Obligations.
Guarantors. The Parent, RTI Capital, Bliss & Laughlin, LLC, a Delaware
limited liability company, Canadian Drawn Steel Company Inc. a Canadian
corporation and Nimishillen & Tuscarawas, LLC, a Delaware limited liability
company.
Hazardous Substances. See Section 7.18(b).
Indebtedness. As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:
(i) every obligation of such Person for money borrowed,
(ii) every obligation of such Person evidenced by bonds, debentures, notes
or other similar instruments,
(iii) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person,
(iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable existing on the Effective Date,
or trade accounts payable or accrued liabilities arising in the ordinary course
of business which are not overdue by more than 90 days or which are being
contested in good faith),
(v) every obligation of such Person under any Capitalized Lease,
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(vi) every obligation of such Person under any lease (a "synthetic lease")
treated as an operating lease under generally accepted accounting principles and
as a loan or financing for U.S. income tax purposes,
(vii) all sales by such Person of (A) accounts or general intangibles for
money due or to become due (other than general intangibles related to assets
disposed of in accordance with this Agreement and the other Loan Documents), (B)
chattel paper, instruments or documents creating or evidencing a right to
payment of money or (C) other receivables (collectively "receivables"), whether
pursuant to a purchase facility or otherwise, other than in connection with the
disposition of the business operations of such Person relating thereto or a
disposition of defaulted receivables for collection and not as a financing
arrangement, and together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse, expenses or other
amounts in connection therewith,
(viii) every obligation of such Person under any forward contract, futures
contract, swap, option or other financing agreement or arrangement (including,
without limitation, caps, floors, collars and similar agreements), the value of
which is dependent upon interest rates, currency exchange rates, commodities or
other indices (a "derivative contract"),
(ix) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
extent that the terms of such Indebtedness provide that such Person is not
liable therefor and such terms are enforceable under applicable law,
(x) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise acting
as surety for, any obligation of a type described in any of clauses (i) through
(x) (the "primary obligation") of another Person (the "primary obligor"), in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person (A) to purchase or pay (or advance or supply funds for
the purchase of) any security for the payment of such primary obligation, (B) to
purchase property, securities or services for the purpose of assuring the
payment of such primary obligation, or (C) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (v) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (w) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the purchaser (other than the Borrower or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or
interest earned on such investment, (x) any synthetic lease shall be the
stipulated loss value, termination value or other equivalent amount, and (y) any
derivative contract shall be the
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maximum amount of any termination or loss payment required to be paid by such
Person if such derivative contract were, at the time of determination, to be
terminated by reason of any event of default or early termination event
thereunder, whether or not such event of default or early termination event has
in fact occurred.
Indenture. The Indenture, of even date herewith, among the Borrower, RTI
Capital and the Trustee, pursuant to which the Notes are issued, in the form
delivered to the Co-Agents on or prior to the Effective Date.
Ineligible Securities. Securities which may not be underwritten or dealt
in by member banks of the Federal Reserve System under Section 16 of the Banking
Act of 1933 (12 U.S.C.Section 24, Seventh), as amended.
Intercreditor Agreements. The Pledge Intercreditor Agreement and the Other
Asset Intercreditor Agreement.
Interest Payment Date. (a) As to any Base Rate Loan, the first day of the
calendar month with respect to interest accrued during the immediately preceding
calendar month, including, without limitation, the calendar month which includes
the Drawdown Date of such Base Rate Loan; (or if such day is not a Business Day,
then the next immediately following Business Day); and (b) as to any Eurodollar
Rate Loan in respect of which the Interest Period is (i) 3 months or less, the
last day of such Interest Period and (ii) more than 3 months, the date that is 3
months from the first day of such Interest Period and, in addition, the last day
of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan, (a)
initially, the period commencing on the Drawdown Date of such Loan and ending
on, (i) for any Base Rate Loan, the last day of the calendar month; and (ii) for
any Eurodollar Rate Loan, the last day of the 1, 2, 3, or 6 month period as
selected by the Borrower in a Loan Request; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Revolving Credit Loan and ending on the last day of the next calendar month
for any Base Rate Loan and the last day of one of the periods set forth above,
as selected by the Borrower in a Conversion Request, for any Eurodollar Rate
Loan; provided that all of the foregoing provisions relating to Interest Periods
are subject to the following:
(A) if any Interest Period with respect to a Eurodollar Rate Loan would
otherwise end on a day that is not a Eurodollar Business Day, that Interest
Period shall be extended to the next succeeding Eurodollar Business Day unless
the result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the immediately
preceding Eurodollar Business Day;
(B) if any Interest Period with respect to a Base Rate Loan would end on a
day that is not a Business Day, that Interest Period shall end on the next
succeeding Business Day;
(C) if the Borrower shall fail to give notice as provided in Section 2.7,
the Borrower shall be deemed to have requested a conversion of the affected
Eurodollar Rate Loan to a
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Base Rate Loan and the continuance of all Base Rate Loans as Base Rate Loans on
the last day of the then current Interest Period with respect thereto;
(D) any Interest Period relating to any Eurodollar Rate Loan that begins
on the last Eurodollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Eurodollar Business Day of a
calendar month; and
(E) any Interest Period relating to any Eurodollar Rate Loan that would
otherwise extend beyond the Revolving Credit Loan Maturity Date shall end on the
Revolving Credit Loan Maturity Date.
International Standby Practices. With respect to any standby Letter of
Credit, International Standby Practices (ISP98), International Chamber of
Commerce Publication No. 590, or any successor code of standby letter of credit
practices among banks adopted by the Agent in the ordinary course of its
business as a standby letter of credit issuer and in effect at the time of
issuance of such Letter of Credit.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock, other equity interests
or Indebtedness of, or for loans, advances, capital contributions or transfers
of property for a similar purpose to, or in respect of any guaranties of (or
other commitments as described under Indebtedness), or obligations of, any
Person. In determining the aggregate amount of Investments outstanding at any
particular time: (a) the amount of any Investment represented by a guaranty
shall be taken at not less than the principal amount of the obligations
guaranteed and still outstanding, except that if such guaranty is limited in
amount, the amount of such Investment shall be equal to the amount to which such
guaranty is limited; (b) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but only by repurchase,
redemption, retirement, repayment, dividend or distribution); (c) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise; and (d) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value thereof.
Letter of Credit. See Section 4.1.1.
Letter of Credit Application. See Section 4.1.1.
Letter of Credit Fee. See Section 4.6.
Letter of Credit Participation. See Section 4.1.4.
Loan Documents. This Credit Agreement, the Revolving Credit Notes, the
Letter of Credit Applications, the Letters of Credit, the Intercreditor
Agreements and the Security Documents and the Rate Protection Agreements.
Loan Request. See Section 2.6.
Majority Banks. As of any date, the Banks holding at least fifty-one
percent (51%) of the outstanding principal amount of the Revolving Credit Notes
on such date; and if no
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such principal is outstanding, the Banks whose aggregate Commitments constitutes
more than fifty-one percent (51%) of the Total Commitment, provided, that
Majority Banks shall in any event include at least three (3) or more Banks which
are not Co-Agents.
Marked to Market Manufacturing and Conversion Costs of Sales. For each
month in any fiscal period, the product of (a) the cost per ton incurred for
manufacturing and converting products during such month, weighted by the
appropriate process routing based on shipments during such month, times (b) the
aggregate shipments (by ton) during such month.
Marked to Market Materials Cost of Sales. For each month in any fiscal
period, the product of (a) receipted materials costs per ton weighted by the
Borrower's and its Subsidiaries' actual product mix of shipments during such
month, times (b) the aggregate shipments (by ton) during such month.
Master Pledge Agreement. The Master Pledge Agreement, of even date
herewith, made by the Borrower, the Parent and the other "Pledgors" named
therein in favor of the United States Trust Company of New York as collateral
agent for the benefit of the Banks, the Agent, the Trustee and the other
"Secured Parties" named therein..
Master Restructuring Agreement. The Master Restructuring Agreement, dated
as of August, 1999 among Bar Technologies, Inc. ("BarTech"), Republic Engineered
Steels, Inc. ("RES"), USS/Kobe Steel Company ("USS/Kobe") and the other parties
thereto, pursuant to which such Persons combine their operating assets into the
Borrower and enter into certain transactions related thereto.
Material Adverse Effect. A material adverse effect on the consolidated
assets, business, condition (financial or otherwise) or operations of the
Borrower or on the Borrower's ability to perform its material Obligations under
the Loan Documents or the Banks' and the Agent's material rights under the Loan
Documents.
Maximum Drawing Amount. The maximum aggregate amount from time to time
that the beneficiaries are or may become entitled to draw under issued and
outstanding Letters of Credit, as such aggregate amount may be reduced from time
to time pursuant to the terms of the Letters of Credit.
Mortgaged Property. The real estate and fixtures related to the Canton
Cast-Roll Facility and subject to the Mortgage and any related properties,
rights and assets subject to the Mortgage.
Mortgage. The mortgage, dated or to be dated on or prior to the Effective
Date, from the Borrower to the Agent for the benefit of the Banks with respect
to the Mortgaged Property and in form and substance satisfactory to the Banks
and the Agent.
Multiemployer Plan. Any multiemployer plan within the meaning of Section
3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
Net Cash Proceeds. In connection with any sale or other disposition of
assets, any issuance of equity or any incurrence of Indebtedness after the
Effective Date, the cash
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proceeds received from such sale, disposition, issuance or incurrence, net of
all customary and reasonable costs of sale, underwriting or brokerage costs,
fees, commissions, costs, expenses, and taxes paid or payable as a result
thereof (including resulting income tax distributions of the type described in
Section 9.4(d)) by the Borrower or any of its Subsidiaries, including, without
limitation, attorneys' fees, survey costs, title insurance premiums, and related
search and recording charges, transfer taxes and deed or mortgage recording
taxes, and, in the case of any sale or other disposition of assets, after the
satisfaction of all Indebtedness and other obligations permitted hereby and
secured by such assets or required to by paid upon the sale of such assets.
New Banks. See Section 29.3.
Non-Affected Bank. See Section 5.11.
Note Documents. The Notes, the Indenture and all documents, instruments
and agreements executed in connection therewith, each in the form delivered to
the Co-Agents or on prior to the Effective Date.
Notes. The 13 3/4% Senior Secured Notes, of even date herewith, due 2009
issued by the Borrower and RTI Capital in the form delivered to the Co-Agents on
or prior to the Effective Date.
Obligations. All indebtedness, obligations and liabilities of any of the
Borrower and its Subsidiaries to any of the Banks and the Agent, individually or
collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise (including any indebtedness of
Borrower incurred in connection with cash management services provided by BKB),
arising or incurred under this Credit Agreement, any of the other Loan
Documents, or in respect of any of the Revolving Credit Loans made or
Reimbursement Obligations incurred, or any of the Revolving Credit Notes, Letter
of Credit Application, Letter of Credit, Rate Protection Agreements, or other
instruments at any time evidencing any thereof .
Operating Account. The Borrower's operating account (No. 53132381)
maintained with BKB.
outstanding. With respect to the Revolving Credit Loans, the aggregate
unpaid principal thereof as of any date of determination.
Other Asset Intercreditor Agreement. That Amended and Restated
Intercreditor and Subordination Agreement, dated as of August 13, 1999, by and
among United States Trust Company of New York, as collateral agent and as
trustee, the "Pennsylvania Lenders", as defined therein, the Agent, the Parent,
the Borrower, RTI Capital and the other parties thereto.
Parent. Republic Technologies International Holdings, LLC, a Delaware
limited liability company.
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Parent Guaranty. The Guaranty contained in Section 6.2 hereof by the
Parent in favor of the Banks and the Agent.
Patent Assignment. The Patent Collateral Assignment and Security
Agreement, made by the Borrower in favor of the Agent.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of
ERISA and any successor entity or entities having similar responsibilities.
Pennsylvania Indebtedness Indebtedness of the Borrower to the Pennsylvania
Lenders under the Pennsylvania Lenders Debt Instruments.
Pennsylvania Lenders. The "Pennsylvania Lenders" as defined in the Other
Asset Intercreditor Agreement
Pennsylvania Lenders Debt Instruments. The "Pennsylvania Lenders Debt
Instruments" as defined in the Other Asset Intercreditor Agreement.
Perfection Certificates. The Perfection Certificates as defined in the
Security Agreements.
Permitted Holders. (i) Blackstone Capital Partners II Merchant Banking
Fund L.P., a Delaware limited partnership, Blackstone Offshore Capital Partners
II L.P., a Cayman Islands exempted limited partnership, and Blackstone Family
Investment Partnership II L.P., a Delaware limited partnership, (ii) each
general partner of any of the foregoing who is a partner or employee of The
Blackstone Group L.P., (iii) USX Corporation, (iv) Kobe Steel, Ltd. and (v) any
Affiliate of the persons specified in clauses (i)-(iv) of this definition.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 9.2.
Person. Any individual, corporation, partnership, limited liability
company, trust, unincorporated association, business, or other legal entity, and
any government or any governmental agency or political subdivision thereof.
Petty Cash Accounts. Those accounts listed and described on Schedule 7.20
as petty cash accounts.
Rate Protection Agreements. Any interest rate swap, cap, collar or similar
agreement or arrangement entered into, from time to time, by the Borrower or any
of its Subsidiaries which is a Guarantor and any of the Banks or any of their
respective Affiliates to protect the Borrower or such Subsidiary against
fluctuations in interests rates on Indebtedness of such Borrower or such
Subsidiary permitted hereunder and as to which the Bank (or Affiliates) which is
a party thereto has provided notice to the Agent of such Rate Protection
Agreement's existence, type, notional amount, tenor and cost to terminate.
Rate Protection Exposure. As of any date of determination, the net cost to
terminate all Rate Protection Agreements, marked to market no less frequently
than monthly, or more frequently if requested by the Agent.
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Real Estate. All real property at any time owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Revolving Credit Note, or the continuation
of such grid, or any other similar record, including computer records,
maintained by any Bank with respect to any Revolving Credit Loan referred to in
such Note.
Reference Bank. BKB.
Register. See Section 19.3.
Reimbursement Obligation. The Borrower's obligation to reimburse the Agent
and the Banks on account of any drawing under any Letter of Credit as provided
in Section 5.2.
Rental Obligations. All present or future obligations of the Borrower or
any of its Subsidiaries under any rental agreements or leases of real or
personal property, other than (a) obligations that can be terminated by the
giving of notice without liability to the Borrower or such Subsidiary in excess
of the liability for rent due within thirty (30) days of the date on which such
notice is given and under which no penalty or premium is paid as a result of any
such termination, and (b) obligations in respect of Capitalized Leases or any
synthetic leases referred to in clause (vi) of the definition of the term
"Indebtedness".
RES Balance Sheet Date. June 30, 1998.
Restricted Payment. As to the Borrower and its Subsidiaries, any (a)
Distribution, (b) any payment or prepayment by the Borrower or its Subsidiaries
to the Parent or to any Affiliate of the Borrower or the Parent (other than a
payment to a Subsidiary of the Borrower which is a Guarantor or the Borrower) or
(c) any payment in respect of any Indebtedness which is subordinated in right of
payment by its terms to the repayment of the applicable Obligations.
RES Holding. RES Holding Corporation, a Delaware corporation.
Restructuring. The combination of the operating assets and liabilities of
BarTech, RES, and the Acquired Portions of USS/Kobe and certain other Persons
into the Borrower pursuant to the Master Restructuring Agreement and any related
documents and agreements.
Restructuring Documents. The Master Restructuring Agreement and all
documents, instruments and agreements executed in connection therewith, each in
form and substance satisfactory to the Co-Agents.
Revolving Credit Loan Maturity Date. August 13, 2004.
Revolving Credit Loans. Revolving credit loans made or to be made by the
Banks to the Borrower pursuant to Section 2.
Revolving Credit Note Record. A Record with respect to a Revolving Credit
Note.
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Revolving Credit Notes. See Section 2.4.
Roll-up Transaction. Any merger or consolidation of the Borrower with, or
any transfer of all of the assets of, or membership interests of, the Borrower
to, any newly organized Affiliate thereof (having no material liabilities other
than investments in or liabilities with respect to the Borrower or its
Subsidiaries) or to RTII (provided it has no material liabilities, other than
investments in or liabilities with respect to the Borrower or its Subsidiaries)
if such transaction and any series off related transactions are for the sole
purpose of creating a corporation that will own all of the assets that the
Borrower owned immediately prior to such transactions.
RTI Capital. RTI Capital Corp., a Delaware corporation.
RTII. Republic Technologies International, Inc., a Delaware corporation.
Section 20 Subsidiary. A Subsidiary of the bank holding company
controlling any Bank, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
Security Agreements. The Domestic Security Agreement and the Canadian
Security Agreement.
Security Documents. The Security Agreements, the Master Pledge Agreement,
the Patent Assignment, the Trademark Assignment, the Mortgage and the Agency
Agreements.
Settlement. The making of, or receiving of payments, in immediately
available funds, by the Banks, to the extent necessary to cause each Bank's
actual share of the outstanding amount of Revolving Credit Loans (after giving
effect to any Loan Request and including any Revolving Credit Loans made
pursuant to Section 2.6.2) to be equal to each Bank's Commitment Percentage of
the outstanding amount of such Revolving Credit Loans (after giving effect to
any Loan Request and including any Revolving Credit Loans made pursuant to
Section 2.6.2), where, prior to such event or action, the actual share is not so
equal.
Settlement Amount. See Section 2.8.3.1.
Settling Bank. See Section 2.8.3.2.
Settling Date. A Settling Date shall occur upon any one or more of the
following: (a) the Drawdown Date of any Loan Request, (b) the last Business Day
of each calendar week, (c) any date on which the Borrower's Obligations to the
Agent in respect of Revolving Credit Loans made pursuant to Section 2.6.2
exceeds $15,000,000 and (d) more frequently, if the Agent so designates to the
Banks from time to time.
Specialty Steel Assets. Those assets associated exclusively with the
Specialty Steel business of Republic Engineered Steels, Inc., including the
equipment of No. 3 Melt Shop and No. 4 Grinding Department in the Canton, Ohio
8th Street Plant, the equipment and property of the Canton, Ohio Harrison Road
Specialty Plant and the equipment and property of the Baltimore, Maryland
specialty steels plant.
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Specified Non-Consenting Bank. A Bank that shall have refused to approve
or consent to a waiver, consent or amendment hereunder or under the Loan
Documents which waiver, consent or amendment is, pursuant to Section 26,
approved by the Majority Banks or such greater number of Banks as are required
to cause such waiver, consent or amendment to be effective.
Stock Intercreditor Agreement. That Pledge Intercreditor Agreement of even
date herewith among the Agent, the Trustee and the United States Trust Company
of New York as collateral agent regarding the stock, membership interests and
other equity interests pledged pursuant to the Master Pledge Agreement.
Subsidiary. Any corporation, association, trust, or other business entity
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Subsidiary Guarantors. As of the Effective Date, RTI Capital, Bliss &
Laughlin, LLC, a Delaware limited liability company, Canadian Drawn Steel
Company Inc. a Canadian corporation and Nimishillen & Tuscarawas, LLC, a
Delaware limited liability company; as of any other date, such Subsidiaries and
any other Subsidiaries of the Borrower that are also Guarantors.
Super-Majority Banks. As of any date, the Banks holding at least
eighty-five percent (85%) of the outstanding principal amount of the Revolving
Credit Notes on such date (which must in any event include all of the
Co-Agents); and if no such principal is outstanding, each of the Co-Agents and
the Banks whose aggregate Commitments constitutes more than eighty-five percent
(85%) of the Total Commitment.
Survey. An instrument survey of the Mortgaged Property dated as of a date
subsequent to January 1, 1999, which shall show the location of all buildings,
structures, easements and utility lines on the Mortgaged Property, shall be
sufficient to remove the survey exception from the Title Policy, shall show that
all buildings and structures are within the lot lines of the Mortgaged Property,
shall not show any encroachments by others, shall show the zoning district or
districts in which the Mortgaged Property is located in a flood hazard district
as established by the Federal Emergency Management Agency or any successor
agency or is located in any flood plain, flood hazard or wetland protection
district established under federal, state or local law.
Surveyor Certificate. In relation to the Mortgaged Property, a certificate
executed by the surveyor who prepared the Survey dated as of a recent date and
containing such information relating to the Mortgaged Property as the Agent or
the Title Insurance Company may require, such certificate to be satisfactory to
the Agent in form and substance.
Sweep Deadline. The date forty-five (45) days after the Effective Date.
Swept Accounts. Those depository accounts from which, commencing on or
prior to the Sweep Deadline, all funds and cash proceeds shall be transferred to
the Agent pursuant to Sections 3.4, 8.13 and the Agency Agreements
applicable thereto and any future such accounts that may be established in
accordance with this Agreement.
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Swept Lockboxes. Those lockboxes from which, commencing on or prior to the
Sweep Deadline, all funds shall be transferred to the Swept Accounts pursuant to
Section 8.13.1 and the lockbox agreements pursuant thereto and any future such
lockboxes that may be established in accordance with this Agreement.
Syndication Agent. See preamble.
Title Insurance Company. Title Associates Inc.
Title Policy. In relation to the Mortgaged Property, an ALTA standard form
title insurance policy issued by the Title Insurance Company (with such
reinsurance or co-insurance as the Agent may require, any such reinsurance to be
with direct access endorsements) in such amount as may be determined by the
Agent insuring the priority of the Mortgage of the Mortgaged Property and that
the Borrower or one of its Subsidiaries holds marketable fee simple title to the
Mortgaged Property, subject only to the encumbrances permitted by the Mortgage
and which shall not contain exceptions for mechanics liens, persons in occupancy
or matters which would be shown by a survey (except as may be permitted by the
Mortgage), shall not insure over any matter except to the extent that any such
affirmative insurance is acceptable to the Agent in its sole discretion, and
shall contain such endorsements and affirmative insurance as the Agent in its
discretion may require, including but not limited to (i) comprehensive
endorsement, (ii) variable rate of interest endorsement, (iii) usury
endorsement, (iv) revolving credit endorsement, (vii) doing business
endorsement, (viii) last-dollar endorsement and (ix) ALTA form 3.1 zoning
endorsement.
Total Commitment. The sum of the Commitments of the Banks, as in effect
from time to time. The Total Commitment as of the Effective Date is
$425,000,000.
Trademark Assignment. The Trademark Collateral Assignment Agreement, of
even date herewith, made by the Borrower in favor of the Agent.
Trustee. The United States Trust Company of New York, as trustee under the
Indenture.
Type. As to any Revolving Credit Loan, its nature as a Base Rate Loan or a
Eurodollar Rate Loan.
Uniform Customs. With respect to any Letter of Credit, the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Agent in the ordinary course of its business as a letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which
the Borrower does not reimburse the Agent and the Banks on the date specified in
and in accordance with Section 4.2.
USS/Kobe. See definition of Master Restructuring Agreement.
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USS/Kobe Balance Sheet Date. March 31, 1999.
USX. USX Corporation, a Delaware corporation.
Veritas. The Veritas Capital Fund, L.P., a Delaware limited partnership,
KDJ L.L.C., a Delaware limited liability company, and HVR Holdings, L.L.C., a
Delaware limited liability company.
Voting Stock. Stock, membership interests or similar interests, of any
class or classes (however designated), the holders of which are at the time
entitled, as such holders, to vote under ordinary circumstances for the election
of a majority of the directors (or persons performing similar functions) of the
corporation, association, limited liability company, trust or other business
entity involved irrespective of whether any other stock, membership interests or
similar interests have the right to vote by reason of the happening of a
contingency.
Warrant Agreement. The Warrant Agreement of even date herewith among the
Warrant-Issuer and United States Trust Company of New York, as Warrant Agent.
Warrant-Issuer. Republic Technologies International, Inc., a Delaware
corporation.
Warrant Documents. The Warrant Agreement and all documents, instruments
and agreements executed in connection therewith, each in the form delivered to
the Co-Agents on or prior to the Effective Date.
Warrants. The Warrants to purchase Class D Common Stock of the
Warrant-Issuer issued to purchasers of the Notes on the Effective Date.
Section 1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such document
or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the singular.
(c) A reference to any law includes any amendment or modification to such
law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by generally accepted
accounting principles, which terms are defined in the Uniform Commercial Code as
in
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effect in the Commonwealth of Massachusetts, have the meanings assigned to them
therein, with the term "instrument" being that defined under Article 9 of the
Uniform Commercial Code.
(h) Reference to a particular "Section" refers to that section of this
Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Credit Agreement as a whole and not to any particular
section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including," the words "to" and "until" each mean "to but excluding,"
and the word "through" means "to and including."
(k) This Credit Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are, however, cumulative
and are to be performed in accordance with the terms thereof.
(l) This Credit Agreement and the other Loan Documents are the result of
negotiation among, and have been reviewed by counsel to, among others, the Agent
and the Borrower and are the product of discussions and negotiations among all
parties. Accordingly, this Credit Agreement and the other Loan Documents are not
intended to be construed against the Agent or any of the Banks merely on account
of the Agent's or any Bank's involvement in the preparation of such documents.
Section 2. THE REVOLVING CREDIT FACILITY.
Section 2.1. Commitment to Lend. Subject to the terms and conditions set
forth in this Credit Agreement, each of the Banks severally (and not jointly)
agrees to lend to the Borrower and the Borrower may borrow, repay, and reborrow
from time to time between the Effective Date and the Revolving Credit Loan
Maturity Date upon notice by the Borrower to the Agent given in accordance with
Section 2.6, such sums as are requested by the Borrower up to a maximum
aggregate amount outstanding (after giving effect to all amounts requested) at
any one time equal to such Bank's Commitment minus such Bank's Commitment
Percentage of the sum of the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations, provided that the sum of the outstanding amount of the Revolving
Credit Loans (after giving effect to all amounts requested) plus the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations shall not at any time
exceed the Availability. The Revolving Credit Loans shall be made pro rata in
accordance with each Bank's Commitment Percentage. Each request for a Revolving
Credit Loan hereunder shall constitute a representation and warranty by the
Borrower that the conditions set forth in Section 11 and Section 12, in the case
of the initial Revolving Credit Loans, and Section 12, in the case of all other
Revolving Credit Loans, have been satisfied on the date of such request.
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Section 2.2. Commitment Fee. The Borrower agrees to pay to the Agent for
the accounts of the Banks in accordance with their respective Commitment
Percentages a commitment fee calculated at the rate of one half of one percent
(1/2%) per annum on the average daily amount during each calendar month or
portion thereof from the Effective Date to the Revolving Credit Loan Maturity
Date, by which the Total Commitment minus the Maximum Drawing Amount and all
Unpaid Reimbursement Obligations exceeds the outstanding amount of Revolving
Credit Loans (excluding the Swing Line Loans) during such period or calendar
month. The commitment fee shall be payable monthly in arrears on the first
Business Day of each calendar month for the immediately preceding calendar month
commencing on the first such date following the date hereof, with a final
payment on the Revolving Credit Maturity Date or any earlier date on which the
Commitments shall terminate.
Section 2.3. Reduction of Total Commitment. The Borrower shall have the
right at any time with respect to any unused portion of the Total Commitment and
at the end of the applicable Interest Period with respect to Eurodollar Rate
Loans, and from time to time upon three (3) Business Days' prior written notice
to the Agent to reduce by $10,000,000 or an integral multiple thereof the Total
Commitment or terminate entirely the Total Commitment, whereupon the Commitments
of the Banks shall be reduced pro rata in accordance with their respective
Commitment Percentages of the amount specified in such notice or, as the case
may be, terminated. Promptly after receiving any notice of the Borrower
delivered pursuant to this Section 2.3, the Agent will notify the Banks of the
substance thereof. Upon the effective date of any such reduction or termination,
the Borrower shall pay to the Agent for the respective accounts of the Banks the
full amount of any commitment fee then accrued on the amount of the reduction.
No reduction or termination of the Commitments may be reinstated.
Section 2.4. The Revolving Credit Notes. The Revolving Credit Loans shall
be evidenced by separate promissory notes of the Borrower in substantially the
form of Exhibit B hereto, as applicable (each a "Revolving Credit Note"), dated
as of the Effective Date (or other such date on which a Bank may become a party
hereto in accordance with Section 19 hereof) and completed with appropriate
insertions. One Revolving Credit Note shall be payable to the order of each Bank
in a principal amount equal to such Bank's Commitment or, if less, the
outstanding amount of all Revolving Credit Loans made by such Bank, plus
interest accrued thereon, as set forth below. The Borrower irrevocably
authorizes each Bank to make or cause to be made, at or about the time of the
Drawdown Date of any Revolving Credit Loan or at the time of receipt of any
payment of principal on such Bank's Revolving Credit Note, an appropriate
notation on such Bank's Revolving Credit Note Record reflecting the making of
such Revolving Credit Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Revolving Credit Loans set forth on such Bank's
Revolving Credit Note Record shall be prima facie evidence of the principal
amount thereof owing and unpaid to such Bank, but the failure to record, or any
error in so recording, any such amount on such Bank's Revolving Credit Note
Record shall not limit or otherwise affect the obligations of the Borrower
hereunder or under any Revolving Credit Note, including, without limitation, its
obligations to make payments of principal of or interest on any Revolving Credit
Note when due.
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Section 2.5. Interest on Revolving Credit Loans. Except as otherwise
provided in Section 5.10,
(a) Each Base Rate Loan shall bear interest at the rate per annum equal to
the Base Rate plus the Applicable Margin.
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the
Eurodollar Rate determined for such Interest Period plus the Applicable Margin.
(c) The Borrower promises to pay interest on each Revolving Credit Loan in
arrears on each Interest Payment Date with respect thereto.
Section 2.6. Requests for Revolving Credit Loans.
2.6.1. General. The Borrower shall give to the Agent written notice
in the form of Exhibit C hereto (or telephonic notice confirmed in a
writing in the form of Exhibit C hereto) of each Revolving Credit Loan
requested hereunder (a "Loan Request") no later than 11:00 a.m. (Boston
time) on the proposed Drawdown Date of any Base Rate Loan and (b) three
(3) Eurodollar Business Days prior to the proposed Drawdown Date of any
Eurodollar Rate Loan. Each such notice shall specify (i) the principal
amount of the Revolving Credit Loan requested, (ii) the proposed Drawdown
Date of such Revolving Credit Loan, (iii) the Type of such Revolving
Credit Loan and (iv) the Interest Period for such Revolving Credit Loan if
a Eurodollar Rate Loan. Promptly upon receipt of any such notice, the
Agent shall notify each of the Banks thereof. Each Loan Request shall be
irrevocable and binding on the Borrower and shall obligate the Borrower to
accept the Revolving Credit Loan requested from the Banks on the proposed
Drawdown Date. Each Loan Request for Eurodollar Loans shall be in a
minimum aggregate amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof and no more than five (5) Eurodollar Rate
Loans Interest Periods may run concurrently at any time during the term of
this Credit Agreement.
2.6.2. Swing Line. Notwithstanding the notice and minimum amount
requirements set forth in Section 2.6.1 but otherwise in accordance with
the terms and conditions of this Credit Agreement, the Agent may, in its
sole discretion and without conferring with the Banks, make Revolving
Credit Loans to the Borrower up to a maximum aggregate amount outstanding
(after giving effect to all amounts borrowed under this Section 2.6.2) at
any one time equal to $30,000,000 (i) by entry of credits to the
Borrower's Operating Account with the Agent to cover checks or other
charges which the Borrower has drawn or made against such account or (ii)
in an amount as otherwise requested by the Borrower. The Borrower hereby
requests and authorizes the Agent to make from time to time such Revolving
Credit Loans by means of appropriate entries of such credits sufficient to
cover checks and other charges then presented for payment from the
Operating Account or as otherwise so requested. The Borrower acknowledges
and agrees that the making of such Revolving Credit Loans shall, in each
case, be subject in all respects to the provisions of this Credit
Agreement as if they were Revolving Credit Loans covered
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by a Loan Request including, without limitation, the limitations set forth
in Section 2.1 and the requirements that the applicable provisions of
Section 11 (in the case of Revolving Credit Loans made on the Effective
Date) and Section 12 be satisfied. All actions taken by the Agent pursuant
to the provisions of this Section 2.6.2 shall be conclusive and binding on
the Borrower and the Banks absent the Agent's gross negligence or willful
misconduct. Revolving Credit Loans made pursuant to this Section 2.6.2
shall be Base Rate Loans until converted in accordance with the provisions
of this Agreement and, prior to a Settlement, such interest shall be for
the account of the Agent. The Banks shall pay the Agent their pro rata
share of Revolving Credit Loans made pursuant to this Section 2.6.2
pursuant to the Settlement provisions of Section 2.8.3.
Section 2.7. Conversion Options.
2.7.1. Conversion to Different Type of Revolving Credit Loan. The
Borrower may elect from time to time to convert any outstanding Revolving
Credit Loan to a Revolving Credit Loan of another Type, provided that (a)
with respect to any such conversion of a Revolving Credit Loan to a Base
Rate Loan, the Borrower shall give the Agent at least one (1) Business
Day's prior written notice of such election; (b) with respect to any such
conversion of a Revolving Credit Loan to a Eurodollar Rate Loan, the
Borrower shall give the Agent at least three (3) Eurodollar Business Days'
prior written notice of such election; (c) with respect to any such
conversion of a Eurodollar Rate Loan into a Revolving Credit Loan of
another Type, such conversion shall only be made on the last day of the
Interest Period with respect thereto and (d) no Revolving Credit Loan may
be converted into a Eurodollar Rate Loan when any Default or Event of
Default has occurred and is continuing. On the date on which such
conversion is being made each Bank shall take such action as is necessary
to transfer its Commitment Percentage of such Revolving Credit Loans to
its Domestic Lending Office or its Eurodollar Lending Office, as the case
may be. All or any part of outstanding Revolving Credit Loans of any Type
may be converted into a Revolving Credit Loan of another Type as provided
herein, provided that any partial conversion shall be in an aggregate
principal amount of $5,000,000 or an integral multiple of $1,000,000 in
excess thereof. Each Conversion Request relating to the conversion of a
Revolving Credit Loan to a Eurodollar Rate Loan shall be irrevocable by
the Borrower.
2.7.2. Continuation of Type of Revolving Credit Loan. Any Revolving
Credit Loan of any Type may be continued as a Revolving Credit Loan of the
same Type upon the expiration of an Interest Period with respect thereto
by compliance by the Borrower with the notice provisions contained in
Section 2.7.1; provided that no Eurodollar Rate Loan may be continued as
such when any Default or Event of Default has occurred and is continuing
and the Agent has given the Borrower notice that the option to borrow or
continue Eurodollar Rate Loans has been suspended or terminated, but shall
be automatically converted to a Base Rate Loan on the last day of the
first Interest Period relating thereto ending during the continuance of
any Default or Event of Default and following such notice. In the event
the Borrower fails to provide any such notice with respect to the
continuation of any Eurodollar Rate Loan as such, then such Eurodollar
Rate Loan shall be automatically converted to a Base Rate Loan on the last
day of the Interest Period
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relating thereto. The Agent shall notify the Banks promptly when any such
automatic conversion contemplated by this Section 2.7 is scheduled to
occur.
2.7.3. Eurodollar Rate Loans. Any conversion to or from Eurodollar
Rate Loans shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of
all Eurodollar Rate Loans having the same Interest Period shall not be
less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.
Section 2.8. Funds for Revolving Credit Loan.
2.8.1. Funding Procedures. Not later than 12:00 Noon (Boston time)
on the proposed Drawdown Date (other than the date on which any Revolving
Credit Loan is converted or continued in accordance with Section 2.7) of
any Revolving Credit Loans, each of the Banks will make available to the
Agent, at its Head Office, in immediately available funds, the amount of
such Bank's Commitment Percentage of the amount of the requested Revolving
Credit Loans. Upon receipt from each Bank of such amount, and upon receipt
of the documents required by Sections 11 and 12 on the Effective
Date and thereafter required by Section 12 and the satisfaction of the
other conditions set forth therein, to the extent applicable, the Agent
will make available to the Borrower the aggregate amount of such Revolving
Credit Loans made available to the Agent by the Banks. The failure or
refusal of any Bank to make available to the Agent at the aforesaid time
and place on any such Drawdown Date the amount of its Commitment
Percentage of the requested Revolving Credit Loans shall not relieve any
other Bank from its several obligation hereunder to make available to the
Agent the amount of such Bank's Commitment Percentage of any requested
Revolving Credit Loans.
2.8.2. Advances by Agent. The Agent may, unless notified to the
contrary by any Bank prior to a Drawdown Date (other than the date on
which any Revolving Credit Loan is converted or continued in accordance
with Section 2.7), assume that such Bank has made available to the Agent
on such Drawdown Date the amount of such Bank's Commitment Percentage of
the Revolving Credit Loans to be made on such Drawdown Date, and the Agent
may (but it shall not be required to), in reliance upon such assumption,
make available to the Borrower a corresponding amount. If any Bank makes
available to the Agent such amount on a date after such Drawdown Date,
such Bank shall pay to the Agent on demand an amount equal to the product
of (a) the average computed for the period referred to in clause (c)
below, of the weighted average interest rate paid by the Agent for federal
funds acquired by the Agent during each day included in such period, times
(b) the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans, times (c) a fraction, the numerator of which is the number
of days that elapse from and including such Drawdown Date to the date on
which the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans shall become immediately available to the Agent, and the
denominator of which is 365. A statement of the Agent submitted to such
Bank with respect to any amounts owing under this paragraph shall be prima
facie evidence of the amount due and owing to the Agent by such Bank. If
the amount of such Bank's Commitment Percentage of such
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Revolving Credit Loans is not made available to the Agent by such Bank
within three (3) Business Days following such Settling Date, the Agent
shall be entitled to recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to the Revolving Credit
Loans made most recently preceding such Drawdown Date.
2.8.3. Settlements.
2.8.3.1. General. On each Settling Date, the Agent shall, not
later than 11:00 a.m. (Boston time), give telephonic or facsimile
notice (i) to the Banks and the Borrower of the respective
outstanding amount of Revolving Credit Loans made by the Agent on
behalf of the Banks from the immediately preceding Settling Date
through the close of business on the prior day and the amount of any
Eurodollar Rate Loans to be made (following the giving of notice
pursuant to Section 2.6.1(b)) on such date pursuant to a Loan
Request and (ii) to the Banks of the amount (a "Settlement Amount")
that each Bank (a "Settling Bank") shall pay to effect a Settlement
of any Revolving Credit Loan. A statement of the Agent submitted to
the Banks and the Borrower or to the Banks with respect to any
amounts owing under this Section 2.8.3 shall be prima facie evidence
of the amount due and owing. Each Settling Bank shall, not later
than 3:00 p.m. (Boston time) on such Settling Date, effect a wire
transfer of immediately available funds to the Agent in the amount
of the Settlement Amount for such Settling Bank. All funds advanced
by any Bank as a Settling Bank pursuant to this Section 2.8.3 shall
for all purposes be treated as a Revolving Credit Loan made by such
Settling Bank to the Borrower and all funds received by any Bank
pursuant to this Section 2.8.3 shall for all purposes be treated as
repayment of amounts owed with respect to Revolving Credit Loans
made by such Bank. In the event that any bankruptcy, reorganization,
liquidation, receivership or similar cases or proceedings in which
the Borrower is a debtor prevent a Settling Bank from making any
Revolving Credit Loan to effect a Settlement as contemplated hereby,
such Settling Bank will make such dispositions and arrangements with
the other Banks with respect to such Revolving Credit Loans, either
by way of purchase of participations, distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in
each Bank's share of the outstanding Revolving Credit Loans being
equal, as nearly as may be, to such Bank's Commitment Percentage of
the outstanding amount of the Revolving Credit Loans.
2.8.3.2. Failure to Make Funds Available. The Agent may,
unless notified to the contrary by any Settling Bank prior to a
Settling Date, assume that such Settling Bank has made or will make
available to the Agent on such Settling Date the amount of such
Settling Bank's Settlement Amount, and the Agent may (but it shall
not be required to), in reliance upon such assumption, make
available to the Borrower a corresponding amount. If any Settling
Bank makes available to the Agent such amount on a date after such
Settling Date, such Settling Bank shall pay to the Agent on demand
an amount equal to the product of (i) the average computed for the
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period referred to in clause (iii) below, of the weighted average
interest rate paid by the Agent for federal funds acquired by the
Agent during each day included in such period, times (ii) the amount
of such Settlement Amount, times (iii) a fraction, the numerator of
which is the number of days that elapse from and including such
Settling Date to the date on which the amount of such Settlement
Amount shall become immediately available to the Agent, and the
denominator of which is 360. A statement of the Agent submitted to
such Settling Bank with respect to any amounts owing under this
Section 2.8.3.2 shall be prima facie evidence of the amount due and
owing to the Agent by such Settling Bank. If such Settling Bank's
Settlement Amount is not made available to the Agent by such
Settling Bank within three (3) Business Days following such Settling
Date, the Agent shall be entitled to recover such amount from the
Borrower on demand, with interest thereon at the rate per annum
applicable to the Revolving Credit Loans as of such Settling Date.
2.8.3.3. No Effect on Other Banks. The failure or refusal of
any Settling Bank to make available to the Agent at the aforesaid
time and place on any Settling Date the amount of such Settling
Bank's Settlement Amount shall not (i) relieve any other Settling
Bank from its several obligations hereunder to make available to the
Agent the amount of such other Settling Bank's Settlement Amount or
(ii) impose upon any Bank, other than the Settling Bank so failing
or refusing, any liability with respect to such failure or refusal
or otherwise increase the Commitment of such other Bank.
Section 2.9. Change in Borrowing Base. The Borrowing Base shall be
determined weekly (or at such other interval as may be specified pursuant
to Section 8.4(i)) by the Agent by reference to the Borrowing Base Report.
Section 2.10. Canadian Subfacility. Upon the reasonable request of the
Borrower, the Banks and the Agent shall negotiate in good faith to amend this
Agreement to permit Canadian Drawn Steel Company Inc. to borrow Dollars or
Canadian Dollars, the amount of such loans to be subject to such caps, terms and
conditions as shall be satisfactory to the Banks and the Agent, provided,
however, that the Banks and the Agent shall be under no obligation to increase
the Total Commitment to permit such borrowings by Canadian Drawn Steel Company
Inc.
Section 3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
Section 3.1. Maturity. The Borrower promises to pay on the Revolving
Credit Loan Maturity Date, and there shall become absolutely due and payable on
the Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
Section 3.2. Mandatory Repayments of Revolving Credit Loans.
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(a) If at any time the sum of the outstanding amount of the
Revolving Credit Loans, the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations exceeds the Availability, then the Borrower
shall immediately pay the amount of such excess to the Agent for the
respective accounts of the Banks. Any amounts paid to the Agent for the
respective accounts of the Banks under this Section 3.2(a) shall be
applied, first, to any Unpaid Reimbursement Obligations; second, in the
absence of instruction by the Borrower, to the principal of Base Rate
Loans and then to the principal of Eurodollar Rate Loans; and third, to
provide to the Agent cash collateral for Reimbursement Obligations as
contemplated by Section 4.2(b) and (c). Each payment of any Unpaid
Reimbursement Obligations or prepayment of Revolving Credit Loans shall be
allocated among the Banks, in proportion, as nearly as practicable, to
each Unpaid Reimbursement Obligation or (as the case may be) the
respective unpaid principal amount of each Bank's Revolving Credit Note,
with adjustments to the extent practicable to equalize any prior payments
or repayments not exactly in proportion.
(b) The Borrower hereby agrees that:
(i) if the Borrower or any of its Subsidiaries shall sell the
Canton Cast-Roll Facility or any substantial portion thereof (other
than de minimus sales of obsolete equipment in the ordinary course
of business), (A) the Eligible Fixed Asset Cap shall be reduced
immediately to $0, and (B) the Borrower shall immediately apply an
amount equal to the Net Cash Proceeds of such sale of the Canton
Cast Roll Facility to the Unpaid Reimbursement Obligations,
Revolving Credit Loans and Reimbursement Obligations in the order
provided for in Section 3.2(a);
(ii) if the Borrower or any of its Subsidiaries shall sell or
issue any shares of its stock, options or warrants for the purchase
of its stock or any other equity interests in a public offering of
its stock or the stock of any company resulting from the Roll-up
Transaction, the Net Cash Proceeds of such sale shall be applied and
the following adjustments shall occur as follows: (I) first, up to
50% of such Net Cash Proceeds may be used to redeem the Notes
pursuant to Section 5 of the Notes and the Indenture, (II) second,
the Eligible Fixed Asset Cap shall be reduced by an amount equal to
that portion of such Net Cash Proceeds that is not used to redeem
the Notes (the "Unused Portion"), or, if the Unused Portion exceeds
the Eligible Fixed Asset Cap, the Eligible Fixed Asset Cap shall be
reduced to $0, (III) third, an amount equal to the amount by which
the Eligible Fixed Asset Cap was reduced pursuant to the preceding
clause shall be applied to the Unpaid Reimbursement Obligations,
Revolving Credit Loans and Reimbursement Obligations in the order
provided for in Section 3.2(a), (IV) fourth, to the extent that the
Unused Portion exceeds the amount by which the Eligible Fixed Asset
Cap was reduced pursuant to clause (III) above, such excess may be
used to redeem the Notes pursuant to Section 5 of the Notes and the
Indenture; and (V) fifth, to the extent that any portion of the Net
Cash Proceeds remain, such portion shall be applied to the Unpaid
Reimbursement Obligations,
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Revolving Credit Loans and Reimbursement Obligations in the order
provided for in Section 3.2(a).
(iii) if the Borrower or any of its Subsidiaries shall receive
insurance proceeds related to the Canton Cast-Roll Facility or
receive awards for takings or condemnation of any of the Collateral
and, (A), if the Borrower notifies the Agent on or before the
receipt of such awards or proceeds of its intention to reinvest the
Net Cash Proceeds of such awards or proceeds, such Net Cash Proceeds
shall be immediately delivered to the Agent to be held as cash
collateral for the Obligations until the earlier to occur of (x) the
disbursement of such Net Cash Proceeds by the Agent, upon terms and
conditions as the Agent may reasonably prescribe, for direct
application by the Borrower to the repair or replacement of such
Collateral and (y) the termination of the 180 day period following
receipt of such proceeds, upon which date the Borrower shall repay
the Revolving Credit Loans in an aggregate amount equal to the
remaining unreinvested amount of Net Cash Proceeds of such proceeds
or awards or, in the case of proceeds or awards related to the
Canton Cast-Roll Facility and not applied to repair or replace the
same as provided in clause (x) above, to repay the Revolving Credit
Loans in an amount equal to such Net Cash Proceeds and reduce the
Eligible Fixed Asset Cap in at least an amount equal to the
reduction in appraised value of the Canton Cast-Roll Facility if the
Canton Cast-Roll Facility remains operational or the entire amount
of the Eligible Fixed Asset Cap if the Canton Cast-Roll Facility is
no longer operational and, (B) if the Borrower does not notify the
Agent on or before the receipt of such awards or proceeds of its
intention to reinvest the Net Cash Proceeds of such awards or
proceeds the Borrower repay the Revolving Credit Loans in an
aggregate amount equal to the Net Cash Proceeds of such proceeds or
awards immediately upon the receipt of such Net Cash Proceeds and in
the case of the Canton Cast-Roll Facility, if the Canton Cast-Roll
Facility is no longer operational the Eligible Fixed Asset Cap shall
be immediately reduced to $0;
(iv) if the Borrower or any of its Subsidiaries shall incur
Canton Indebtedness, the Revolving Credit Loans shall be repaid in
an aggregate amount equal to the Net Cash Proceeds thereof and the
Eligible Fixed Asset Cap shall be permanently reduced immediately to
$0.
To the extent that any reduction in the Total Commitment shall
result in the sum of the outstanding amount of the Revolving Credit Loans,
the Maximum Drawing Amount and all Unpaid Reimbursement Obligations to be
greater than the Availability, the Borrower shall repay such excess in
accordance with Section 3.2(a) hereof.
Section 3.3. Optional Repayments of Revolving Credit Loans. The Borrower
shall have the right, at its election, to repay the outstanding amount of the
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, provided that any full or partial prepayment of the outstanding amount
of any Eurodollar Rate Loans pursuant to this Section 3.3 may be made only on
the last day of the Interest Period relating
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thereto. The Borrower shall give the Agent, no later than 11:00 a.m., Boston
time, on the day of the proposed repayment prior written notice of any proposed
prepayment pursuant to this Section 3.3 of Base Rate Loans, and three (3)
Eurodollar Business Days' notice of any proposed prepayment pursuant to this
Section 3.3 of Eurodollar Rate Loans, in each case specifying the proposed date
of prepayment of Revolving Credit Loans and the principal amount to be prepaid.
Each such partial prepayment of the Revolving Credit Loans shall be in an
integral multiple of $1,000,000 and shall be applied, in the absence of
instruction by the Borrower, first to the principal of Base Rate Loans and then
to the principal of Eurodollar Rate Loans. Each partial prepayment shall be
allocated among the Banks, in proportion, as nearly as practicable, to the
respective unpaid principal amount of each Bank's Revolving Credit Note, with
adjustments to the extent practicable to equalize any prior repayments not
exactly in proportion.
Section 3.4. Automatic Repayments of Revolving Credit Loans Prior to Event
of Default.
3.4.1. Credit for Funds Transferred from Swept Accounts. Prior to
the occurrence of an Event of Default as to which the account officers of
the Agent active upon the Borrower's account have actual knowledge, (i)
all funds and cash proceeds in the form of a wire transfer transferred to
the Agent from the Swept Accounts as contemplated by Section 8.13.2(c)
shall be credited on the same Business Day as the Agent's receipt of such
amounts (or up to such later date as the Agent determines that good
collected funds have been received), and applied as contemplated by
Section 3.4.2, and (ii) all funds and cash proceeds in the form of an
automated clearing house transfer transferred to the Agent from the Swept
Accounts as contemplated by Section 8.13.2(c) shall be credited, on the
next Business Day following the Agent's receipt of such amounts (or up to
such later date as the Agent determines that good collected funds have
been received), and applied as contemplated by Section 3.4.2. For purposes
of the foregoing provisions of this Section 3.4, the Agent shall not be
deemed to have received any such funds or cash proceeds on any day unless
received by the Agent before 3:00 p.m. (Boston time) on such day. The
Borrower further acknowledges and agrees that any such provisional credits
or credits in respect of wire or automatic clearing house funds transfers
shall be subject to reversal if final collection in good funds of the
related item is not received by, or final settlement of the funds transfer
is not made in favor of, the Agent in accordance with the Agent's
customary procedures and practices for collecting provisional items or
receiving settlement of funds transfers.
3.4.2. Application of Automatic Payments Prior to Event of Default.
(a) Prior to the occurrence of an Event of Default of which
the account officers of the Agent active on the Borrower's account
have knowledge, all funds transferred to the Agent for application
against the Obligations and for which the Borrower has received
credits shall be applied to the Obligations as follows:
(i) first, to pay amounts then due and payable under
this Credit Agreement, the Revolving Credit Notes and the
other Loan Documents;
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(ii) second, to reduce Revolving Credit Loans made by
the Agent pursuant to Section 2.6.2 and for which Settlement
has not then been made;
(iii) third, to reduce Revolving Credit Loans made by
the Agent pursuant to Section 2.8.2 and for which Settlement
has not then been made;
(iv) fourth, to reduce other Revolving Credit Loans
which are Base Rate Loans;
(v) fifth, to reduce Revolving Credit Loans which are
Eurodollar Rate Loans; and
(vi) sixth, except as otherwise required by Section
4.2(b) and (c), to the Concentration Account.
(b) All prepayments of Eurodollar Rate Loans prior to the end
of an Interest Period shall obligate the Borrower to pay any
breakage costs associated with such Eurodollar Rate Loans in
accordance with Section 5.9.
(c) All repayments of the Revolving Credit Loans pursuant to
this Section 3.4.2 shall be allocated among the Banks making such
Revolving Credit Loans, in proportion, as nearly as practicable, to
the respective unpaid principal amount of such Revolving Credit
Loans outstanding, with adjustments to the extent practicable to
equalize any prior payments or repayments not exactly in proportion.
Prior to any Settlement Date, however, all repayments of the
Revolving Credit Loans shall be applied in accordance with this
Section 3.4.2, first to outstanding Revolving Credit Loans of the
Agent.
Section 3.5. Automatic Repayments of Revolving Credit Loans After Event of
Default. Following the occurrence and during the continuance of an Event of
Default of which the account officers of the Agent active on the Borrower's
account have knowledge, all funds transferred to the Agent from the Swept
Accounts for which the Borrower has received credits shall be applied to the
Obligations in accordance with Section 13.4.
Section 4. LETTERS OF CREDIT.
Section 4.1. Letter of Credit Commitments.
4.1.1. Commitment to Issue Letters of Credit. Subject to the terms
and conditions hereof and the execution and delivery by the Borrower of a
letter of credit application on the Agent's customary form (a "Letter of
Credit Application"), the Agent and, in case of the Chase Letter of
Credit, Chase, on behalf of the Banks and in reliance upon the agreement
of the Banks set forth in Section 4.1.4 and upon the representations and
warranties of the Borrower contained herein, agrees, in its individual
capacity, to issue, extend and renew for the account of the Borrower one
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or more standby or documentary letters of credit (individually, a "Letter
of Credit"), in such form as may be requested from time to time by the
Borrower and agreed to by the Agent; provided, however, that, after giving
effect to such request, (a) the sum of the aggregate Maximum Drawing
Amount shall not exceed $100,000,000 at any one time and (b) the sum of
(i) the Maximum Drawing Amount on all Letters of Credit, (ii) all Unpaid
Reimbursement Obligations, and (iii) the amount of all Revolving Credit
Loans outstanding shall not exceed the Availability; provided, further,
that Chase shall issue, extend or renew no Letters of Credit other than
the Chase Letter of Credit.
4.1.2. Letter of Credit Applications. Each Letter of Credit
Application shall be completed to the satisfaction of the Agent. In the
event that any provision of any Letter of Credit Application shall be
inconsistent with any provision of this Credit Agreement, then the
provisions of this Credit Agreement shall, to the extent of any such
inconsistency, govern.
4.1.3. Terms of Letters of Credit. Each Letter of Credit issued,
extended or renewed hereunder shall, among other things, (a) provide for
the payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein, and (b) have an expiry date no later than the date
which is ten (10) days (or, if the beneficiary is located outside of the
United States of America or the Letter of Credit is confirmed by a
confirmer or otherwise provides for one or more nominated persons,
forty-five (45) days) prior to the Revolving Credit Loan Maturity Date.
Each Letter of Credit so issued, extended, maintained or renewed shall be
subject to the Uniform Customs or, in the case of a standby Letter of
Credit, either the Uniform Customs or the International Standby Practices.
4.1.4. Reimbursement Obligations of Banks. Each Bank and the
Borrower hereby acknowledge that each Letter of Credit issued or
maintained by the Agent or Chase pursuant to this Credit Agreement is
issued or maintained by the Agent or Chase, as applicable, on behalf of
the Banks. Each Bank severally agrees that it shall be absolutely liable,
without regard to the occurrence of any Default or Event of Default or any
other condition precedent whatsoever, to the extent of such Bank's
Commitment Percentage, to reimburse the Agent or Chase, as applicable, on
demand for the amount of each draft paid by the Agent or Chase under each
Letter of Credit to the extent that such amount is not reimbursed by the
Borrower pursuant to Section 4.2 (such agreement for a Bank being called
herein the "Letter of Credit Participation" of such Bank).
4.1.5. Participation of Banks. Each such payment made by a Bank
shall be treated as the purchase by such Bank of a participating interest
in the Borrower's Reimbursement Obligation under Section 4.2 in an amount
equal to such payment. Each Bank shall share in accordance with its
participating interest in any interest which accrues pursuant to Section
4.2.
Section 4.2. Reimbursement Obligation of the Borrower. In order to induce
the Agent to issue, extend and renew each Letter of Credit other than the Chase
Letter of Credit, or, in the case of Chase, to maintain the Chase Letter of
Credit, and the Banks to participate therein, the Borrower hereby agrees to
reimburse or pay to the Agent, for
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the account of the Agent, Chase or (as the case may be) the Banks, with respect
to each Letter of Credit issued, extended or renewed by the Agent or Chase
hereunder,
(a) except as otherwise expressly provided in Section 4.2(b) and (c), on
each date that any draft presented under such Letter of Credit is honored by the
Agent or any draft presented under the Chase Letter of Credit is honored by
Chase, or the Agent or Chase otherwise makes a payment with respect thereto, (i)
the amount paid by the Agent or Chase under or with respect to such Letter of
Credit, and (ii) the amount of any taxes, fees, charges or other costs and
expenses whatsoever incurred by the Agent or any Bank in connection with any
payment made by the Agent or any Bank, under, or with respect to, such Letter of
Credit,
(b) upon the reduction (but not termination) of the Total Commitment to an
amount less than the Maximum Drawing Amount, an amount equal to such difference,
which amount shall be held by the Agent for the benefit of the Banks and the
Agent as cash collateral for all Reimbursement Obligations, and
(c) upon the termination of the Total Commitment, or the acceleration of
the Reimbursement Obligations with respect to all Letters of Credit in
accordance with Section 13, an amount equal to the then Maximum Drawing Amount
on all Letters of Credit, which amount shall be held by the Agent for the
benefit of the Banks and the Agent as cash collateral for all Reimbursement
Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid by
the Borrower under this Section 4.2 at any time from the date such amounts
become due and payable (whether as stated in this Section 4.2, by acceleration
or otherwise) until payment in full (whether before or after judgment) shall be
payable to the Agent on demand at the rate specified in Section 5.10 for overdue
principal on the Revolving Credit Loans.
Section 4.3. Letter of Credit Payments. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Agent or
Chase, as applicable, shall notify the Borrower of the date and amount of the
draft presented or demand for payment and of the date and time when it expects
to pay such draft or honor such demand for payment. If the Borrower fails to
reimburse the Agent as provided in Section 4.2 on or before the date that such
draft is paid or other payment is made by the Agent, the Agent may at any time
thereafter notify the Banks of the amount of any such Unpaid Reimbursement
Obligation. No later than 3:00 p.m. (Boston time) on the Business Day next
following the receipt of such notice, each Bank shall make available to the
Agent, at its Head Office, in immediately available funds, such Bank's
Commitment Percentage of such Unpaid Reimbursement Obligation, together with an
amount equal to the product of (i) the average, computed for the period referred
to in clause (iii) below, of the weighted average interest rate paid by the
Agent or Chase, as applicable, for federal funds acquired by the Agent or Chase,
as applicable, during each day included in such period, times (ii) the amount
equal to such Bank's Commitment Percentage of such Unpaid Reimbursement
Obligation, times (iii) a fraction, the numerator of which is the number of days
that elapse from and including the date the Agent or Chase, as applicable, paid
the draft presented for honor or otherwise made
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payment to the date on which such Bank's Commitment Percentage of such Unpaid
Reimbursement Obligation shall become immediately available to the Agent, and
the denominator of which is 365. If such payments by the Banks are made with
respect to the Chase Letter of Credit, such payments to the Agent shall be for
the account of Chase. The responsibility of the Agent and Chase, as applicable,
to the Borrower and the Banks shall be only to determine that the documents
(including each draft) delivered under each Letter of Credit in connection with
such presentment shall be in accordance in all material respects with such
Letter of Credit.
Section 4.4. Obligations Absolute. The Borrower's obligations under this
Section 4 to repay drawings under the Letters of Credit as provided hereunder
shall rank pari passu with the obligations of the Borrower to repay all other
Revolving Credit Loans, and shall be absolute and unconditional under any and
all circumstances and irrespective of the occurrence of any Default or Event of
Default or any condition precedent whatsoever or any setoff, counterclaim or
defense to payment which the Borrower may have or have had against the Agent,
Chase, any Bank or any beneficiary of a Letter of Credit. The Borrower further
agrees with the Agent, Chase and the Banks that the Agent, Chase and the Banks
shall not be responsible for, and the Borrower's Reimbursement Obligations under
Section 4.2 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or forged,
or any dispute between or among the Borrower, the beneficiary of any Letter of
Credit or any financing institution or other party to which any Letter of Credit
may be transferred or any claims or defenses whatsoever of the Borrower against
the beneficiary of any Letter of Credit or any such transferee. The Agent, Chase
and the Banks shall not be liable for any error, omission, interruption or delay
in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Borrower agrees that
any action taken or omitted by the Agent or any Bank under or in connection with
each Letter of Credit and the related drafts and documents, if done in good
faith and not constituting gross negligence or willful misconduct, shall be
binding upon the Borrower and shall not result in any liability on the part of
the Agent, Chase or any Bank to the Borrower.
Section 4.5. Reliance by Issuer. To the extent not inconsistent with
Section 4.4, the Agent (and Chase, with respect to the Chase Letter of Credit)
shall be entitled to rely, and shall be fully protected in relying upon, any
Letter of Credit, draft, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel, independent accountants and other
experts selected by the Agent (or Chase, in the case of the Chase Letter of
Credit). The Agent (and Chase, with respect to the Chase Letter of Credit) shall
be fully justified in failing or refusing to take any action under this
Agreement unless it shall first have received such advice or concurrence of the
Majority Banks as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent (and Chase, with respect to the
Chase Letter of Credit) shall in all cases be fully protected in acting, or in
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refraining from acting, under this Agreement in accordance with a request of the
Majority Banks, and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Banks and all future holders of the Revolving
Credit Notes or of a Letter of Credit Participation.
Section 4.6. Letter of Credit Fee. The Borrower shall pay a fee (in each
case, a "Letter of Credit Fee") to the Agent at a rate per annum (a) in respect
of each standby Letter of Credit equal to (i) the Applicable Margin plus
one-eighth of one percent (1/8%) per annum of the face amount of such standby
Letter of Credit plus (ii) the Agent's customary issuance fee for any Letter of
Credit issued after the Effective Date, and (b) in respect of each documentary
Letter of Credit equal to (i) the Agent's customary issuance fee or amendment
fee, as the case may be, plus (ii) the Agent's customary time negotiation fee
per document examination plus (iii) an amount equal to the Applicable Margin
plus one-eighth of one percent (1/8%) per annum of the face amount of such
documentary Letter of Credit. Each issuance, amendment, negotiation or document
examination fee and, with respect to each Letter of Credit, a portion of the
Letter of Credit Fee in the amount of one-eighth of one percent (1/8%) of the
face amount of each standby Letter of Credit and each documentary Letter of
Credit shall be for the Agent's own account (or for the account of Chase, in the
case of the Chase Letter of Credit) and the remaining portion of each Letter of
Credit Fee shall be for the accounts of the Banks in accordance with their
respective Commitment Percentages. The Letter of Credit Fee referred to in
clauses (a)(i) and (b)(iii) shall be payable quarterly in arrears, and all such
other Letter of Credit Fees shall be payable upon issuance, amendment or
negotiation, as the case may be.
Section 5. CERTAIN GENERAL PROVISIONS.
Section 5.1. Fees. The Borrower shall pay to the Co-Agents for each
Co-Agent's own account closing fees, underwriting fees and such other fees as
specified in the letter agreements of even date herewith (the "Fee Letters").
Section 5.2. Funds for Payments.
5.2.1. Payments to Agent. All payments of principal, interest,
Reimbursement Obligations, commitment fees, Letter of Credit Fees and any
other amounts due hereunder or under any of the other Loan Documents shall
be made to the Agent, for the respective accounts of the Banks and the
Agent, at the Agent's Head Office or at such other location in the Boston,
Massachusetts, area that the Agent may from time to time designate, in
each case in immediately available funds.
5.2.2. No Offset, Etc.
(a) All payments by the Borrower hereunder and under any of
the other Loan Documents shall be made without setoff or
counterclaim and, except as provided in paragraph (c) below, free
and clear of and without deduction for any taxes, levies, imposts,
duties, charges, fees, deductions or withholdings of any nature now
or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority
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therein unless the Borrower is compelled by law to make such
deduction or withholding. If any such obligation is imposed upon the
Borrower with respect to any amount payable by it hereunder or under
any of the other Loan Documents, the Borrower will, except as
provided in paragraph (c) below, pay to the Agent, for the account
of the Banks or (as the case may be) the Agent, on the date on which
such amount is due and payable hereunder or under such other Loan
Document, such additional amount in Dollars as shall be necessary to
enable the Banks or the Agent to receive the same net amount which
the Banks or the Agent would have received on such due date had no
such obligation been imposed upon the Borrower. The Borrower will
deliver promptly to the Agent certificates or other valid vouchers
for all taxes or other charges deducted from or paid with respect to
payments made by the Borrower hereunder or under such other Loan
Document.
(b) Each Bank and the Agent that is not a U.S. Person as
defined in Section 7701(a)(30) of the Code hereby agrees that, if
and to the extent it is legally able to do so, it shall, prior to
the date of the first payment by the Borrower hereunder to be made
to such Bank or the Agent or for such Bank's or the Agent's account,
deliver to the Borrower and the Agent, as applicable, such
certificates, documents or other evidence, as and when required by
the Code or Treasury Regulations issued pursuant thereto, including
two (2) duly completed copies of Internal Revenue Service Form
W-8BEN or Form W-8ECI and any other certificate or statement of
exemption required by Treasury Regulations, or any subsequent
versions thereof or successors thereto, properly completed and duly
executed by such Bank or the Agent establishing that with respect to
payments of principal, interest or fees hereunder it is (i) not
subject to United States federal withholding tax under the Code
because such payment is effectively connected with the conduct by
such Bank or Agent of a trade or business in the United States or
(ii) totally exempt or partially exempt from United States federal
withholding tax under a provision of an applicable tax treaty. Each
Bank or Agent agrees that it shall, promptly upon a change of its
lending office or the selection of any additional lending office, to
the extent the forms previously delivered by it pursuant to this
section are no longer effective, and promptly upon the Borrower's or
the Agent's reasonable request after the occurrence of any other
event (including the passage of time) requiring the delivery of a
Form W-8BEN or Form W-8ECI in addition to or in replacement of the
forms previously delivered, deliver to the Borrower and the Agent,
as applicable, if and to the extent it is properly entitled to do
so, a properly completed and executed Form W-8BEN or Form W-8ECI (or
any successor forms thereto). Unless the Borrower and the Agent have
received forms or other documents satisfactory to them indicating
that such payments hereunder or under the other Loan Documents are
not subject to the United States federal withholding tax, the
Borrower or the Agent shall withhold taxes from such payments at the
applicable statutory rate, or a reduced rate pursuant to an
applicable tax treaty if such Bank has delivered a form evidencing
such tax treaty benefit.
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(c) Notwithstanding paragraph (a) above, the Borrower shall not be
required to pay any additional amounts to any Bank or the Agent for the
account of the lending office of such Bank or Agent, pursuant to this
Section 5.2.2, if (i) the obligation to pay such additional amounts would
not have arisen but for a failure by such Bank or the Agent to comply with
the provisions of subsection (b) above; (ii) the Bank or the Agent is not
eligible, in respect of such lending office, for complete exemption from
United States federal withholding tax with respect to payments of
interest, principal or fees under this Credit Agreement or under any of
the other Loan Documents, other than by reason of any change, after the
Initial Date, of any applicable law, treaty or regulation by any
governmental authority or other agency charged with the interpretation or
administration thereof; or (iii) the tax is an income or franchise tax
imposed on net income either by the jurisdiction under which such Bank or
the Agent is organized or any political subdivision thereof or in which
its principal office is located or by the jurisdiction of such Bank's or
Agent's lending office or any political subdivision thereof. For purposes
of this subsection (c), the term "Initial Date" shall mean, with respect
to any Bank or the Agent which is a party hereto on the Effective Date,
and with respect to each assignee or transferee of any Bank, the date of
the grant of the participation in, or transfer or assignment of an
interest hereunder to such assignee or transferee.
Section 5.3. Computations. All computations of interest on the Revolving
Credit Loans other than Eurodollar Rate Loans and of commitment fees, Letter of
Credit Fees or other fees shall, unless otherwise expressly provided herein be
based on a 365/366-day year and paid for the actual number of days elapsed. All
computations of interest on the Eurodollar Rate Loans shall be based on a 360
day year and paid for the actual number of days elapsed. Except as otherwise
provided in the definition of the term "Interest Period" with respect to
Eurodollar Rate Loans, whenever a payment hereunder or under any of the other
Loan Documents becomes due on a day that is not a Business Day, the due date for
such payment shall be extended to the next succeeding Business Day, and interest
shall accrue during such extension. The outstanding amount of the Revolving
Credit Loans as reflected on the Revolving Credit Note Records from time to time
shall be considered correct and binding on the Borrower unless within five (5)
Business Days after receipt of any notice by the Agent or any of the Banks of
such outstanding amount, the Agent or such Bank shall notify the Borrower to the
contrary.
Section 5.4. Inability to Determine Eurodollar Rate. In the event, prior
to the commencement of any Interest Period relating to any Eurodollar Rate Loan,
the Agent shall determine or be notified by the Majority Banks that adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate that would
otherwise determine the rate of interest to be applicable to any Eurodollar Rate
Loan during any Interest Period, the Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and the
Banks) to the Borrower and the Banks. In such event (a) any Loan Request or
Conversion Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans, (b) each Eurodollar
Rate Loan will automatically, on the
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last day of the then current Interest Period relating thereto, become a Base
Rate Loan, and (c) the obligations of the Banks to make Eurodollar Rate Loans
shall be suspended until the Agent or the Majority Banks determines that the
circumstances giving rise to such suspension no longer exist, whereupon the
Agent or, as the case may be, the Agent upon the instruction of the Majority
Banks, shall so notify the Borrower and the Banks.
Section 5.5. Illegality. Notwithstanding any other provisions herein, if
any present or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice of
such circumstances to the Borrower and the other Banks and thereupon (a) the
commitment of such Bank to make Eurodollar Rate Loans or convert Loans of
another Type to Eurodollar Rate Loans shall forthwith be suspended and (b) such
Bank's Revolving Credit Loans then outstanding as Eurodollar Rate Loans, if any,
shall be converted automatically to Base Rate Loans on the last day of each
Interest Period applicable to such Eurodollar Rate Loans or within such earlier
period as may be required by law. The Borrower hereby agrees promptly to pay the
Agent for the account of such Bank, upon demand by such Bank, any additional
amounts necessary to compensate such Bank for any costs incurred by such Bank in
making any conversion in accordance with this Section 5.5, including any
interest or fees payable by such Bank to lenders of funds obtained by it in
order to make or maintain its Eurodollar Loans hereunder.
Section 5.6. Additional Costs, Etc. If any present or future applicable
law, which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank by any central bank or other fiscal, monetary or
other authority (whether or not having the force of law), shall:
(a) subject any Bank to any tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature with respect to this Credit Agreement,
the other Loan Documents, any Letters of Credit, such Bank's Commitment or such
Bank's Revolving Credit Loans (other than taxes based upon or measured by the
income or profits of such Bank), or
(b) materially change the basis of taxation (except for changes in taxes
on income or profits) of payments to any Bank of the principal of or the
interest on any Revolving Credit Loans or any other amounts payable to any Bank
or the Agent under this Credit Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans by or letters of credit issued by,
or commitments of an office of such Bank, or
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(d) impose on any Bank or the Agent any other conditions or requirements
with respect to this Credit Agreement, the other Loan Documents, any Letters of
Credit, the Revolving Credit Loans, such Bank's Commitment or any class of
loans, letters of credit or commitments of which any of the Revolving Credit
Loans or such Bank's Commitment forms a part, and the result of any of the
foregoing is
(i) to increase the cost to any Bank of making, funding, issuing,
renewing, extending or maintaining any of the Revolving Credit Loans or
such Bank's Commitment or any Letter of Credit, or
(ii) to reduce the amount of principal, interest, Reimbursement
Obligation or other amount payable to such Bank or the Agent hereunder on
account of such Bank's Commitment, any Letter of Credit or any of the
Revolving Credit Loans, or
(iii) to require such Bank or the Agent to make any payment or to
forego any interest or Reimbursement Obligation or other sum payable
hereunder, the amount of which payment or foregone interest or
Reimbursement Obligation or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by such Bank or the
Agent from the Borrower hereunder,
then, except as otherwise provided in Section 5.2(c), and in each such case, the
Borrower will, upon demand made by such Bank or (as the case may be) the Agent
at any time and from time to time and as often as the occasion therefor may
arise, pay to such Bank or the Agent such additional amounts as will be
sufficient in the good faith opinion of such Bank or the Agent, to compensate
such Bank or the Agent for such additional cost, reduction, payment or foregone
interest or Reimbursement Obligation or other sum. Each Bank shall allocate such
costs (or the effect of such reductions, payments or foregone interest) among
its customers similarly situated in good faith and on an equitable basis.
Section 5.7. Capital Adequacy. If after the date hereof any Bank or the
Agent determines that (a) the adoption of or change in any law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) regarding capital requirements for banks or bank holding companies
or any change in the interpretation or application thereof by a court or
governmental authority with appropriate jurisdiction, or (b) compliance by such
Bank or the Agent or any corporation controlling such Bank or the Agent with any
law, governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) of any such entity regarding capital adequacy, has
the effect of reducing the return on such Bank's or the Agent's commitment with
respect to any Revolving Credit Loans to a level below that which such Bank or
the Agent could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's on the Agent's then existing policies
with respect to capital adequacy and assuming full utilization of such entity's
capital) by any amount deemed by such Bank or (as the case may be) the Agent to
be material, then such Bank or the Agent may notify the Borrower of such fact.
To the extent that the amount of such reduction in the return on capital is not
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reflected in the Base Rate, the Borrower and such Bank or the Agent, as the case
may be, shall thereafter attempt to negotiate in good faith, within thirty (30)
days of the day on which the Borrower receives such notice, an adjustment
payable hereunder that will adequately compensate such Bank or the Agent, as the
case may be, in light of these circumstances. If the Borrower and such Bank or
the Agent, as the case may be, are unable to agree to such adjustment within
thirty (30) days of the date on which the Borrower receives such notice, then
commencing on the date of such notice (but not earlier than the effective date
of any such increased capital requirement), the fees payable hereunder shall
increase by an amount that will, in such Bank's reasonable determination,
provide adequate compensation. Each Bank and the Agent shall allocate such cost
increases among its customers in good faith and on an equitable basis.
Section 5.8. Certificate. A certificate setting forth any additional
amounts payable pursuant to Sections 5.6 or 5.7 and a brief explanation
of such amounts which are due, submitted by any Bank or the Agent to the
Borrower, shall be conclusive, absent manifest error, that such amounts are due
and owing.
Section 5.9. Indemnity. The Borrower agrees to indemnify each Bank and to
hold each Bank harmless from and against any loss, cost or expense (including
loss of anticipated profits) that such Bank may sustain or incur as a
consequence of (a) default by the Borrower in payment of the principal amount of
or any interest on any Eurodollar Rate Loans as and when due and payable,
including any such loss or expense arising from interest or fees payable by such
Bank to lenders of funds obtained by it in order to maintain its Eurodollar Rate
Loans, (b) default by the Borrower in making a borrowing or conversion after the
Borrower has given (or is deemed to have given) a Loan Request or a Conversion
Request relating thereto in accordance with Section 2.6 or Section 2.7 or (c)
the making of any payment of a Eurodollar Rate Loan or the making of any
conversion of any such Loan to a Base Rate Loan on a day that is not the last
day of the applicable Interest Period with respect thereto, including interest
or fees payable by such Bank to lenders of funds obtained by it in order to
maintain any such Loans. The Borrower hereby authorizes the Agent to debit from
time to time its Operating Account for the amount of any such loss, cost or
expense.
Section 5.10. Interest After Default.
5.10.1. Overdue Amounts. Overdue principal and (to the extent
permitted by applicable law) interest on the Revolving Credit Loans and
all other overdue amounts payable hereunder or under any of the other Loan
Documents shall bear interest compounded monthly and payable on demand at
a rate per annum equal to two percent (2%) above the Base Rate plus the
Applicable Margin otherwise applicable to Base Rate Loans until such
amount shall be paid in full (after as well as before judgment).
5.10.2. Amounts Not Overdue. During the continuance of an Event of
Default and upon written notice from the Agent to the Borrower, the
principal of the Revolving Credit Loans not overdue and all other amounts
not overdue payable hereunder (including, without limitation, Letter of
Credit Fees) or under any of the other Loan Documents shall, until such
Event of Default has been cured or
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remedied or such Event of Default has been waived by the Banks pursuant to
Section 26, bear interest at a rate per annum equal to two percent (2%)
above the rate otherwise applicable thereto until such amount shall be
paid in full (after as well as before judgment).
5.10.3. Maximum Interest. Notwithstanding any other term of this
Credit Agreement or any Revolving Credit Note or any other document
referred to herein or therein, the maximum amount of interest which may be
charged to or collected from any person liable hereunder or under any
Revolving Credit Note by the Banks shall be absolutely limited to, and
shall in no event exceed, the maximum amount of interest which could
lawfully be charged or collected under applicable law (including, to the
extent applicable, the provisions of Section 5197 of the Revised Statutes
of the United States of America, as amended, 12 U.S.C. Section 85, as
amended), so that the maximum of all amounts constituting interest under
applicable law, howsoever computed, shall never exceed as to any person
liable therefor such lawful maximum, and any term of this Credit Agreement
or any Revolving Credit Note or any other document referred to herein or
therein which could be construed as providing for interest in excess of
such lawful maximum shall be and hereby is made expressly subject to and
modified by the provisions of this paragraph.
5.11. Replacement Banks. Within thirty (30) days after (a) any Bank has
demanded compensation from the Borrower pursuant to Sections 5.2.2(a),
5.6 or 5.7 hereof, (b) there shall have occurred a change in law with respect to
any Bank as a consequence of which it shall have become unlawful for such Bank
to make a Eurodollar Rate Loan on any Drawdown Date, as described in Section 5.5
hereof or (c) any Bank shall be a Specified Non-Consenting Bank (any such Bank
described in the foregoing clauses (a), (b) or (c) is hereinafter referred to as
an "Affected Bank"), the Borrower may request that the Banks other than the
Affected Banks (the "Non-Affected Banks") acquire all, but not less than all, of
the Affected Bank's outstanding Revolving Credit Loans and assume all, but not
less than all, of the Affected Bank's Commitment. If the Borrower so requests,
the Non-Affected Banks may elect to acquire all or any portion of the Affected
Bank's outstanding Revolving Credit Loans and to assume all or any portion of
the Affected Bank's Commitment. If the Non-Affected Banks do not elect to
acquire and assume all of the Affected Bank's outstanding Revolving Credit Loans
and Commitment, the Borrower may designate a replacement bank or banks, which
must be satisfactory to the Agent, to acquire and assume that portion of the
outstanding Revolving Credit Loans and Commitment of the Affected Bank not being
acquired and assumed by the Non-Affected Banks. The provisions of Section 19
hereof shall apply to all reallocations pursuant to this Section 5.11, and the
Affected Bank and any Non-Affected Banks and/or replacement banks which are to
acquire the Revolving Credit Loans and Commitment of the Affected Bank shall
execute and deliver to the Agent, in accordance with the provisions of Section
19 hereof, such Assignments and Acceptances and other instruments, including,
without limitation, Revolving Credit Notes, as are required pursuant to Section
19 hereof to give effect to such reallocations. Any Non-Affected Banks and/or
replacement banks which are to acquire the Revolving Credit Loans and Commitment
of the Affected Bank shall be deemed to be Eligible Assignees for all purposes
of Section 19 hereof. On the effective date of the
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applicable Assignments and Acceptances, the Borrower shall pay to the Affected
Bank all interest accrued on its Revolving Credit Loans up to but excluding such
date, along with any fees payable to such Affected Bank hereunder up to but
excluding such date.
Section 6. SECURITY AND GUARANTY.
Section 6.1. Collateral Security. The Obligations shall be secured by a
perfected first-priority security interest (subject only to Permitted Liens) in
certain of the assets of the Borrower, whether now owned or hereafter acquired,
pursuant to the Security Documents. The Obligations shall also be guaranteed
pursuant to the terms of the Guaranty. The obligations of the Guarantors under
the Guaranty shall be in turn secured by a perfected first priority security
interest (subject only to Permitted Liens) in certain of the assets of the
Guarantors, whether now owned or hereafter acquired, pursuant to the terms of
the Security Documents to which the Guarantors are party.
Section 6.2. Guaranty. Whereas, (i) each Guarantor and the Borrower are
members of a group of related corporations, the success of any one of which is
dependent in part on the success of the other members of such group, (ii) each
Guarantor expects to receive substantial direct and indirect benefit from the
Loans advanced and other credit extended to the Borrower by the Banks pursuant
to this Loan Agreement (which benefits are hereby acknowledged), (iii) it is a
condition precedent to the Banks' advancing Loans and Letters of Credit to the
Borrower under this Loan Agreement that each Guarantor execute and deliver to
the Bank a guaranty substantially in the form of this Section 6.2 and (iv) each
Guarantor wishes to guaranty the Borrower's obligations to the Agent and the
Banks under or in respect of the Loan Agreement, each Guarantor hereby agrees
with the Agent and the Banks as set forth in this Section 6.2.
Section 6.2.1. Guaranty of Payment and Performance. Each Guarantor
hereby jointly and severally guarantees to the Banks and the Agent the
full and punctual payment when due (whether at stated maturity, by
required pre-payment, by acceleration or otherwise), as well as the
performance, of all of the Obligations of the Borrower (referred to in
this Section 6.2 as the "Borrower's Obligations"), including all such
which would become due but for the operation of the automatic stay
pursuant to Section 362(a) of the Federal Bankruptcy Code and the
operation of Sections 502(b) and 506(b) of the Federal Bankruptcy
Code. This Guaranty is an absolute, unconditional and continuing guaranty
of the full and punctual payment and performance of all of the Borrower's
Obligations and not of their collectibility only and is in no way
conditioned upon any requirement that the Agent or any Bank first attempt
to collect any of the Borrower's Obligations from the Borrower or any
other Guarantor or resort to any collateral security or other means of
obtaining payment. Should the Borrower default in the payment or
performance of any of the Borrower's Obligations, the obligations of each
Guarantor hereunder with respect to such Borrower's Obligations in default
shall, upon demand by the Agent, become immediately due and payable to the
Agent, for the benefit of the Banks and the Agent, without demand or
notice of any nature, all of which are expressly waived by each Guarantor.
Payments by each Guarantor hereunder may be required by the Agent on any
number of occasions. All payments by each Guarantor hereunder shall be
made to the Agent, in the manner and at the place of payment specified
therefor in this Agreement, for the account of the Banks and the Agent.
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Section 6.2.2. Guarantors' Agreement to Pay Enforcement Costs, etc.
Each Guarantor further agrees, as the principal obligor and not as a
guarantor only, to pay to the Agent, on demand, all costs and expenses
(including court costs and legal expenses) incurred or expended by the
Agent or any Bank in connection with the Obligations, this Guaranty and
the enforcement thereof, together with interest on amounts recoverable
under this Section 6.2.2 from the time when such amounts become due until
payment, whether before or after judgment, at the rate of interest for
overdue principal set forth in this Agreement, provided that if such
interest exceeds the maximum amount permitted to be paid under applicable
law, then such interest shall be reduced to such maximum permitted amount.
Section 6.2.3. Waivers by Guarantors; Bank's Freedom to Act. Each
Guarantor agrees that the Obligations will be paid and performed strictly
in accordance with their respective terms, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agent or any Bank with
respect thereto. Each Guarantor waives promptness, diligences,
presentment, demand, protest, notice of acceptance, notice of any
Obligations incurred and all other notices of any kind, all defenses which
may be available by virtue of any valuation, stay, moratorium law or other
similar law now or hereafter in effect, any right to require the
marshalling of assets of the Borrower or any other entity or other person
primarily or secondarily liable with respect to any of the Obligations,
and all suretyship defenses generally. Without limiting the generality of
the foregoing, each Guarantor agrees to the provisions of any instrument
evidencing, securing or otherwise executed in connection with any
Obligation and agrees that the obligations of such Guarantor hereunder
shall not be released or discharged, in whole or in part, or otherwise
affected by (i) the failure of the Agent or any Bank to assert any claim
or demand or to enforce any right or remedy against the Borrower or any
other entity or other person primarily or secondarily liable with respect
to any of the Obligations; (ii) any extensions, compromise, refinancing,
consolidation or renewals of any Obligation; (iii) any change in the time,
place or manner of payment of any of the Obligations or any rescissions,
waivers, compromise, refinancing, consolidation or other amendments or
modifications of any of the terms or provisions of this Agreement, the
Revolving Credit Notes, the other Loan Documents or any other agreement
evidencing, securing or otherwise executed in connection with any of the
Obligations, (iv) the addition, substitution or release of any entity or
other person primarily or secondarily liable for any Obligation; (v) the
adequacy of any rights which the Agent or any Bank may have against any
collateral security or other means of obtaining repayment of any of the
Obligations; (vi) the impairment of any collateral securing any of the
Obligations, including without limitation the failure to perfect or
preserve any rights which the Agent or any Bank might have in such
collateral security or the substitution, exchange, surrender, release,
loss or destruction of any such collateral security; or (vii) any other
act or omission which might in any manner or to any extent vary the risk
of any Guarantor or otherwise operate as a release or discharge of any
Guarantor, all of which may be done without notice to any Guarantor. To
the fullest extent permitted by law, each Guarantor hereby expressly
waives any and all rights or defenses arising by reason of (A) any "one
action" or "anti-deficiency" law which would otherwise prevent the Agent
or any
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Bank from bringing any action, including any claim for a deficiency, or
exercising any other right or remedy (including any right of set-off),
against any Guarantor before or after the Agent's or such Bank's
commencement or completion of any foreclosure action, whether judicially,
by exercise of power of sale or otherwise, or (B) any other law which in
any other way would otherwise require any election of remedies by the
Agent or any Bank.
Section 6.2.4. Unenforceability of Obligations Against Borrower. If
for any reason the Borrower has no legal existence or is under no legal
obligation to discharge any of the Borrower's Obligations, or if any of
the Borrower's Obligations have become irrecoverable from the Borrower by
reason of the Borrower's insolvency, bankruptcy or reorganization or by
other operation of law or for any other reason, this Guaranty shall
nevertheless be binding on each Guarantor to the same extent as if such
Guarantor at all times had been the principal obligor on all such
Obligations. In the event that acceleration of the time for payment of any
of the Borrower's Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, or for any other reason, all such amounts
otherwise subject to acceleration under the terms of this Agreement, the
Revolving Credit Notes, the other Loan Documents or any other agreement
evidencing, securing or otherwise executed in connection with any
Obligation of the Borrower shall be immediately due and payable by each
Guarantors.
6.2.5. Subrogation; Subordination.
6.2.5.1. Waiver of Rights Against Borrower. Until the
indefeasible payment and performance in full of all of the
Borrower's Obligations, no Guarantor shall exercise and each
Guarantor hereby waives any rights against the Borrower arising as a
result of payment by such Guarantor hereunder, by way of
subrogation, reimbursement, restitution, contribution or otherwise,
and will not prove any claim in competition with the Agent or any
Bank in respect of any payment hereunder in any bankruptcy,
insolvency or reorganization case or proceedings of any nature; no
Guarantor will claim any setoff, recoupment or counterclaim against
the Borrower in respect of any liability of such Guarantor to the
Borrower; and each Guarantor waives any benefit of and any right to
participate in any collateral security which may be held by the
Agent or any Bank.
6.2.5.2. Subordination. The payment of any amounts due with
respect to any indebtedness of the Borrower for money borrowed or
credit received now or hereafter owed to each Guarantor is hereby
subordinated to the prior payment in full of all of the Borrower's
Obligations. Each Guarantor agrees that, after the occurrence of any
default in the payment or performance of any of the Borrower's
Obligations, each Guarantor will not demand, sue for or otherwise
attempt to collect any such indebtedness of the Borrower to such
Guarantor until all of the Borrower's Obligations shall have been
paid in full. If, notwithstanding the foregoing sentence, any
Guarantor shall collect, enforce or receive any amounts in respect
of such indebtedness while any Borrower's Obligations are still
outstanding, such amounts shall be collected, enforced and received
by such Guarantor as
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trustee for the Banks and the Agent and be paid over to the Agent,
for the benefit of the Banks and the Agent, on account of the
Borrower's Obligations without affecting in any manner the liability
of any Guarantor under the other provisions of this Guaranty.
6.2.5.3 Provisions Supplemental. The provisions of this
Section 6.2.5 shall be supplemental to and not in derogation of any
rights and remedies of the Banks and the Agent under any separate
subordination agreement which the Agent may at any time and from
time to time enter into with any Guarantor for the benefit of the
Banks and the Agent.
6.2.6. Setoff. Regardless of the adequacy of any collateral security
or other means of obtaining payment of any of the Borrower's Obligations,
each of the Agent and the Banks is hereby authorized at any time and from
time to time, without notice to any Guarantor (any such notice being
expressly waived by each Guarantor) and to the fullest extent permitted by
law, to set off and apply any deposits and other sums credited by or due
from the Agent or such Bank to any Guarantor or subject to withdrawal by
such Guarantor against the obligations of any Guarantor under this
Guaranty, whether or not the Agent or such Bank shall have made any demand
under this Guaranty and although such obligations may be contingent or
unmatured.
6.2.7. Further Assurances. Each Guarantor agrees that it will from
time to time, at the request of the Agent, do all such things and execute
all such documents as the Agent may consider necessary or desirable to
give full effect to this Guaranty and to perfect and preserve the rights
and powers of the Banks and the Agent hereunder. Each Guarantor
acknowledges and confirms that such Guarantor itself has established its
own adequate means of obtaining from the Borrower on a continuing basis
all information desired by such Guarantor concerning the financial
condition of the Borrower and that each Guarantor will look to the
Borrower and not to the Agent or any Bank in order for such Guarantor to
keep adequately informed of changes in the Borrower's financial condition.
6.2.8. Termination; Reinstatement. This Guaranty shall remain in
full force and effect until all of the Borrower's Obligations have been
irrevocably paid in full in cash and all commitments under this Loan
Agreement have been terminated. This Guaranty shall continue to be
effective or be reinstated, if at any time any payment made or value
received with respect to any Borrower's Obligation is rescinded or must
otherwise be returned by the Agent or any Bank upon the insolvency,
bankruptcy or reorganization of the Borrower, or otherwise, all as though
such payment had not been made or value received.
6.2.9. Successors and Assigns. This Guaranty shall be binding upon
each Guarantor, its successors and assigns, and shall inure to the benefit
of the Agent and the Banks and their respective successors, transferees
and assigns. Without limiting the generality of the foregoing sentence,
each Bank may assign or otherwise transfer this Agreement, the Revolving
Credit Notes, the other Loan Documents or any other agreement or note held
by it evidencing, securing or otherwise executed in connection with the
Borrower's Obligations, or sell participations in any interest therein, to
any other entity or other person, and such
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other entity or other person shall thereupon become vested, to the extent
set forth in the agreement evidencing such assignment, transfer or
participation, with all the rights in respect thereof granted to such Bank
herein, all in accordance with Section 19 of this Agreement. No Guarantor
may assign any of its obligations hereunder.
Section 7. REPRESENTATIONS AND WARRANTIES. The Borrower (and, where
applicable, the Parent), represents and warrants to the Banks and the Agent as
follows:
Section 7.1. Corporate Authority.
7.1.1. Incorporation; Good Standing. Each of the Parent, the
Borrower and their respective Subsidiaries (a) is a corporation or limited
liability company duly organized, validly existing and in good standing
under the laws of its state or other jurisdiction of incorporation or
organization, (b) has all requisite corporate or limited liability company
power to own its property and conduct its business as now conducted and as
presently contemplated, and (c) is in good standing as a foreign
corporation or limited liability company and is duly authorized to do
business in each jurisdiction where such qualification is necessary except
where a failure to be so qualified would not have a Material Adverse
Effect.
7.1.2. Authorization. The execution, delivery and performance by the
Parent, the Borrower and their respective Subsidiaries of this Credit
Agreement and the other Loan Documents to which it is a party and the
transactions contemplated hereby and thereby (a) are within the corporate
or limited liability company authority of such Person, (b) have been duly
authorized by all necessary corporate or limited liability company
proceedings, (c) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to
which such Person is subject or any judgment, order, writ, injunction,
license or permit applicable to such Person where such conflict, breach or
contravention could reasonably be expected to have a Material Adverse
Effect and (d) do not conflict with any provision of the corporate charter
or bylaws of, or any agreement or other instrument binding upon, such
Person where such conflict could reasonably be expected to have a Material
Adverse Effect.
7.1.3. Enforceability. The execution and delivery by the Parent, the
Borrower and their respective Subsidiaries of this Credit Agreement and
the other Loan Documents to which it is a party will result in valid and
legally binding obligations of such Person enforceable against such Person
in accordance with the respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights and except to the extent
that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
Section 7.2. Governmental Approvals. The execution, delivery and
performance by the Parent, the Borrower and their respective Subsidiaries of
this Credit Agreement and the other Loan Documents to which it is party and the
transactions contemplated hereby and thereby do not require the approval or
consent of, or filing with, any governmental agency or authority which have not
been obtained except for those which
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the failure to obtain the same could reasonably be expected to have a Material
Adverse Effect.
Section 7.3. Title to Properties; Leases. Except as indicated on Schedule
7.3 hereto, the Borrower and each of its Subsidiaries own all of the assets
reflected in the consolidated balance sheets of RES, BarTech and the Acquired
Portions of USS/Kobe as at the RES Balance Sheet Date, the BarTech Balance Sheet
Date or the USS/Kobe Balance Sheet, respectively, or acquired since such dates
(except (i) property and assets sold or otherwise disposed of in the ordinary
course of business since that date or otherwise permitted hereunder and (ii)
minor defects in title that do not interfere with the Borrower's ability to
conduct its business or utilize such assets), subject to no rights of others,
including any mortgages, leases, conditional sales agreements, title retention
agreements, liens or other encumbrances except Permitted Liens.
Section 7.4. Financial Statements and Projections.
7.4.1. Financial Statements. There has been furnished to each of the
Banks consolidated balance sheets of RES, BarTech, and the Acquired
Portion of USS/Kobe as at, respectively, the RES Balance Sheet Date, the
BarTech Balance Sheet Date and the USS/Kobe Balance Sheet Date, and
consolidated statements of income of RES, BarTech, the Acquired Portion of
USS/Kobe and each of their respective Subsidiaries for the respective
fiscal years then ended, certified by the independent certified public
accountants of RES, BarTech or USS/Kobe, as applicable. Such balance
sheets and statements of income have been prepared in accordance with
generally accepted accounting principles and fairly present the financial
condition of RES, BarTech and the Acquired Portion of USS/Kobe as at the
close of business on such dates and the results of operations for the
fiscal years then ended. There are no contingent liabilities of RES,
BarTech, the Acquired Portion of USS/Kobe or any of their respective
Subsidiaries as of such date involving material amounts, known to the
officers of the Borrower, which were not disclosed in such balance sheets
and the notes related thereto.
7.4.2. Projections. The projections of the annual operating budgets
of the Borrower and its Subsidiaries on a consolidated basis, calculated
on a quarterly basis, including quarterly balance sheets, income
statements, borrowing base availability and cash flow statements for the
1999 through 2000 fiscal years and the annual operating budgets of the
Borrower and its Subsidiaries on a consolidated basis, annual balance
sheets, income statements and borrowing base availability and cash flow
statements for the 1999 through 2004 fiscal years have been delivered to
each Bank. To the knowledge of the Borrower or any of its Subsidiaries, no
facts exist that (individually or in the aggregate) would as of the
Effective Date, result in any material change in any of such projections.
The projections (including any updated projections) are based upon
reasonable estimates and assumptions, have been prepared on the basis of
the assumptions stated therein and reflect the reasonable estimates of the
Borrower and its Subsidiaries of the results of operations and other
information projected therein.
Section 7.5. No Material Changes, Etc. (A) Since the RES Balance Sheet
Date there has occurred no materially adverse change in the consolidated
financial condition or
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business of RES as shown on or reflected in the consolidated balance sheet of
RES as at the RES Balance Sheet Date, or the consolidated statement of income
for the fiscal year then ended, other than changes in the ordinary course of
business or contemplated herein that have not had any material adverse effect in
the aggregate on the business or financial condition of RES or any of its
Subsidiaries, taken as a whole. Since the RES Balance Sheet Date, except to the
extent permitted under this Credit Agreement and except as set forth on Schedule
7.5 hereto, RES has not made any Distribution. (B) Since the BarTech Balance
Sheet Date there has occurred no materially adverse change in the consolidated
financial condition or business of BarTech as shown on or reflected in the
consolidated balance sheet of BarTech at the BarTech Balance Sheet Date, or the
consolidated statement of income for the fiscal year then ended, other than
changes in the ordinary course of business or contemplated herein that have not
had any material adverse effect in the aggregate on the business or financial
condition of BarTech and its Subsidiaries, taken as a whole. Since the BarTech
Balance Sheet Date, except to the extent permitted under this Credit Agreement
and except as set forth on Schedule 7.5 hereto, BarTech has not made any
Distribution. (C) Since the USS/Kobe Balance Sheet Date there has occurred no
materially adverse change in the financial condition or business of the Acquired
Portions of USS/Kobe as shown on or reflected in the consolidated balance sheet
of USS/Kobe as at the USS/Kobe Balance Sheet Date, or the consolidated statement
of income for the fiscal year then ended, other than changes in the ordinary
course of business or contemplated herein that have not had any material adverse
effect in the aggregate on the business or financial condition of the Acquired
Portions of USS/Kobe. Since the Balance Sheet Date, except to the extent
permitted under this Credit Agreement and except as set forth on Schedule 7.5
hereto, USS/Kobe has not made any Distribution.
Section 7.6. Franchises, Patents, Copyrights, Etc. Each of the Borrower
and its Subsidiaries possesses all franchises, patents, copyrights, trademarks,
trade names, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of its business substantially as now conducted without
known conflict with any rights of others except where failure to do so would not
have a Material Adverse Effect.
Section 7.7. Litigation. Except as set forth in Schedule 7.7 hereto, there
are no actions, suits, proceedings or investigations of any kind pending or
threatened against the Borrower or any of its Subsidiaries before any court,
tribunal or administrative agency or board that would be reasonably likely to,
either in any case or in the aggregate, materially adversely affect the
properties, assets, financial condition or business of the Borrower and its
Subsidiaries, taken as a whole, or materially impair the right of the Borrower
and its Subsidiaries, taken as a whole, to carry on the business conducted by
them, or which question the validity of this Credit Agreement or any of the
other Loan Documents.
Section 7.8. No Materially Adverse Contracts, Etc. Neither the Borrower
nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction (including any legal restrictions created by any other
organizational document of the Borrower or any of its Subsidiaries), or any
judgment, decree, order, rule or regulation that has or is expected in the
future to have a materially adverse effect on the business, assets or
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financial condition of the Borrower or any of its Subsidiaries. Neither the
Borrower nor any of its Subsidiaries is a party to any contract or agreement
that has or is expected to have any materially adverse effect on the business of
the Borrower or any of its Subsidiaries.
Section 7.9. Compliance with Other Instruments, Laws, Etc. Neither the
Borrower nor any of its Subsidiaries is in violation of any provision of its
charter documents, bylaws, or any agreement or instrument to which it is subject
or by which it or any of its properties is bound or any decree, order, judgment,
statute, license, rule or regulation, in any of the foregoing cases in a manner
that would reasonably be expected to have a Material Adverse Effect.
Section 7.10. Tax Status. The Borrower and its Subsidiaries (a) have made
or filed all federal and state income and all other material tax returns,
reports and declarations required by any jurisdiction to which any of them is
subject, (b) have paid all material taxes and other governmental assessments and
charges shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and by appropriate proceedings or
those having an aggregate principal amount of $10,000,000 or less and (c) have
established on their books provisions reasonably adequate for the payment of all
material taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Borrower know of no basis for any such claim.
Section 7.11. No Event of Default. No Default or Event of Default has
occurred and is continuing.
Section 7.12. Holding Company and Investment Company Acts. Neither the
Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor is
it an "investment company", or an "affiliated company" or a "principal
underwriter" of an "investment company", as such terms are defined in the
Investment Company Act of 1940.
Section 7.13. Absence of Financing Statements, Etc. Except with respect to
Permitted Liens and financing statements filed to give notice that the Borrower
holds certain raw materials on consignment from vendors or to give notice of
operating leases permitted under Section 9.1(f), there is no financing
statement, security agreement, chattel mortgage, real estate mortgage or other
document filed or recorded with any filing records, registry or other public
office, that purports to cover, affect or give notice of any present or possible
future lien on, or security interest in, any assets or property of the Borrower
or any rights relating thereto other than financing statements that have not yet
been released of record relating to Indebtedness that has been repaid in full.
Section 7.14. Perfection of Security Interest. All filings, assignments,
pledges and deposits of documents or instruments have been made and all other
actions have been taken that are necessary or advisable, under applicable law,
to establish and perfect the Agent's security interest in the Collateral. The
Collateral and the Agent's rights
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with respect to the Collateral are not subject to any setoff, claims,
withholdings or other defenses. The Borrower is the owner of the Collateral free
from any lien, security interest, encumbrance and any other claim or demand,
except for Permitted Liens.
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Section 7.15. [Intentionally Omitted]
Section 7.16. Employee Benefit Plans.
7.16.1. In General. Each Employee Benefit Plan and each Guaranteed
Pension Plan has been maintained and operated in compliance in all
material respects with the provisions of ERISA and, to the extent
applicable, the Code.
7.16.2. Guaranteed Pension Plans. Each contribution required to be
made to a Guaranteed Pension Plan, to avoid the notice or lien provisions
of Section 302(f) of ERISA, and each other contribution required to be
made to a Guaranteed Pension Plan to avoid a Material Adverse Effect, has
been timely made. No waiver of an accumulated funding deficiency or
extension of amortization periods has been received with respect to any
Guaranteed Pension Plan, and neither the Borrower nor any ERISA Affiliate
is obligated to or has posted security in connection with an amendment of
a Guaranteed Pension Plan pursuant to Section 307 of ERISA or Section
401(a)(29) of the Code, other than as would not be reasonably likely to
result in a Material Adverse Effect. No liability to the PBGC (other than
required insurance premiums, has been incurred by the Borrower or any
ERISA Affiliate with respect to any Guaranteed Pension Plan, other than as
would not be reasonably likely to result in a Material Adverse Effect and
there has not been any ERISA Reportable Event with respect to which the
requirement of thirty (30) days notice has not been waived, or any other
event or condition which presents a material risk of termination of any
Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each
Guaranteed Pension Plan (which in each case occurred within twelve months
of the date of this representation), and on the actuarial methods and
assumptions employed for that valuation, the aggregate present value of
accumulated benefits of all such Guaranteed Pension Plans did not exceed
the aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the accumulated benefits and assets of any
Guaranteed Pension Plan with assets in excess of accumulated benefits, by
more than an amount reasonably likely to result in a Material Adverse
Effect.
7.16.3. Multiemployer Plans. Neither the Borrower nor any ERISA
Affiliate has incurred any unsatisfied liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under Section 4201 of ERISA or as
a result of a sale of assets described in Section 4204 of ERISA other than
such amounts of liability as in aggregate would not be reasonably likely
to result in a Material Adverse Effect. Neither the Borrower nor any ERISA
Affiliate has been notified that any Multiemployer Plan is in
reorganization or insolvent under and within the meaning of Section 4241
or Section 4245 of ERISA or is at risk of entering reorganization or
becoming insolvent, or that any Multiemployer Plan intends to terminate or
has been terminated under Section 4041A of ERISA other than as would not
be reasonably likely to result in a Material Adverse Effect.
Section 7.17. Regulations U and X. The proceeds of the Revolving Credit
Loans shall be used for, and the Borrower will obtain Letters of Credit solely
for, working capital
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and general corporate purposes. No portion of any Revolving Credit Loan is to be
used, and no portion of any Letter of Credit is to be obtained, for the purpose
of purchasing or carrying any "margin security" or "margin stock" as such terms
are used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224.
Section 7.18. Environmental Compliance. Except as previously disclosed to
the Banks in writing or as set forth on Schedule 7.18 attached hereto, to the
knowledge of the Borrower:
(a) none of the Borrower, its Subsidiaries or any operator of the Real
Estate or any operations thereon has received a notice that it is in violation
of any applicable Environmental Law, which includes the Resource Conservation
and Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean Water
Act, the Federal Clean Air Act, the Toxic Substances Control Act, and any
analogous state or local statute, regulation, ordinance, or order or decree
(including, without limitation, the Corrective Action Order entered into under
RCRA on June 16, 1999 between the EPA and RES relating to RES's facilities in
Canton, Ohio) to which the Borrower or any of its Subsidiaries is a party
relating to health, safety (as relating to the environment or Hazardous
Substances) or the environment (hereinafter "Environmental Laws"), which
violation would have a Material Adverse Effect;
(b) neither the Borrower nor any of its Subsidiaries has received notice
from any third party including, without limitation: any federal, state or local
governmental authority, (i) that any one of them has been identified by the
United States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B; (ii) that any hazardous waste,
as defined by 42 U.S.C. Section 6903(5), any hazardous substances as defined by
42 U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42 U.S.C.
Section 9601(33) and any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which any one of them has generated, transported or disposed of has
been found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that any Borrower or any of its Subsidiaries
conduct a remedial investigation, removal or other response action pursuant to
any Environmental Law which would result in expenditures in excess of
$5,000,000; or (iii) that it is or shall be a named party to any claim, action,
cause of action, complaint, or legal or administrative proceeding (in each case,
contingent or otherwise) arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
release of Hazardous Substances on the Real Estate or generated, transported or
disposed of by the Borrower or any of its Subsidiaries which would result in
expenditures in excess of $5,000,000;
(c) except where non-compliance would not have a Material Adverse Effect,
(i) no portion of the Real Estate has been used by the Borrower or any of its
Subsidiaries for the handling, processing, storage or disposal of Hazardous
Substances
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except in compliance with applicable Environmental Laws; and no underground tank
or other underground storage receptacle for Hazardous Substances is located on
any portion of the Real Estate; (ii) in the course of any activities conducted
by the Borrower, its Subsidiaries or operators of its properties, no Hazardous
Substances have been discharged, emitted, generated or used except in accordance
with applicable Environmental Laws; (iii) in addition, to the extent required by
applicable Environmental Law, any Hazardous Substances that have been
transported from the Real Estate have been transported offsite only by carriers
having an identification number issued by the EPA, treated or disposed of only
by treatment or disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities have been and
are, to the best of the Borrower's knowledge, operating in compliance with such
permits and applicable Environmental Laws; (iv) there have been no releases
(i.e., any past or present releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, disposing or dumping) or
threatened releases of Hazardous Substances on, upon, into or from the
properties of the Borrower or its Subsidiaries, which releases would have a
material adverse effect on the value of the Real Estate or adjacent properties
or the environment; and (v) to the best of Borrower's knowledge, there have been
no releases on, upon, from or into any real property in the vicinity of any of
the Real Estate which, through soil or groundwater contamination, may have come
to be located on, and which would have a material adverse effect on the value
of, the Real Estate; and
(d) none of the Borrower and its Subsidiaries nor any of the Real Estate
is subject to any applicable environmental law requiring the performance of
Hazardous Substances site assessments or the removal or remediation of Hazardous
Substances, or the giving of notice to any governmental agency or the recording
or delivery to other Persons of an environmental disclosure document or
statement by virtue of the transactions set forth herein and contemplated
hereby.
Section 7.19. Subsidiaries, Etc. RTI Capital., Nimishillen & Tuscarawas,
LLC, Bliss & Laughlin, LLC, Canadian Drawn Steel Company Inc. and the Oberlin
Insurance Company are the only Subsidiaries of the Borrower on the Effective
Date. Except as set forth on Schedule 7.19 hereto, neither the Borrower nor any
Subsidiary of the Borrower is engaged in any joint venture or partnership with
any other Person on the Effective Date.
Section 7.20. Bank Accounts. Schedule 7.20 sets forth the account numbers
and location of all bank accounts of the Borrower or any of its Subsidiaries.
Section 7.21. Fiscal Year. The Borrower has a fiscal year which ends on
December 31 in each year.
Section 7.22. Disclosure. No representation or warranty made by the
Borrower in any of the Loan Documents or any agreement, instrument, document,
certificate or letter furnished by or on behalf of the Borrower pursuant to any
Loan Document or in connection with any of the transactions contemplated thereby
when taken as a whole with all other such representations and warranties
contains any untrue statement of any material fact or omits to state any
material fact necessary in order to make the
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statement contained therein not misleading. There is no fact known to the
Borrower (excluding general industry, economic and political conditions) which
materially adversely affects, or which could reasonably be expected to
materially adversely affect in the reasonable foreseeable future the financial
condition, business, operations, or affairs or the Borrower, which has not been
disclosed in writing to the Agent.
Section 7.23. Year 2000 Problem. The Borrower and its Subsidiaries have
(i) reviewed the areas within their businesses and operations which could be
adversely affected by failure to become "Year 2000 Compliant" (i.e. that
computer applications, imbedded microchips and other systems used by the
Borrower or any of its Subsidiaries or any of its material vendors, will be able
properly to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii) developed a
detailed plan and timetable to become Year 2000 Compliant in a timely manner,
and (iii) committed adequate resources to support the Year 2000 plan of the
Borrower and its Subsidiaries. Based upon such review, the Borrower reasonably
believes that the Borrower and its Subsidiaries will become "Year 2000
Compliant" in a timely manner except to the extent that failure to do so will
not have any materially adverse effect on the business or financial condition of
the Borrower or any of its Subsidiaries.
Section 7.24. Ownership of Assets of Constituent Companies. The Borrower
owns all of the assets and business of RES, BarTech and the Acquired Portions of
USS/Kobe and each of their respective Subsidiaries that were owned by such
Persons immediately prior to the Restructuring except those assets and
businesses listed on Schedule 7.24 hereto.
Section 7.25. Ineligible Securities. No portion of the proceeds of any
Revolving Credit Loans is to be used, and no portion of any Letter of Credit is
to be obtained, for the purpose of knowingly purchasing, or providing credit
support for the purchase of, during the underwriting or placement period or
within 30 days thereafter, any Ineligible Securities underwritten or privately
placed by a Section 20 Subsidiary.
Section 8. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower covenants
and agrees that, so long as any Revolving Credit Loan, Letter of Credit or
Revolving Credit Note is outstanding or any Bank has any obligation to make any
Revolving Credit Loans or the Agent has any obligation to issue, extend or renew
any Letters of Credit:
Section 8.1. Punctual Payment. The Borrower will duly and punctually pay
or cause to be paid the principal and interest on the Revolving Credit Loans,
all Reimbursement Obligations, the Letter of Credit Fees, the commitment fees,
the Agent's fee and all other amounts provided for in this Credit Agreement and
the other Loan Documents, all in accordance with the terms of this Credit
Agreement and such other Loan Documents.
Section 8.2. Maintenance of Office. The Borrower will maintain its chief
executive office in 3770 Embassy Parkway, Akron, OH 44333, or at such other
place in the United States of America as the Borrower shall designate upon
written notice to the
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Agent, where notices, presentations and demands to or upon the Borrower in
respect of the Loan Documents to which the Borrower is a party may be given or
made.
Section 8.3. Records and Accounts. The Borrower will (a) keep, and cause
each of its Subsidiaries to keep, true and accurate records and books of account
in which full, true and correct entries will be made in accordance with
generally accepted accounting principles and (b) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties and the properties of its
Subsidiaries, contingencies, and other reserves.
Section 8.4. Financial Statements, Certificates and Information. The
Borrower will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than ninety (90)
days after the end of each fiscal year (or portion thereof) of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries and the
consolidating balance sheet of the Borrower and its Subsidiaries, each as at the
end of such year, and the related consolidated statement of income and retained
earnings and consolidated statement of cash flow and consolidating statement of
income and retained earnings and consolidating statement of cash flow for such
year, each setting forth in comparative form the figures set forth in the
projections delivered pursuant to Section 7.4.2 (or, if updated, pursuant to
Section 8.4(k)) for the comparable period and, to the extent available, those
figures for the previous fiscal year and all such consolidated and consolidating
statements to be in reasonable detail, prepared in accordance with generally
accepted accounting principles, and, with respect to the consolidated financial
statements, certified without qualification (except for qualification for a
change in accounting principles with which the independent public accountant
concurs) by a nationally recognized firm of independent certified public
accountants satisfactory to the Agent, together with a written statement from
such accountants to the effect that they have read a copy of this Credit
Agreement, and that, in making the examination necessary to said certification,
they have obtained no knowledge of any Default or Event of Default, or, if such
accountants shall have obtained knowledge of any then existing Default or Event
of Default they shall disclose in such statement any such Default or Event of
Default; provided that such accountants shall not be liable to the Banks for
failure to obtain knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than forty-five
(45) days after the end of each of the fiscal quarters of the Borrower, copies
of the unaudited consolidated balance sheet of the Borrower and its Subsidiaries
as at the end of such quarter, and the related consolidated statement of income
and retained earnings and consolidated statement of cash flow for the portion of
the Borrower's fiscal year then elapsed, each setting forth in comparative form
the figures set forth in the projections delivered pursuant to Section 7.4.2
(or, if updated, pursuant to Section 8.4(k)) for the comparable period and, to
the extent available, those figures for the comparable period in the preceding
fiscal year, all in reasonable detail and prepared in accordance with generally
accepted accounting principles, together with a certification by the treasurer
or other authorized financial officer of the Borrower that the information
contained in such financial statements fairly presents the financial position of
the Borrower and its Subsidiaries on the date thereof (subject to year-end
adjustments and the exclusion of footnotes) provided that the
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financial statements for the fiscal quarter ending September 30, 1999 shall be
accompanied by information relating to the period following the Effective Date
reasonably satisfactory to the Co-Agents;
(c) (i) as soon as practicable, but in any event within thirty (30) days
after the end of each month commencing with September, 1999, in each fiscal year
of the Borrower, copies of the unaudited monthly consolidated balance sheet of
the Borrower and its Subsidiaries for such month, and the related consolidated
statement of income and retained earnings and consolidated statement of cash
flow for the portion of the Borrower's fiscal year then elapsed, each setting
forth in comparative form the figures set forth in the projections delivered
pursuant to Section 7.4.2 (or, if updated, pursuant to Section 8.4(k)) for the
comparable period and, to the extent available, those figures for the comparable
period in the preceding fiscal year, all in reasonable detail and prepared in
accordance with generally accepted accounting principles, together with a
certification by the treasurer or other authorized financial officer of the
Borrower that the information contained in such financial statements fairly
presents the financial condition of the Borrower and its Subsidiaries on the
date thereof (subject to year-end adjustments and the exclusion of footnotes),
and (ii) for the month of August, 1999 as soon as practicable but in any event
within thirty (30) days after the end of such month, copies of the production
statistics and such other financial information, if any, as is prepared by the
Borrower for delivery to its other lenders or equity holders of the Borrower and
its Subsidiaries for such period;
(d) simultaneously with the delivery of the financial statements referred
to in subsections (a) and (b) above, a statement certified by the treasurer or
other authorized financial officer of the Borrower in substantially the form of
Exhibit D hereto (the "Compliance Certificate") and setting forth in reasonable
detail computations evidencing compliance with the covenants contained in
Section 10 and (if applicable) (i) reconciliations to reflect changes in
generally accepted accounting principles since the RES Balance Sheet Date, and
(ii) reconciliations to generally accepted accounting principles of any amounts
shown on a marked to market basis, and on a quarterly basis, a report in form
and substance reasonably satisfactory to the Agent, on the status of
environmental matters affecting the Borrower, including any material changes in
remedial activity requested by any governmental agency or authority and the
impact, if any, of such changes on the budget for the year delivered pursuant to
subsection (h) below;
(e) simultaneously with delivery of the financial statements referred to
in subsections (a) and (b), a certificate, executed by the treasurer or other
authorized financial officer of the Borrower, stating that such officer has
caused this Credit Agreement to be reviewed and has no knowledge of any material
default by the Borrower in the performance or observance of any of the
provisions of this Credit Agreement, during the applicable quarter or at the end
of the applicable year, or, if such officer has such knowledge, specifying each
default and the nature thereof;
(f) promptly upon receipt thereof, copies of all final management letters
of substance and other material reports of substance which are submitted to the
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Borrower by its independent accountants in connection with any annual or interim
audit of the books of the Borrower made by such accountants;
(g) as soon as practicable but, in any event, within ten (10) Business
Days after the issuance thereof, copies of such other financial statements and
reports as the Borrower shall send to its stockholders as such, and copies of
all regular and periodic reports which the Borrower may be required to file with
the Securities and Exchange Commission or any similar or corresponding
governmental commission, department or agency substituted therefor, or any
similar or corresponding governmental commission, department, board, bureau, or
agency, federal or state;
(h) within thirty (30) days after the first day of each fiscal year of the
Borrower, its budget, including quarterly balance sheets, income statements,
borrowing base availability and cash flow statements for the Borrower and its
Subsidiaries for such fiscal year prepared by the Borrower for its Board of
Directors or similar authority, which shall include detail by quarter and shall
include projected spending for such year relating to Capital Expenditures,
including with respect to environmental matters affecting the Borrower;
(i) on Wednesday of each week or at such earlier time as the Agent may
reasonably request, or, if an Event of Default shall have occurred and be
continuing or upon the request of the Agent, on a daily basis, a Borrowing Base
Report setting forth the Borrowing Base as at the end of the preceding week or
the preceding day, as the case may be;
(j) within twenty (20) days after the end of each calendar month, an
Accounts Receivable aging report, a Borrowing Base Report setting forth the
Borrowing Base as at the end of the preceding month, reconciliations and an
inventory report;
(k) simultaneously with delivery of each annual budget pursuant to Section
8.4(h) and from time to time upon request of the Agent, projections of the
Borrower and its Subsidiaries (including, without limitation, as to availability
of the Revolving Credit Loans) updating those projections delivered to the Banks
and referred to in Section 7.4.2 or, if applicable, updating any later such
projections delivered pursuant to this Section 8.4(k);
(l) from time to time such other financial data and information (including
accountants and management letters) as the Agent or any Bank may reasonably
request;
(m) as soon as practicable, but in any event not later than 45 days after
notice by the Agent made after determining in its discretion that an appraisal
or reappraisal of the value of the Canton Cast-Roll Facility or Eligible
Inventory of the Borrower or any Subsidiary of the Borrower is necessary to
ensure the accuracy of the Borrowing Base, an appraisal or reappraisal, as the
case may be, of the value of the Canton Cast-Roll Facility or Eligible
Inventory, which appraisal or reappraisal shall be conducted by the Agent or its
designee at the expense of the Borrower or such Subsidiary by an appraiser
retained by the Agent in form and substance satisfactory to the Agent, provided
that Eligible Fixed Assets shall not be adjusted as a result of any
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such appraisal before March 31, 2001, provided further, that, in the absence of
an Event of Default or a reasonable belief on the part of the Agent that the
value of the Canton Cast-Roll Facility has materially changed, no more than one
appraisal of the Canton Cast-Roll Facility shall be required before March 31,
2001 and no more than one appraisal of the Canton Cast-Roll Facility shall be
required during any period of twelve months beginning on April 1 and ending on
March 31 thereafter; and
(n) not later than September 30, 1999, the consolidated financial
statements of each of RES, BarTech and USS/Kobe for the period ended June 30,
1999, in each case in reasonable detail and prepared in accordance with
generally accepted accounting principles, evidencing that the combined EBITDA of
RES, BarTech and USS/Kobe for the period of three (3) consecutive fiscal months
ended on June 30, 1999, was at least $15,000,000, together with such
reconciliations as are necessary to reflect any changes in such EBITDA from the
EBITDA certified pursuant to Section 11.16.
Section 8.5. Notices.
8.5.1. Defaults. The Borrower will promptly notify the Agent and
each of the Banks in writing of the occurrence of any Default or Event of
Default. If any Person shall give any notice or take any other action in
respect of a claimed default (whether or not constituting an Event of
Default) under this Credit Agreement or any other note, evidence of
indebtedness, indenture or other obligation, the amount of which is in
excess of $2,500,000, to which or with respect to which the Borrower or
any of its Subsidiaries is a party or obligor, whether as principal,
guarantor, surety or otherwise, the Borrower shall forthwith give written
notice thereof to the Agent and each of the Banks, describing the notice
or action and the nature of the claimed default.
8.5.2. Environmental Events. The Borrower will promptly give written
notice to the Agent and each of the Banks (i) of any violation of any
Environmental Law that the Borrower or any of its Subsidiaries reports in
writing or is reportable by the Borrower or any of its Subsidiaries in
writing (or for which any written report supplement to any oral report is
made) to any federal, state or local environmental agency and (ii) upon
becoming aware thereof of any inquiry, proceeding, investigation, or
notice of violation, or order from any agency of potential environmental
liability, or any federal, state or local environmental agency or board,
that, in the case of either (i) or (ii) above, would reasonably be
expected to materially adversely affect the assets, liabilities, financial
conditions or operations of the Borrower and its Subsidiaries, taken as a
whole, or the Agent's security interests pursuant to the Security
Documents.
8.5.3. Notification of Claim against Collateral. The Borrower will,
immediately upon becoming aware thereof, notify the Agent and each of the
Banks in writing of any setoff, claims (including, with respect to the
Real Estate, environmental claims in excess of $1,500,000), withholdings
or other defenses to which any of the Collateral, or the Agent's rights
with respect to the Collateral, are subject.
8.5.4. Notice of Litigation and Judgments. The Borrower will, and
will cause each of its Subsidiaries to, give notice to the Agent and each
of the Banks in
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writing within fifteen (15) days of becoming aware of any litigation or
proceedings threatened in writing or any pending litigation and
proceedings affecting the Borrower or any of its Subsidiaries or to which
the Borrower or any of its Subsidiaries is or becomes a party involving an
uninsured claim against the Borrower or any of its Subsidiaries that could
reasonably be expected to have a materially adverse effect on the Borrower
or any of its Subsidiaries and stating the nature and status of such
litigation or proceedings. The Borrower will, and will cause each of its
Subsidiaries to, give notice to the Agent and each of the Banks, in
writing, in form and detail satisfactory to the Agent, within twenty (20)
days of any judgment not covered by insurance, final or otherwise, against
the Borrower or any of its Subsidiaries in an amount in excess of
$2,500,000.
8.5.5. Notices Concerning Inventory Collateral. The Borrower shall
provide to the Agent prompt notice of (i) any physical count of the
Borrower's or any of its Subsidiaries' inventory, together with a copy of
the results thereof certified by the Borrower or such Subsidiary, (ii) any
determination by the Borrower or any of its Subsidiaries that the
inventory levels of the Borrower or such Subsidiary are not adequate to
meet the sales projections of the Borrower or such Subsidiary, and (iii)
any failure of the Borrower or any of its Subsidiaries to pay rent at any
location, which failure continues for more than five days following the
day on which such rent is due and payable by the Borrower or such
Subsidiary. If so requested by the Agent or any Bank, the Borrower shall
provide to the Agent or such Bank copies of all advertising by the
Borrower or any of its Subsidiaries including copies of all print
advertising and duplicate tapes of all video and radio advertising.
Section 8.6. Existence; Maintenance of Properties. Except as otherwise
permitted by Section 9.5 or Section 9.6, the Borrower will do or cause to be
done all things necessary to preserve and keep in full force and effect its
limited liability company existence and material rights and franchises and the
corporate or limited liability company existence and material rights and
franchises of its Subsidiaries. It (a) will cause all of its properties and
those of its Subsidiaries material to the conduct of its business or the
business of its Subsidiaries to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment (ordinary wear and
tear excepted), (b) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrower may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, and (c)
will, and will cause each of its Subsidiaries to, continue to engage primarily
in the businesses now conducted by them and in related businesses; provided that
nothing in this Section 8.6 shall prevent the Borrower from discontinuing the
operation and maintenance of any of its properties or any of those of its
Subsidiaries if such discontinuance is, in the judgment of the Borrower,
desirable in the conduct of its or their business and that do not in the
aggregate materially adversely affect the business of the Borrower and its
Subsidiaries on a consolidated basis.
Section 8.7. Insurance.
(a) The Borrower will and will cause each of its Subsidiaries to maintain
with an insurer rated B+ or better by A.M. Best, insurance with respect to its
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properties and business against such casualties and contingencies as shall be in
accordance with sound business practices of businesses engaged in similar
activities in similar geographic areas. Such insurance shall be in such minimum
amounts that the Borrower will not be deemed a co-insurer under applicable
insurance laws, regulations and policies and otherwise shall be in such amounts,
contain such terms, be in such forms and be for such periods as may be
reasonably satisfactory to the Agent. In addition, all insurance (except third
party liability insurance) insuring any of the Collateral and the interruption
of the business of the Borrower shall be payable to the Agent (subject to the
rights of other creditors to receive such business interruption insurance as
provided for below) as a loss payee under a standard loss payee clause for the
benefit of the Banks and the Agent and shall designate the Agent as an
additional insured, as applicable. With respect to the business interruption
insurance maintained by the Borrower, in the event of a loss and during the
continuance of an Event of Default (or other occurrence that would give rise to
the right of the Agent, the Pennsylvania Lenders or the Trustee to payment of
such proceeds) all proceeds thereof shall be paid on a pro rata basis to the
Agent, the Pennsylvania Lenders and the Trustee as co-loss payees and allocated
based upon the ratio, the numerator of which shall be equal to (i) the
outstanding amount of the Obligations, with respect to the Agent and the Banks,
(ii) the outstanding amount of the Indebtedness of the Borrower in respect of
the Pennsylvania Indebtedness, with respect to the Pennsylvania Lenders and
(iii) the outstanding amount of the Indebtedness of the Borrower in respect of
the Notes, with respect to the Trustee, and the denominator of which shall be
equal to the sum of the Obligations plus the outstanding amount of Pennsylvania
Indebtedness plus the outstanding amount of Indebtedness of the Borrower in
respect of the Notes, in each case determined as of the date of such payment.
Without limiting the foregoing, the Borrower will, and will cause each of its
Subsidiaries to, (i) keep all of its physical property insured with casualty or
physical hazard insurance on an "all risks" basis, with broad form flood and
earthquake coverages and electronic data processing coverage, with a full
replacement cost endorsement and an "agreed amount" clause in an amount equal to
100% of the full replacement cost of such property exclusive of deductibles and
self insurance in amounts not greater than those generally maintained by
businesses engaged in similar activities in similar geographic areas, (ii)
maintain all such workers' compensation or similar insurance or self-insurance
as may be required by law, and (iii) maintain, in amounts and with deductibles
or retentions equal to those generally maintained by businesses engaged in
similar activities in similar geographic areas, general public liability
insurance against claims for bodily injury, death or property damage occurring
on, in or about the properties of the Borrower or its Subsidiaries, business
interruption insurance and product liability insurance. The Borrower will, and
will cause any applicable Subsidiary to, maintain insurance on the Mortgaged
Property in accordance with the terms of the Mortgage.
(b) The proceeds of any casualty insurance in respect of any casualty loss
of any of the Collateral shall, subject to the rights, if any, of other parties
with a prior interest in the property covered thereby, (i) so long as no Default
or Event of Default has occurred and is continuing and to the extent that the
amount of such proceeds is less than $1,000,000, be disbursed to the Borrower
for direct application by the Borrower solely to the repair or replacement of
the Borrower's property so damaged or destroyed or for the purchase of other
similar properties and (ii) in all other
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circumstances, be held by the Agent as cash collateral for the Obligations,
provided, that if such insurance is in respect of any casualty loss of any
Collateral consisting of the Canton Cast-Roll Facility, such proceeds shall be
applied or reinvested in the manner provided in Section 3.2(b)(iii). The Agent
may, at its sole option, disburse from time to time all or any part of such
proceeds so held as cash collateral, upon such terms and conditions as the Agent
may reasonably prescribe, for direct application by the Borrower solely to the
repair or replacement of the Borrower's property so damaged or destroyed or for
the purchase of other similar properties, or the Agent may apply all or any part
of such proceeds to the Obligations, provided, that if such proceeds are in
respect of any casualty loss of any Collateral consisting of the Canton
Cast-Roll Facility, such proceeds shall be applied or reinvested in the manner
provided in Section 3.2(b)(iii).
(c) All policies of insurance shall provide for thirty (30) days prior
written minimum cancellation notice to the Agent. In the event of failure to
provide and maintain insurance as herein provided, the Agent may, at its option,
after giving notice to the Borrower provide such insurance and charge the amount
thereof to the Borrower. The Borrower shall furnish to the Agent certificates or
other evidence satisfactory to the Agent of compliance with the foregoing
insurance provision.
Section 8.8. Taxes, Etc. The Borrower will, and will cause each of its
Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all material taxes, assessments and other
governmental charges imposed upon it and its real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies that if unpaid might by law
become a lien or charge upon any of its property; provided that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if the Borrower or such Subsidiary shall have established on its books
adequate reserves with respect thereto; and provided further that the Borrower
and each Subsidiary of the Borrower will pay all such taxes, assessments,
charges, levies or claims forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor unless the
Borrower has obtained a stay of such proceedings which remains in effect.
Section 8.9. Inspection of Properties and Books, Etc.
8.9.1. General. The Borrower shall permit the Banks, through the
Agent or any of the Banks' other designated representatives, to visit and
inspect any of the properties of the Borrower or any of its Subsidiaries,
to examine the books of account of the Borrower and its Subsidiaries (and
to make copies thereof and extracts therefrom), and to discuss the
affairs, finances and accounts of the Borrower and its Subsidiaries with,
and to be advised as to the same by, its and their officers, all at such
reasonable times and intervals as the Agent or any Bank may reasonably
request. The Agent and the Banks will, to the extent practicable, exercise
their rights under this Section 8.9.1 in a manner which causes no material
disruption of the Borrower's operations. Each of the Agent and the Banks
agrees that it will treat in confidence all financial information with
respect to the Borrower and its Subsidiaries, and all information obtained
during such inspection which is
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designated by the Borrower as confidential and will not, without the
consent of the Borrower, disclose such information to any third party and,
if any representative or agent of the Agent or the Bank shall not be an
employee of the Agent or such Bank or any affiliate of the Agent or such
Bank, such designee shall be reputable and of recognized standing and
shall agree in writing to treat in confidence the information obtained
during any such inspection and, without the prior written consent of the
Borrower, not to disclose such information to any third party or make use
of such information for personal gain. Notwithstanding the foregoing, the
Borrower hereby authorizes the Agent and each Bank to disclose information
obtained pursuant to this Credit Agreement to other banks or financial
institutions who are participants in the Revolving Credit Loans and
Letters of Credit made or issued or to be made or issued hereunder and to
potential participants with the consent of the Borrower, such consent not
to be unreasonably withheld; provided that such participant or potential
participant agrees to be bound by the confidentiality provisions of this
Section 8.9.1, and where required or requested by governmental or
regulatory authorities.
8.9.2. Commercial Finance Examinations. The Borrower will permit the
Agent's examiners and, if accompanied by the Agent or its examiners, a
Bank's examiners, from time to time, to conduct, at the Borrower's
reasonable expense, commercial finance examinations of the Borrower and
its Subsidiaries.
8.9.3. Communications with Accountants. The Borrower authorizes the
Agent and, if accompanied by the Agent, the Banks to communicate with the
Borrower's independent certified public accountants and authorizes such
accountants to disclose to the Agent and the Banks any and all financial
statements and other supporting financial documents and schedules
including copies of any management letter with respect to the business,
financial condition and other affairs of the Borrower or any of its
Subsidiaries. At the request of the Agent, the Borrower shall deliver a
letter addressed to such accountants instructing them to comply with the
provisions of this Section 8.9.3.
8.9.4. Environmental Assessments. Whether or not an Event of Default
shall have occurred and be continuing, the Agent may, from time to time,
in its reasonable discretion for the purpose of assessing and ensuring the
value of the Mortgaged Property, obtain one or more environmental
assessments or audits of reasonable scope and expense of the Mortgaged
Property prepared by a hydrogeologist, an independent engineer or other
qualified consultant or expert retained by the Agent to evaluate or
confirm (i) whether any Hazardous Substances are present in the soil or
water at the Mortgaged Property and (ii) whether the use and operation of
such Mortgaged Property materially complies with all Environmental Laws.
Environmental assessments may include without limitation detailed visual
inspections of the Mortgaged Property including any and all storage areas,
storage tanks, drains, dry wells and leaching areas, and the taking of
soil samples, surface water samples and ground water samples, as well as
such other investigations or analyses as the Agent reasonably deems
appropriate. All such environmental assessments shall be conducted and
made at the expense of the Borrower.
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Section 8.10. Compliance with Laws, Contracts, Licenses, and Permits. The
Borrower will, and will cause each of its Subsidiaries to, comply with (a) the
applicable laws and regulations wherever its business is conducted, including
all Environmental Laws, except where failure to do so will not have a Material
Adverse Effect, (b) the provisions of its charter documents and by-laws, and all
agreements and instruments by which it or any of its properties may be bound,
except where failure to do so will not have a Material Adverse Effect, and (c)
all applicable decrees, orders, and judgments, except where failure to do so
will not have a Material Adverse Effect . If any authorization, consent,
approval, permit or license from any officer, agency or instrumentality of any
government shall become necessary or required in order that the Borrower may
fulfill any of its obligations hereunder or any of the other Loan Documents, the
Borrower will promptly take or cause to be taken all reasonable steps within the
power of the Borrower to obtain such authorization, consent, approval, permit or
license and furnish the Agent and the Banks with evidence thereof.
Section 8.11. Employee Benefit Plans. The Borrower will (a) promptly upon
request of the Agent, furnish to the Agent a copy of the most recent actuarial
statement required to be submitted under Section 103(d) of ERISA and Annual
Report, Form 5500, with all required attachments, in respect of each Guaranteed
Pension Plan with unfunded benefit liabilities in excess of $2,500,000 and (b)
promptly upon receipt or dispatch, furnish to the Agent any notice, report or
demand sent or received in respect of a Guaranteed Pension Plan with unfunded
benefit liabilities in excess of $2,500,000 under Sections 302, 4041,
4042, 4043, 4063, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan,
under Sections 4041A, 4202, 4219, 4242, or 4245 of ERISA.
Section 8.12. Use of Proceeds. The Borrower will use the proceeds of the
Revolving Credit Loans, and will obtain Letters of Credit, solely to repay
existing indebtedness, to finance working capital and for general corporate
purposes.
Section 8.13. Bank Accounts; Agency Account Arrangements.
Section 8.13.1. Bank Accounts. Commencing on or prior to the Sweep
Deadline, the Borrower shall, and shall cause each of its Subsidiaries to,
require all account debtors to make payments to the Swept Lockboxes or
Swept Accounts. The Borrower shall maintain lockbox agreements, in form
and substance reasonably satisfactory to the Agent, with the Blocked
Account Banks which maintain Swept Lockboxes, pursuant to which lockbox
agreements all checks, drafts or other items or amounts in such Swept
Lockboxes shall be deposited by such Blocked Account Bank in the Swept
Accounts maintained by such Blocked Account Bank. The Borrower shall, and
shall cause each of its Subsidiaries to, together with the employees,
agents and other Persons acting on behalf of the Borrower or any such
Subsidiary, receive and hold in trust for the Agent and the Banks all
payments constituting proceeds of Accounts Receivable or other Collateral
which, notwithstanding the foregoing, come into their possession or under
their control and, immediately upon receipt thereof, deposit such payments
in the form received, with any appropriate endorsements, in one of the
Swept Accounts.
Section 8.13.2. Agency Account Arrangements.
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(a) On or before the Sweep Deadline, the Borrower will, and will
cause each of its Subsidiaries to, execute and deliver to the Agent for
the benefit of the Agent and the Banks, Agency Agreements in form and
substance reasonably acceptable to the Agent (collectively, the "Agency
Agreements") executed by the Borrower and its Subsidiaries and the
financial institution (each a "Blocked Account Bank") with which the
Borrower or its Subsidiaries maintain any Swept Accounts or other accounts
with respect to which the Agent may determine that the execution of a
Agency Agreement is advisable (collectively, together with the Swept
Accounts, the "Blocked Accounts") simultaneously with the opening of such
Blocked Account. The Agent shall be granted a security interest by the
Borrower and each of its Subsidiaries in all Blocked Accounts. No Agency
Agreement may be modified or amended without the prior written consent of
the Agent.
(b) The Borrower expressly agrees that (i) following notice to the
Blocked Account Banks of the existence and continuance of a Default or an
Event of Default the Agent may at anytime require that, from and after the
date specified in such notice, all monies deposited in the Blocked
Accounts be transferred on a daily basis to the Concentration Account,
which monies shall be credited against Obligations (or such monies shall
be applied directly to pay down the Obligations without such monies being
transferred first to such the Concentration Account) and (ii) in the event
such transfer is required, upon the request of the Agent, the Borrower
will take any steps necessary, to effect such transfer, including, without
limitation, the execution and delivery of amendments to each of the Agency
Agreements. From time to time, upon the Agent's reasonable request, the
Borrower shall furnish to the Agent copies of all bank statements and
other notices received by it with respect to the Blocked Accounts.
(c) The Borrower agrees that all monies deposited in the Swept
Accounts shall be transferred to the Agent on a daily basis and applied on
a daily basis to the Obligations as provided in Section 3.4.1, and the
Borrower shall take any steps reasonably deemed by the Agent to be
necessary or advisable to effect such application, including, without
limitation, the execution and delivery of lockbox agreements and
amendments to each of the Agency Agreements. The Borrower further agrees
that the Petty Cash Accounts shall contain, considered together and in the
aggregate, no more than $60,000.
Section 8.14. Borrowing Base. The Borrower represents, warrants and
covenants as follows:
(a) At the time any Eligible Account Receivable is included in the
Borrowing Base and to the extent of the value of such Eligible Account
Receivable as reflected in the Borrowing Base, such Eligible Account Receivable
shall conform to the definition of Eligible Account Receivable.
(b) The Borrower is, and as to Eligible Inventory to be acquired after the
date hereof and to be included in the Borrowing Base, shall be the owner of all
Eligible Inventory to be included in the Borrowing Base and (except for the
liens for carrier, warehouse, customs and similar statutory liens arising in the
ordinary course of
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business) shall neither create nor suffer to exist any lien or encumbrance
thereon or security interest therein in favor of any Person other than the
Agent.
(c) The Borrower is the owner of the Canton Cast-Roll Facility and shall
neither create nor suffer to exist any lien or encumbrance thereon or security
interest therein in favor of any Person other than the Agent (other than liens
permitted by the Mortgage and a subordinate lien that may be permitted to secure
certain payables subject to the negotiation and delivery of a subordination
agreement in form and substance satisfactory to the Co-Agents).
(d) The Borrower shall give the Agent on the Effective Date a list of, and
thereafter shall give thirty (30) days written notice prior to any change in,
each warehouse location at which inventory is or will be kept and each office of
the Borrower at which the records of the Borrower pertaining to Accounts
Receivable and contract rights are kept. All Eligible Inventory is and shall be
kept, and all records pertaining to Accounts Receivable and contract rights are
and shall be kept, only at locations of which the Agent has been given notice as
provided in this Section 8.14(d).
(e) The Borrower shall promptly notify the Agent of any of the following
events of which any senior or executive officer of the Borrower becomes aware:
any material loss or depreciation in value of Eligible Inventory or the Canton
Cast-Roll Facility and the amount of the loss or depreciation; rejection,
return, repossession or loss of any material amount of goods giving rise to
Eligible Accounts Receivable; material damage to any such goods; any request by
an account debtor for any credits or adjustments of Eligible Accounts Receivable
which are material in the aggregate; any adjustments of the amounts owing on
Eligible Accounts Receivable which are material in the aggregate; any other
disputes which are material in the aggregate; any other event which materially
affects Eligible Inventory, Eligible Fixed Assets or Eligible Accounts
Receivable or the value or amount thereof, provided, that during any period when
Eligible Accounts Receivable are being determined on a daily basis, all
applicable adjustments to the amount thereof shall be taken on the day such
adjustment(s) are made, and shall not be delayed by virtue of this Section
8.14(e). For purposes of this Section 8.14(e), "material" shall mean involving
amounts in excess of $1,000,000 in the aggregate in the case of Eligible
Accounts Receivable and $5,000,000 in the aggregate in the case of Eligible
Inventory.
Section 8.15. Further Assurances. The Borrower will, and will cause each
of its Subsidiaries to, cooperate with the Banks and the Agent and execute such
further instruments and documents as the Banks or the Agent shall reasonably
request to carry out to their satisfaction the transactions contemplated by this
Credit Agreement and the other Loan Documents.
Section 9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. The Borrower
covenants and agrees that, so long as any Revolving Credit Loan, Letter of
Credit or Revolving Credit Note is outstanding or any Bank has any obligation to
make any Revolving Credit Loans or the Agent has any obligations to issue,
extend or renew any Letters of Credit:
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Section 9.1. Restrictions on Indebtedness. The Borrower will not, and will
not permit any of its Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness or
Rental Obligations other than:
(a) Indebtedness to the Banks and the Agent arising under any of the Loan
Documents;
(b) current liabilities of the Borrower or such Subsidiary incurred in the
ordinary course of business not incurred through (i) the borrowing of money, or
(ii) the obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal purchases of
goods and services;
(c) Indebtedness of the Borrower and its Subsidiaries in respect of taxes,
assessments, governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be required
to be made in accordance with the provisions of Section 8.8;
(d) Indebtedness of the Borrower and its Subsidiaries in respect of
judgments or awards that have been in force for less than the applicable period
for taking and pursuing an appeal so long as execution is not levied thereunder
or in respect of which the Borrower or such Subsidiary shall at the time in good
faith be prosecuting an appeal or proceedings for review and in respect of which
a stay of execution shall have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and warranties of
products or services, in each case incurred in the ordinary course of business;
(f) Indebtedness of the Borrower and its Subsidiaries consisting of Rental
Obligations under operating leases with aggregate payments due in any year not
in excess of $36,000,000;
(g) Indebtedness consisting of contingent liabilities in respect of
litigation against the Borrower so long as such Indebtedness would not be
required by the Borrower's independent public accountants to be included in the
footnotes to the financial statements delivered pursuant to Section 8.4(a) or
the reserves for which required to be established on the books of the Borrower
are not in excess of $15,000,000;
(h) Indebtedness of the Borrower and its Subsidiaries incurred in
connection with the Capitalized Lease or acquisition after the date hereof of
personal or tangible property by the Borrower or any Subsidiary or the
refinancing thereof; provided that the principal amount of such Indebtedness
shall not exceed in any case 90% of the cost, to the Borrower or such
Subsidiary, of the personal or tangible property so acquired, and provided,
further, that the aggregate principal amount of such Indebtedness outstanding
shall not exceed $30,000,000 at any time;
(i) Indebtedness in respect of the Notes not exceeding the aggregate
principal amount of $425,000,000;
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(j) Indebtedness existing on the date hereof and listed and described on
Schedule 9.1 hereto, and Indebtedness incurred pursuant to the refinancing of
such Indebtedness provided that such Indebtedness (i) is in an aggregate
principal amount no greater than that portion of the Indebtedness listed on
Schedule 9.1 hereto so refinanced, (ii) has a final scheduled maturity later
than the final scheduled maturity of the Indebtedness refinanced, (iii) shall
not be secured by any lien or any assets that did not secure the Indebtedness
refinanced, (iv) shall be otherwise subject to terms and conditions reasonably
satisfactory to the Co-Agents;
(k) Indebtedness of a Subsidiary Guarantor of the Borrower to the Borrower
or another Subsidiary Guarantor and of the Borrower to a Subsidiary Guarantor;
(l) Indebtedness with respect to surety bonds and other obligations of the
type described in Section 9.2(x) required in the ordinary course of business of
the Borrower and its Subsidiaries, provided that the aggregate principal amount
of such Indebtedness shall not at any time exceed $9,000,000;
(m) Indebtedness of the Borrower and its Subsidiaries consisting of
contingent liabilities with respect to Guaranteed Pension Plans to the extent
permitted under Section 9.9;
(n) Indebtedness incurred under any interest rate swap, cap, collar or
similar arrangements or foreign currency exchange transactions with respect to
Indebtedness permitted by this Agreement;
(o) Indebtedness of the Borrower and its Subsidiaries not otherwise
permitted by this Section 9.1 not exceeding the aggregate principal amount of
$20,000,000 at any time;
(p) Indebtedness of the Borrower and its Subsidiaries representing
obligations in respect of performance bonds, bid bonds, appeal bonds, surety
bonds, completion guarantees and similar obligations and trade-related letters
of credit, in each case provided in the ordinary course of business, including
those incurred to secure health, safety and environmental obligations in the
ordinary course of business;
(q) Indebtedness of the Borrower in an aggregate amount not to exceed the
amount represented by the appraised value of the Canton Cast-Roll Facility on
the date on which such Indebtedness was incurred and not less than the value of
that portion of the Borrowing Base applicable to Eligible Fixed Assets on the
date on which such Indebtedness was incurred (such Indebtedness referred to
herein as the "Canton Indebtedness"), provided that (i) on the date of the
incurrence of the Canton Indebtedness the Eligible Fixed Asset Cap shall be
reduced immediately to $0, (ii) the annual interest rate applicable to the
Canton Indebtedness shall at no time be more than two hundred basis points above
the rate applicable to the Revolving Credit Loans at such time, (iii) any
covenants entered into by the Borrower or any of its Subsidiaries in connection
with the Canton Indebtedness shall be, when taken in the aggregate, no more
restrictive or onerous to the Borrower or such Subsidiary than those contained
in this Credit Agreement and the other Loan Documents, (iv) the Canton
Indebtedness
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shall mature after the Revolving Credit Loan Maturity Date, (v) the Borrower has
delivered Compliance Certificates demonstrating, both immediately prior to and
immediately after the incurrence of such Canton Indebtedness, compliance with
the covenants set forth in Section 10, (vi) no Default or Event of Default has
occurred and is continuing or would exist after incurring the Canton
Indebtedness, (vii) the Canton Indebtedness shall be subject to an intercreditor
agreement in form and substance reasonably satisfactory to the Agent if
reasonably requested by the Agent to protect its security interest in the
remaining collateral, and (viii) the Canton Indebtedness shall otherwise be
subject to such terms and conditions as are reasonably satisfactory in form and
substance to the Co-Agents;
(r) Government Assisted Indebtedness of Borrower or of its Subsidiaries,
provided that (i) such Government Assisted Indebtedness shall not have a final
scheduled maturity prior to the final scheduled maturity of the Revolving Credit
Loans, (ii) such Government Assisted Indebtedness shall not be secured by any
lien on any Collateral that would not constitute a Permitted Lien with respect
to such Collateral, (iii) Government Assisted Indebtedness incurred after the
Effective Date (excluding Government Assisted Indebtedness existing on the
Effective Date) shall not at any time exceed the aggregate principal amount of
$100,000,000 and (iv) such Government Assisted Indebtedness shall be subject to
terms and conditions reasonably satisfactory to the Co-Agents;
(s) Indebtedness consisting of commodity hedging contracts entered into in
the ordinary course of business in order to hedge actual transactions and not
for speculative purposes in an aggregate notional amount not to exceed the gross
amount of $10,000,000 at any time; and
(t) Indebtedness of the Borrower or any of its Subsidiaries consisting of
obligations of the Borrower or any of its Subsidiaries in respect of workers'
compensation, health, disability or other employee benefits, social security
payments, property, casualty or liability insurance premiums or other payment
obligations in connection with self-insurance or similar requirements in the
ordinary course of business.
Section 9.2. Restrictions on Liens. The Borrower will not, and will not
permit any of its Subsidiaries to, (a) create or incur or suffer to be created
or incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire any property or assets upon
conditional sale or other title retention or purchase money security agreement,
device or arrangement; (d) suffer to exist for a period of more than thirty (30)
days after the same shall have been incurred any Indebtedness or claim or demand
against it that if unpaid would by law or upon bankruptcy or insolvency, or
otherwise, be given any priority whatsoever over its general creditors; or (e)
sell, assign, pledge or otherwise transfer any accounts, contract rights,
general intangibles (other than general
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intangibles related to assets disposed of in accordance with this Agreement and
the other Loan Documents), chattel paper or instruments, with or without
recourse; provided that the Borrower and any Subsidiary of the Borrower may
create or incur or suffer to be created or incurred or to exist:
(i) liens in favor of the Borrower on all or part of the assets of
Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries
of the Borrower to the Borrower;
(ii) liens on assets of the Borrower or its Subsidiaries to secure
taxes, assessments and other government charges in respect of obligations
not overdue or liens on properties other than the Mortgaged Property of
the Borrower or its Subsidiaries to secure claims for labor, material or
supplies in respect of obligations not overdue (or, in each case, which
are being contested in good faith and by appropriate proceedings and as to
which adequate reserves have been provided);
(iii) deposits or pledges made by the Borrower or its Subsidiaries
in connection with, or to secure payment of, workmen's compensation,
unemployment insurance, old age pensions or other social security
obligations or in connection with self-insurance arrangements in respect
of such obligations;
(iv) liens on properties of the Borrower or its Subsidiaries in
respect of judgments or awards, the Indebtedness with respect to which is
permitted by Section 9.1(d);
(v) liens of carriers, warehousemen, mechanics, repairmen, laborers,
suppliers and materialmen on properties of the Borrower or its
Subsidiaries other than the Mortgaged Property in existence less than 120
days from the date of creation thereof in respect of obligations not
overdue;
(vi) encumbrances on Real Estate other than the Mortgaged Property
of the Borrower or its Subsidiaries consisting of easements, rights of
way, zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or lessor's
liens under leases to which the Borrower or a Subsidiary of the Borrower
is a party, and other minor liens or encumbrances none of which in the
opinion of the Borrower interferes materially with the use of the property
affected in the ordinary conduct of the business of the Borrower and its
Subsidiaries, which defects do not individually or in the aggregate have a
materially adverse effect on the business of the Borrower individually or
of the Borrower and its Subsidiaries on a consolidated basis;
(vii) liens of the Borrower and its Subsidiaries existing on the
date hereof and listed on Schedule 9.2 hereto and refinancings of such
Indebtedness permitted under Section 9.1(j);
(viii) Capitalized Leases secured by, and purchase money security
interests in, personal or tangible property of the Borrower or its
Subsidiaries
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acquired or refinanced after the date hereof to secure purchase money
Indebtedness of the type and amount permitted by Section 9.1(h), incurred
in connection with the acquisition of such property, which security
interests cover only the personal or tangible property so acquired;
(ix) liens in favor of the holders of the Notes, which liens shall
in no event include any lien or encumbrance of any kind on the Collateral
except for such portion of the Collateral which is pledged pursuant to the
Master Pledge Agreement;
(x) liens securing the performance of tenders, bids, contracts
(other than for Indebtedness), leases (other than Capitalized Lease
Obligations), statutory obligations, surety and appeal bonds, performance
bonds and other obligations of like nature to the extent permitted by
Section 9.1(l) on assets of the Borrower and Subsidiary Guarantors not
constituting Collateral;
(xi) liens in favor of the Agent for the benefit of the Banks and
the Agent under the Loan Documents;
(xii) liens on the Canton Cast-Roll Facility and the capital stock
or membership interests of the Borrower and its Subsidiaries to secure
Canton Indebtedness to the extent permitted under Section 9.1(q);
(xiii) liens on assets of the Borrower or its Subsidiaries not
constituting Collateral securing Indebtedness permitted under Section
9.1(r) provided, that if any such liens cover property on which any
Collateral is located, the holders of such liens shall have entered into
an intercreditor agreement, if reasonably requested by the Agent to
protect its remaining Collateral, with the Agent reasonably satisfactory
to the Agent and the Banks;
(xiv) liens and encumbrances on the Mortgaged Property as and to the
extent permitted by the Mortgage and any mortgage entered into pursuant to
clause (xii) above;
(xv) liens on assets of the Borrower or any Subsidiary Guarantor not
constituting Collateral which assets secure the Borrower's obligations in
respect of the Notes to the extent that such liens are permitted under the
Indenture;
(xvi) a subordinate lien that may be permitted to secure certain
payables subject to the negotiation and delivery of a subordination
agreement in form and substance satisfactory to the Co-Agents;
(xvii) any leases or subleases to other Persons of properties or
assets owned or leased by the Borrower or any of its Subsidiaries; and
(xviii) liens on cash deposits, not exceeding $3,000,000 in the
aggregate, to secure the Borrower's and Subsidiary Guarantors' obligations
in respect of insurance and items of the type referred to in clause (iii)
or (x) above.
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Section 9.3. Restrictions on Investments. The Borrower will not, and will
not permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except:
(a) Investments by the Borrower or its Subsidiaries in marketable direct
or guaranteed obligations of the United States of America that mature within one
(1) year from the date of purchase by the Borrower;
(b) Investments by the Borrower or its Subsidiaries in demand deposits,
certificates of deposit, Eurodollar deposits, bankers acceptances and time
deposits of United States banks having total assets in excess of $1,000,000,000,
or foreign subsidiaries of such banks;
(c) Investments by the Borrower or its Subsidiaries in securities commonly
known as "commercial paper" issued by a corporation organized and existing under
the laws of the United States of America or any state thereof that at the time
of purchase have been rated and the ratings for which are not less than "P 1" if
rated by Moody's Investors Services, Inc., and not less than "A 1" if rated by
Standard and Poor's Ratings Group or, so long as no Obligations are outstanding,
not less than "P 2" if rated by Moody's Investors Services, Inc., and not less
than "A 2" if rated by Standard and Poor's Ratings Group;
(d) Investments by the Borrower or its Subsidiaries in debt of any state
or political subdivision that is rated "A" or better and due within one (1) year
from the date of purchase by the Borrower or its Subsidiaries;
(e) Investments by the Borrower or its Subsidiaries in repurchase
agreements secured by any one or more of the foregoing;
(f) Investments existing on the date hereof and listed on Schedule 9.3
hereto;
(g) Investments with respect to Indebtedness permitted by Section 9.1(k)
so long as such entities remain Subsidiaries of the Borrower and Guarantors
hereunder;
(h) Investments consisting of non-cash consideration received as proceeds
of asset dispositions permitted by Section 9.6;
(i) Investments by the Borrower or its Subsidiaries in shares of any
so-called "money market fund", provided that such fund is registered under the
Investment Company Act of 1940, has net assets of at least $500,000,000 and has
an investment portfolio with an average maturity of 365 days or less;
(j) Investments by the Borrower or its Subsidiaries in securities of any
Person acquired in full or partial satisfaction of liabilities of said Person to
the Borrower, in a workout or a bankruptcy or insolvency proceeding with respect
to such Person;
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(k) Investments by the Borrower or its Subsidiaries in interest rate
swaps, caps, collars or similar arrangements or foreign currency exchange
transactions entered into in connection with respect to Indebtedness permitted
under this Agreement or commodities hedges;
(l) Investments permitted by Section 9.5;
(m) investments consisting of deposits provided to third parties with
respect to leases or utilities in the ordinary course of business;
(n) Investments by the Borrower or its Subsidiaries in loans or advances
to officers or employees not in excess of $1,000,000 at any time;
(o) Investments by the Borrower or its Subsidiaries consisting of
purchases and acquisitions of inventory, supplies, materials and equipment or
licenses or leases of intellectual property otherwise not prohibited hereunder;
and
(p) other Investments not exceeding $10,000,000 in the aggregate at any
time outstanding.
provided, however, that, if an Event of Default shall have occurred and be
continuing, upon request by the Agent, with respect to all Investments other
than demand deposits referred to in Section 9.3(b), Investments other than short
term Investments listed on Schedule 9.3 hereto or described in clause (h) above
and Investments of the type described in clauses (g) and (j) through (t), either
(p) such Investments shall be immediately converted into cash and deposited in a
Blocked Account or (ii) all actions with respect to such Investments shall be
taken to the satisfaction of the Agent to provide to the Agent, for the benefit
of the Banks and the Agent, a first-priority perfected security interest in such
Investments free of all encumbrances other than Permitted Liens.
Section 9.4. Change in Terms of Capital Stock; Distributions and other
Restricted Payments. The Borrower shall not, and shall not permit any Subsidiary
to, effect or permit any change in or amendment to any document or instrument
pertaining to the terms of the Borrower's or such Subsidiary's capital stock
which would be adverse to the interests of the Banks. The Borrower will not, and
will not permit any of its Subsidiaries to, make any Restricted Payments except:
(a) Distributions by Subsidiaries of the Borrower to the Borrower without
limitation;
(b) Restricted Payments in an amount not to exceed $2,000,000 per annum to
Parent, RES Holding and RTII to allow Parent, RES Holding and RTII to pay their
operating and administrative expenses, including, without limitation, directors
fees, legal and audit expenses, SEC compliance expenses and corporate franchise
and other taxes that are directly attributable to the Borrower and its
Subsidiaries;
<PAGE>
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(c) provided that no Default or Event of Default has occurred and is then
continuing, Restricted Payments made to Parent, RES Holding and RTII or by
Borrower to permit the purchase or redemption of their capital stock or other
equity interests (including related stock and equity appreciation rights or
similar securities) held by present or former officers, employees or consultants
of RTII or the Borrower or any of its Subsidiaries or by any employee pension
benefit plan or management equity or stock option plan or agreement upon such
Person's death, disability, retirement or termination of employment or under the
terms of any such employee pension benefit plan or any other agreement under
which such capital stock or other equity interests or related rights were
issued; provided that the aggregate amount of such purchases or redemptions that
may be made under this clause (c) shall not exceed $3,000,000 per year ("Base
Amount"), provided, that, to the extent that not all of the Base Amount is
utilized in any year, the unused portion of such Base Amount may be carried
forward to and be deemed part of the Base Amount (which may be utilized after
exhausting the original Base Amount) only for the immediately subsequent year
and not any succeeding year;
(d) provided that the Borrower is then treated as a partnership
(pass-through or disregarded entity) for federal or state income tax purposes,
Distributions to the extent necessary to permit direct or indirect beneficial
holders to receive tax distributions as provided in the limited liability
agreement of the Parent not to exceed the tax liabilities payable by such owners
in respect of income of the Borrower and its Subsidiaries that, for tax
purposes, are treated as pass-through or disregarded entities, provided that
nothing in this clause (d) will be deemed to permit any such Distribution (i) in
excess of amounts that a consolidated group that includes the Borrower as the
"parent" and its Subsidiaries that, for tax purposes are treated as pass-through
or disregarded entities would be required to pay on a stand alone basis were
such entities taxable as a consolidated group of corporations, except for
distributions to the extent necessary to permit such holders to pay their tax
liabilities attributable to the disproportionate sharing of income or loss of
the Borrower and its Subsidiaries and (ii) to pay any tax liabilities of direct
or indirect investors of the Borrower or the Parent resulting from the
conversion of the Borrower from a limited liability company to corporate form,
including pursuant to a Roll-up Transaction;
(e) so long as no Default or Event of Default shall have occurred and be
continuing, Distributions made in order to enable RTII to make dividend payments
on, and the scheduled redemption of, the Bethlehem Preferred Stock, as in effect
on the Effective Date;
(f) so long as no Default or Event of Default shall have occurred and be
continuing, Distributions the proceeds of which are or will be used to pay or to
fund the payment of management, consulting or advisory fees and monitoring fees
payable to Blackstone and its Affiliates in an annual amount not to exceed
$1,500,000, Veritas and its Affiliates in an annual amount not to exceed
$500,000 USX and its Affiliates in an annual amount not to exceed $1,000,000 and
Kobe Steel Ltd. and its Affiliates in an annual amount not to exceed $1,000,000,
provided that the aggregate amount of all Distributions under this clause (f)
shall not exceed $4,000,000 per annum;
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(g) noncash repurchases of capital stock or other equity interests deemed
to occur upon exercise of stock options if such capital stock represent a
portion of the exercise price of such options; and
(h) Restricted Payments consisting of (i) the sale, purchase or provision
of goods and services from Affiliates in the conduct of the Borrower's and
Subsidiary Guarantors business and (ii) tranactions permitted under Section
9.15, in each case on arms length terms and which are not otherwise expressly
provided for and restricted in this Section 9.4.
Section 9.5. Merger and Consolidation. The Borrower will not, and will not
permit any of its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or stock acquisition
(other than the acquisition of assets in the ordinary course of business
consistent with past practices) except (i) the merger or consolidation of one or
more of the Subsidiaries of the Borrower with and into the Borrower, or the
merger or consolidation of two or more Subsidiaries of the Borrower, (ii) the
merger or consolidation of any Subsidiary acquired in a transaction permitted by
Section 9.3(p) and (iii) in connection with the Roll-up Transaction, provided
that any entity that survives in such transaction that is not a party hereto
shall expressly assume all Obligations of the merged entities and grant security
interests in all of its assets of a type constituting Collateral, and any new
Subsidiary formed as a result of such transaction will become a Subsidiary
Guarantor and enter into other security agreements reasonably acceptable to the
Agent.
Section 9.6. Sale and Leaseback; Disposition of Assets. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby the Borrower or any Subsidiary of the Borrower
shall sell, transfer, lease or otherwise dispose of any assets or property owned
by it or hereafter acquired by it in one transaction or a series of
transactions, including, without limitation, in order then or thereafter to
lease such property or lease other property that the Borrower or any Subsidiary
of the Borrower intends to use for substantially the same purpose as the
property being sold or transferred other than (a) the disposition of assets
(obsolete or otherwise) in the ordinary course of business, (b) so long as no
Event of Default shall have occurred and be continuing, (i) the disposition of
Investments permitted by Section 9.3; (ii) the disposition of assets listed on
Schedule 9.6 hereto; (iii) the disposition of additional assets on an arms
length basis having an aggregate fair market value (after deducting from such
aggregate value the cash proceeds of previous asset sales which are reinvested,
within 180 days after sale, with such deduction being treated as having been
made in the fiscal year of such reinvestment) of no more than 10% of the
Borrower's total consolidated assets as reflected on the Borrower's pro forma
balance sheet as at the Effective Date, provided that assets having a fair
market value of no more than 5% of the Borrower's total consolidated assets as
reflected on the Borrower's pro forma balance sheet as at the Effective Date
shall be disposed in any fiscal year of the Borrower pursuant to this clause
(iii); (iv) the sale of the Specialty Steel Assets on an arms-length basis for
consideration consisting of at least 75% cash in an amount not less than
$30,000,000; and (v) the sale of the Closed Facilities on an arms-length basis
for consideration consisting of at least 75% cash. All Net Cash Proceeds of any
disposition of assets shall be deposited immediately into a Blocked Account,
provided however, that such
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Net Cash Proceeds shall subject such other provisions of Section 3.2(b) as may
be applicable. Notwithstanding the foregoing, the Borrower and its Subsidiaries
may enter into and assume the Safe Harbor Leases (as defined in the Master
Restructuring Agreement) to which USS/Kobe is a party pursuant to the Master
Restructuring Agreement.
Section 9.7. Compliance with Environmental Laws. Except for actions which
are in material compliance with Environmental Laws or would not result in a
Material Adverse Effect, the Borrower will not, and will not permit any of its
Subsidiaries to, (a) use any of the Real Estate or any portion thereof for the
handling, processing, storage or disposal of Hazardous Substances, (b) cause or
permit to be located on any of the Real Estate any underground tank or other
underground storage receptacle for Hazardous Substances, (c) generate any
Hazardous Substances on any of the Real Estate, (d) conduct any activity at any
Real Estate or use any Real Estate in any manner so as to cause a release (i.e.
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping) or threatened release of
Hazardous Substances on, upon or into the Real Estate or (e) otherwise conduct
any activity at any Real Estate or use any Real Estate in any manner that would
cause a violation of Environmental Laws the result of which violation would have
a Material Adverse Effect.
Section 9.8. Indebtedness in respect of the Notes. The Borrower shall not
amend, supplement or otherwise modify the terms of the Indebtedness in respect
of the Notes or any of the Note Documents to increase the interest rate on, or
principal amount or any premium thereof, shorten the average maturity thereof,
or permit or require the granting or pledging of collateral in addition to the
collateral granted or pledged under the Note Documents as of the date hereof or
required on the date hereof to be granted or pledged, or make any provisions
thereof more restrictive on the Borrower or the Parent than they are on the date
hereof, or otherwise if, in the reasonable opinion of the Banks, such amendment,
supplement or modification could be adverse to the interests of the Banks. The
Borrower shall not prepay, redeem or repurchase any of the Indebtedness in
respect of the Notes or give notice in respect of such prepayment, redemption or
repurchase other than as required under the Note Documents as of the date hereof
and as permitted by Section 3.2(b).
Section 9.9. Employee Benefit Plans. Unless a Material Adverse Effect is
not reasonably likely to result, neither the Borrower nor any ERISA Affiliate
will:
(a) engage in any non-exempt "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code which is reasonably likely
to result in a liability for the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated funding
deficiency", as such term is defined in Section 302 of ERISA, whether or not
such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent which,
or terminate any Guaranteed Pension Plan in a manner which, could result in the
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imposition of a lien or encumbrance on the assets of the Borrower or any of its
Subsidiaries pursuant to Section 302(f) or Section 4068 of ERISA;
(d) amend any Guaranteed Pension Plan in circumstances requiring the
posting of security pursuant to Section 307 of ERISA or Section 401(a)(29) of
the Code; or
(e) permit or take any action which would result in the aggregate benefit
liabilities (within the meaning of Section 4001 of ERISA) of all Guaranteed
Pension Plans exceeding the value of the aggregate assets of such Plans,
disregarding for this purpose the benefit liabilities and assets of any such
Plan with assets in excess of benefit liabilities, by more than the amount set
forth in Section 7.16.3.
Section 9.10. Bank Accounts. The Borrower will not, and will not permit
any of its Subsidiaries to, (a) establish any bank accounts other than those
listed on Schedule 7.20 without the Agent's prior written consent, which consent
shall not be unreasonably withheld, (b) violate directly or indirectly any bank
agency agreement in favor of the Agent for the benefit of the Banks and the
Agent with respect to such account, or (c) deposit into any of the payroll
accounts listed on Schedule 7.20 any amounts in excess of amounts necessary to
pay current payroll obligations from such accounts based on the Borrower's
reasonable estimates of such amounts.
Section 9.11. Limitation on Issuance of Shares of Subsidiaries;
Disposition of Shares and Indebtedness of Subsidiaries.
(a) Except as permitted by Sections 9.4, 9.5 or 9.6, the Borrower
will not permit any of its Subsidiaries to issue, sell or otherwise dispose of
any shares of such Subsidiary or any securities convertible into or exchangeable
for or carrying rights to subscribe for shares of such Subsidiary, except (i) to
the Borrower, or (ii) for the purpose of qualifying directors. The Borrower will
not, in any event, permit any Subsidiary to have outstanding any preferred
shares, other than preferred shares owned by the Borrower.
(b) Except as permitted by Sections 9.4, 9.5 or 9.6, the Borrower
will not sell, transfer or otherwise dispose of any shares (except for the
purpose of qualifying directors) or any Indebtedness of any Subsidiary.
Section 9.12. Intentionally Omitted.
Section 9.13. No Material Changes, Etc. The Borrower shall not permit, at
any time after the RES Balance Sheet Date, any fact or circumstance (whether or
not the result thereof would be covered by insurance) as to which singly or in
the aggregate there is a reasonable likelihood of (a) a material adverse change
with respect to the value of the Collateral taken as a whole, or (b) the
inability of the Banks or the Agent to enforce in any material respect their
rights to be granted hereunder or under any of the other Loan Documents or the
Obligations (including realizing on the Collateral).
Section 9.14. No Subsidiaries. The Borrower will not, and will not permit
any of its Subsidiaries to, create or form, by acquisition or otherwise, any
Subsidiary in addition
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to the Subsidiaries of the Borrower described in Section 7.19 unless such new
Subsidiary shall have become a Guarantor, shall have pledged its assets of the
type pledged by the Borrower and the Guarantors as of the Effective Date and
shall have provided such other documentation as the Agent may reasonably
request, including, without limitation, amendments to the Security Agreements,
UCC searches and filings, legal opinions and corporate authorization
documentation, and, if the Eligible Fixed Asset Cap is not $0, 100% of the
equity interests of such new Subsidiary shall be pledged for the benefit of the
Banks and the Agent and the holders of the Senior Notes, such pledge to be
subject to terms and conditions substantially similar to those contained in the
Master Pledge Agreement.
Section 9.15. Transactions with Affiliates. Except for the sale of stock
of the Borrower to the Parent for cash and except as described on Schedule 9.15,
the Borrower will not, and will not permit any of its Subsidiaries to, engage in
any transaction with any Affiliate (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for real or
personal property to or from, or otherwise requiring payments to or from any
such Affiliate or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which such Affiliate has a substantial
interest or is an officer, director, trustee or partner, on terms more favorable
to such Person than would have been obtainable on an arms-length basis. The
Borrower will not enter into any tax sharing agreement with any Person that is
not the Parent or a Subsidiary of the Borrower, unless such tax sharing
agreement has been approved by the Co-Agents, such consent not to be
unreasonably withheld. Notwithstanding the foregoing, no payments may be made
with respect to any items set forth on Schedule 9.15 during the existence of an
Event of Default if so indicated on Schedule 9.15. This covenant will not
restrict the Borrower or its Subsidiaries from (a) making Investments permitted
under Section 9.3 or Distributions permitted under Section 9.4 and (b) engaging
in transactions among the Borrower and its Subsidiaries and among Subsidiaries
of the Borrower otherwise permitted by this Agreement. This covenant shall not
restrict the Borrower or its Subsidiaries from (a) payments to Blackstone,
Veritas, USX and Kobe Steel Ltd. or any of their Affiliates made for any
financial advisory, underwriting or placement services in connection with any
acquisition or divestiture made by the Borrower or any of its Subsidiaries in an
amount not to exceed in the aggregate 1% of the total enterprise value of such
acquisition or divestiture, which payments are approved by a majority of the
board of directors of the Borrower in good faith, or (b) transactions with
customers, clients, suppliers, purchasers or sellers of goods or services, in
each case in the ordinary course of business and on arms length terms and
otherwise in compliance with this Agreement.
Section 9.16. Parent. The Parent shall at no time own any material assets
other than the membership interests of the Borrower. The Parent shall at no time
engage in any business other than the ownership, directly or indirectly, of the
membership interests of the Borrower and activities incidental thereto. The
Parent shall not incur any Indebtedness in respect of borrowed money except
under the Loan Documents and its guaranty of the Notes and the Pennsylvania
Indebtedness. The Parent shall not create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage,
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pledge, charge, restriction or other security interest of any kind upon the
membership interests of the Borrower other than under the Master Pledge
Agreement.
Section 10. FINANCIAL COVENANTS OF THE BORROWER. The Borrower covenants
and agrees that, so long as any Revolving Credit Loan, Letter of Credit or
Revolving Credit Note is outstanding or any Bank has any obligation to make any
Revolving Credit Loans or the Agent has any obligation to issue, extend or renew
any Letters of Credit:
Section 10.1. Capital Expenditures. The Borrower will not make, or permit
any Subsidiary of the Borrower to make, Capital Expenditures during any of the
periods set forth below that exceed, in the aggregate for the Borrower and its
Subsidiaries, the amounts set forth below opposite such periods, provided,
however, that if, at the end of any of the periods listed below, the amount of
Capital Expenditures permitted for such period is not fully utilized, the lesser
of (i) 25% of Maximum Capital Expenditures for such period and (ii) the
difference between Maximum Capital Expenditures and actual Capital Expenditures
for such fiscal period may be carried over and utilized in any succeeding period
listed below, provided further, that if, at the end of Fiscal Year 2001 or any
subsequent period listed below, the amount of Capital Expenditures permitted for
such period is not fully utilized and the Fixed Charge Coverage Ratio is greater
than or equal to 1.10:1.00 on the last quarter of any Fiscal Year during such
period tested pursuant to Section 10.2, the lesser of (i) 50% of Maximum Capital
Expenditures for such period and (ii) the difference between Maximum Capital
Expenditures and actual Capital Expenditures for such fiscal period may be
carried over and utilized in the any succeeding period listed below:
- --------------------------------------------------------------------------------
Period: Maximum Capital Expenditures:
- --------------------------------------------------------------------------------
Effective Date - December 31, 1999 $19,000,000
- --------------------------------------------------------------------------------
Fiscal Year 2000 $53,000,000
- --------------------------------------------------------------------------------
Fiscal Year 2001 $61,000,000
- --------------------------------------------------------------------------------
Fiscal Year 2002 $125,000,000
- --------------------------------------------------------------------------------
Fiscal Year 2003 $97,000,000
- --------------------------------------------------------------------------------
January 1, 2004 - Revolving Credit
Loan Maturity Date $23,000,000
- --------------------------------------------------------------------------------
Section 10.2. Minimum Fixed Charge Coverage Ratio. The Borrower shall not
permit, for the fiscal quarter ending March 31, 2001, the two consecutive fiscal
quarters ending June 30, 2001, the three consecutive fiscal quarters ending
September 30, 2001 and each period of four consecutive fiscal quarters ending
thereafter, the Fixed Charge Coverage Ratio to be less than 1.10:1.00.
Section 11. CONCERNING THE EFFECTIVE DATE; CONDITIONS TO EFFECTIVENESS.
The Agent's and the Banks' obligations to convert their claims against the
Borrower under this Credit Agreement and the obligation of the Banks to make the
Revolving Credit Loans and to issue, extend or renew any Letters of Credit
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provided for in this Credit Agreement shall be subject to satisfaction of the
following conditions precedent on or prior to the Effective Date:
Section 11.1. Loan Documents. Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto, shall be in full
force and effect and shall be in form and substance satisfactory to each of the
Banks
Section 11.2. Note Documents; Restructuring Documents; Warrant Documents.
Each of the Note Documents, Restructuring Documents, Equity Documents and the
Warrant Documents shall have been duly executed and delivered by the respective
parties thereto, shall be in full force and effect and shall be in form and
substance satisfactory to each of the Banks.
Section 11.3. Certified Copies of Charter Documents.
(a) The Agent shall have received from the Parent, the Borrower and each
of the Subsidiary Guarantors a copy, certified by a duly authorized officer of
such Person to be true and complete on the Effective Date, of each of (a) its
charter or other incorporation or organizational documents as in effect on such
date of certification, and (b) its by-laws or other governing documents as in
effect on such date.
(b) The Agent shall have received from the Parent, the Borrower and each
of the Subsidiary Guarantors a certificate from the Secretary of State, or other
appropriate authority of the jurisdiction of its incorporation or organization,
evidencing its good standing in such jurisdiction and in each other jurisdiction
in which a failure to so qualify could have a Material Adverse Effect.
Section 11.4. Corporate or Limited Liability Company Action. All corporate
or limited liability company action, as applicable, necessary for the valid
execution, delivery and performance by the Parent, the Borrower and each of the
Subsidiary Guarantors of this Credit Agreement and the other Loan Documents to
which such Person is party shall have been duly and effectively taken, and
evidence thereof satisfactory to the Banks shall have been provided to the
Agent.
Section 11.5. Incumbency Certificate. The Agent shall have received from
the Parent, the Borrower and each of the Subsidiary Guarantors an incumbency
certificate, dated as of the Effective Date, signed by a duly authorized officer
of the Borrower or such Subsidiary, and giving the name and bearing a specimen
signature of each individual who shall be authorized: (a) to sign, in the name
and on behalf of the Parent, the Borrower or such Subsidiary Guarantor, each of
the Loan Documents to which such Person is party; (b) to make Loan Requests and
Conversion Requests and to apply for Letters of Credit; and (c) to give notices
and to take other action on its behalf under the Loan Documents.
Section 11.6. Validity of Liens. The Security Documents shall be effective
to create in favor of the Agent a legal, valid and enforceable first (except for
Permitted Liens) security interest in and lien upon the Collateral. All filings,
recordings, deliveries of instruments and other actions necessary or desirable
in the opinion of the Agent to
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protect and preserve such security interests shall have been duly effected. The
Agent shall have received evidence thereof in form and substance satisfactory to
the Agent.
Section 11.7. Perfection Certificates and UCC Search Results. The Agent
shall have received from the Parent, the Borrower and each of the Subsidiary
Guarantors a completed and fully executed Perfection Certificate and the results
of UCC searches with respect to the Collateral, indicating no liens other than
Permitted Liens and otherwise in form and substance satisfactory to the Agent.
Section 11.8. Certificates of Insurance. The Agent shall have received (a)
a certificate of insurance from an independent insurance broker dated as of the
Effective Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of Section 8.7 and (b) certified copies of all policies
evidencing such insurance (or certificates therefor signed by the insurer or an
agent authorized to bind the insurer).
Section 11.9. Borrowing Base Report. The Agent shall have received from
the Borrower a Borrowing Base Report for the preceding week.
Section 11.10. Opinions of Counsel. The Co-Agents shall have received
favorable legal opinions addressed to the Banks and the Agent, dated as of the
Effective Date and in form and substance satisfactory to the Co-Agents, from
each of
(i) Simpson Thacher & Bartlett;
(ii) Colella & Kolczun;
(iii) McDonald, Hopkins, Burke & Haber;
(iv) Amster, Rothstein & Ebenstein;
(v) Borden & Elliot; and
(vi) Bingham Dana LLP
Section 11.11. Payment of Fees. The Borrower shall have paid to the Banks,
the Co-Agents or the Agent, as appropriate, all fees due and payable as of the
Effective Date, including, without limitation, the commitment fee pursuant to
Section 2.2, the fees pursuant to Section 5.1 and, if applicable, Letter of
Credit Fees pursuant to Section 4.6.
Section 11.12. Payment of Interest and Fees under Prior Credit Agreement.
All interest and fees in respect of the Prior Credit Agreement accrued and
unpaid as of the Effective Date shall have been paid in full.
Section 11.13. [Intentionally Omitted.].
Section 11.14. Commercial Finance Examination. The Co-Agents shall have
received a the results of commercial finance examinations of the Borrower and
its Subsidiaries, including, without limitation, a prefunding commercial finance
examination conducted in order to determine Availability on the Effective Date,
and such reports shall be in form and substance satisfactory to the Co-Agents.
Section 11.15. Indebtedness in respect of the Notes. The Co-Agents shall
have received evidence satisfactory to the Co-Agents that the Borrower and RTI
Capital
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Corp. shall have received gross cash proceeds from the Notes in an aggregate
amount of not less than $419,000,000 pursuant to the Note Documents without any
material waiver with respect thereto and otherwise on terms and conditions
reasonably satisfactory to the Co-Agents.
Section 11.16. Equity Contribution. The Co-Agents shall have received
evidence satisfactory to the Co-Agents that the Borrower shall have received a
cash equity contribution in an amount of at least $75,000,000 pursuant to the
Equity Documents without any material waiver with respect thereto and otherwise
on terms and conditions reasonably satisfactory to the Co-Agents, provided that
cash proceeds in respect of the Notes and proceeds in respect of the investments
in the Borrower pursuant to the Equity Documents shall not be less than
$550,000,000 in the aggregate.
Section 11.17. Restructuring. The Co-Agents shall have received evidence
satisfactory to the Co-Agents that the Restructuring shall have occurred
pursuant to and in accordance with the Restructuring Documents without any
material waiver with respect thereto and otherwise on terms and conditions
reasonably satisfactory to the Co-Agents and that the Borrower shall own
substantially all of the assets and business owned by RES, BarTech, the Acquired
Portion of USS/Kobe and each of their respective Subsidiaries immediately prior
to the Restructuring except those assets and business listed on Schedule 7.24
hereto.
Section 11.18. EBITDA. The actual combined EBITDA for each of RES, BarTech
and USS/Kobe for the period of three consecutive fiscal months ending on June
30, 1999 shall not be less than $15,000,000, and the Borrower shall have
delivered to the Co-Agents an officer's certificate evidencing such combined
EBITDA.
Section 11.19. Reports by Deloitte & Touche, Hatch Engineering and Metal
Strategies, Inc. Hatch Engineering and Metal Strategies, Inc. shall each have
completed a report regarding the expected synergies arising out of the
Restructuring and the Borrower's business plans, and the Co-Agents shall be
reasonably satisfied with the results of such reports. Deloitte & Touche shall
have delivered a "comfort letter" in connection with the issuance of the Notes
in the form delivered to the Co-Agents on or prior to the Effective Date.
Section 11.20. Hazardous Waste Assessments. The Co-Agents shall have
received hazardous waste site assessments from environmental engineers in form
and substance satisfactory to the Co-Agents, such assessments to include an
analysis of the environmental liabilities of the Borrower and its Subsidiaries.
Section 11.21. Labor Agreements. The Co-Agents shall have received any
labor agreements of the Borrower, including, without limitation, labor
agreements entered into with the AFL-CIO, and such agreements shall be
reasonably satisfactory in form and substance to the Co-Agents.
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Section 11.22. Excess Availability. Excess Availability, as determined by
the Co-Agents on the Effective Date, shall not be less than $130,000,000, after
giving effect to the Availability Block and any extensions of credit hereunder
on the Effective Date.
Section 11.23. Solvency Opinion. The Co-Agents shall have received a copy
of an opinion from Murray, Devine & Co., describing in detail the solvency of
the Borrower and its Subsidiaries after the consummation of the transactions
contemplated herein and in form and substances satisfactory to the Co-Agents.
Section 11.24. Appraisal of Canton Cast-Roll Facility. The Co-Agents shall
have received an appraisal of the Canton Cast-Roll Facility in form and
substance satisfactory to the Co-Agents.
Section 11.25. Survey and Taxes. The Agent shall have received (i) an
updated Survey of the Mortgaged Property together with a Surveyor Certificate
relating thereto and (ii) evidence of payment of real estate taxes and municipal
charges on the Mortgaged Property not delinquent on or before the Effective
Date.
Section 11.26. Title Insurance. The Agent shall have received a Title
Policy covering the Mortgaged Property (or commitments to issue such policies,
with all conditions to issuance of the Title Policy deleted by an authorized
agent of the Title Insurance Company) together with proof of payment of all fees
and premiums for such policies, from the Title Insurance Company and in amounts
satisfactory to the Agent, insuring the interest of the Agent and each of the
Banks as mortgagee under the Mortgage.
Section 12. CONDITIONS TO ALL BORROWINGS. The obligations of the Banks to
make any Revolving Credit Loan, and of the Agent to issue, extend or renew any
Letter of Credit, in each case whether on or after the Effective Date, shall
also be subject to the satisfaction of the following conditions precedent.
Section 12.1. Representations True. Each of the representations and
warranties of any of the Borrower and its Subsidiaries contained in this Credit
Agreement and the other Loan Documents shall be in all material respects true as
of the date as of which they were made and shall also be true at and as of the
time of the making of such Revolving Credit Loan or the issuance, extension or
renewal of such Letter of Credit, with the same effect as if made at and as of
that time (except to the extent of changes resulting from transactions
contemplated or permitted by this Credit Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing.
Section 12.2. No Legal Impediment. No change shall have occurred in any
law or regulations thereunder or interpretations thereof that in the reasonable
opinion of any Bank would make it illegal for such Bank to make such Revolving
Credit Loan or to participate in the issuance, extension or renewal of such
Letter of Credit or in the reasonable opinion of the Agent would make it illegal
for the Agent to issue, extend or renew such Letter of Credit.
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Section 12.3. Governmental Regulation. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
Section 12.4. Proceedings and Documents. All proceedings in connection
with the transactions contemplated by this Credit Agreement, the other Loan
Documents and all other documents incident thereto shall be satisfactory in
substance and in form to the Banks and to the Agent and the Agent's Special
Counsel, and the Banks, the Agent and such counsel shall have received all
information and such counterpart originals or certified or other copies of such
documents as the Agent may reasonably request.
Section 12.5. Borrowing Base Report. The Agent shall have received the
most recent Borrowing Base Report required to be delivered to the Agent in
accordance with Section 8.4(i) and, if requested by the Agent, a Borrowing Base
Report dated within one (1) Business Day of the Drawdown Date of such Revolving
Credit Loan or of the date of issuance, extension or renewal of such Letter of
Credit.
Section 13. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 13.1. Events of Default and Acceleration. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) the Borrower shall fail to pay any principal of the Revolving Credit
Loans when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;
(b) the Borrower shall fail to pay any interest on the Revolving Credit
Loans, the commitment fee, any Letter of Credit Fee, the Agent's fee, or other
sums due hereunder or under any of the other Loan Documents, within three (3)
days of the stated date of maturity or any accelerated date of maturity or at
any other date fixed for payment;
(c) the Borrower shall fail to comply with any of its covenants contained
in Section 8.1 (including, as it applies to Section 13.1(b), any grace period
applicable thereto), Section 8.4 (within five (5) days of when any monthly
financial statement would otherwise be due and within fifteen (15) days of when
any quarterly or annual statement would otherwise be due), Section 8.5.1,
Section 8.5.4 (within fifteen (15) days of when notice would otherwise be due),
the first sentence of Section 8.6, Section 8.7, Section 8.12, Sections
9.1 through 9.6, Sections 9.8 through 9.13, Section 10 or any covenant
contained in the Mortgage the violation of which would constitute an immediate
"Event of Default" under such Mortgage;
(d) the Borrower shall fail to perform any term, covenant or agreement
contained herein or in any of the other Loan Documents (other than those
specified elsewhere in this Section 13.1) for thirty (30) days after written
notice of such failure has been given to the Borrower by the Agent;
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(e) any representation or warranty of the Borrower or any of its
Subsidiaries in this Credit Agreement or any of the other Loan Documents or in
any other document or instrument delivered pursuant to or in connection with
this Credit Agreement shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall fail to pay at maturity,
or within any applicable period of grace, any obligation for borrowed money or
credit received or in respect of any Capitalized Leases the outstanding
principal amount of which exceeds $15,000,000, or fail to observe or perform any
material term, covenant or agreement contained in any agreement by which it is
bound, evidencing or securing borrowed money or credit received or in respect of
any Capitalized Leases, the outstanding principal amount of which exceeds
$15,000,000, for such period of time as would permit (assuming the giving of
appropriate notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity thereof;
(g) the Borrower or any of its Subsidiaries shall make an assignment for
the benefit of creditors, or admit in writing its inability to pay or generally
fail to pay its debts as they mature or become due, or shall petition or apply
for the appointment of a trustee or other custodian, liquidator or receiver of
the Borrower or any of its Subsidiaries or of any substantial part of the assets
of the Borrower or any of its Subsidiaries or shall commence any case or other
proceeding relating to the Borrower or any of its Subsidiaries under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or hereafter
in effect, or shall take any action to authorize or in furtherance of any of the
foregoing, or if any such petition or application shall be filed or any such
case or other proceeding shall be commenced against the Borrower or any of its
Subsidiaries and the Borrower or any of its Subsidiaries shall indicate its
approval thereof, consent thereto or acquiescence therein or such petition or
application shall not have been dismissed within forty-five (45) days following
the filing thereof;
(h) a decree or order is entered appointing any such trustee, custodian,
liquidator or receiver or adjudicating the Borrower or any of its Subsidiaries
bankrupt or insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of the
Borrower or any Subsidiary of the Borrower in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied, unstayed and
unbonded, for more than thirty (30) days, whether or not consecutive, any final
judgment against the Borrower or any of its Subsidiaries that, with other
outstanding final judgments, undischarged, unsatisfied, unstayed and unbonded,
against the Borrower or any of its Subsidiaries exceeds in the aggregate
$15,000,000;
(j) if the Agency Agreements required pursuant to Section 8.13.2(a) shall
not be in full force and effect within forty-five (45) days after the Effective
Date;
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(k) if any of the Loan Documents shall be canceled, terminated, revoked or
rescinded or the Agent's security interests or liens in a substantial portion of
the Collateral shall cease to be perfected, or shall cease to have the priority
contemplated by the Security Documents in each case otherwise than in accordance
with the terms thereof or with the express prior written agreement, consent or
approval of the Banks, or any action at law, suit or in equity or other legal
proceeding to cancel, revoke or rescind any of the Loan Documents shall be
commenced by or on behalf of the Borrower or any of its Subsidiaries party
thereto or any of their respective stockholders, or any court or any other
governmental or regulatory authority or agency of competent jurisdiction shall
make a determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof;
(l) the Borrower or any ERISA Affiliate incurs any liability to the PBGC
or in the event of a termination or withdrawal from a Guaranteed Pension Plan
pursuant to Title IV of ERISA in an aggregate amount exceeding $15,000,000; the
Borrower or any ERISA Affiliate is assessed withdrawal liability pursuant to
Title IV of ERISA by a Multiemployer Plan requiring aggregate annual payments
exceeding $15,000,000, or any of the following occurs with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to make a
required installment or other payment (within the meaning of Section 302(f)(1)
of ERISA), provided the Agent determines in its reasonable judgment that such
event (A) could be expected to result in liability of the Borrower to the PBGC
or the Plan in an aggregate amount exceeding $15,000,000 and (B) could
constitute grounds for the termination of such Plan by the PBGC, for the
appointment by the appropriate United States District Court of a trustee to
administer such Plan or for the imposition of a lien in favor of the Guaranteed
Pension Plan; (ii) the appointment by a United States District Court of a
trustee to administer such Plan; or (iii) the institution by the PBGC of
proceedings to terminate such Plan;
(m) the Borrower or any of its Subsidiaries shall be enjoined, restrained
or in any way prevented by the order of any court or any administrative or
regulatory agency from conducting any material part of its business and such
order shall continue in effect for more than thirty (30) days;
(n) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike, lockout,
labor dispute, embargo, condemnation, act of God or public enemy, or other
casualty, which in any such case causes, for more than fifteen (15) consecutive
days, the cessation or substantial curtailment of revenue producing activities
at any facility of the Borrower or any of its Subsidiaries if such event or
circumstance is not covered by business interruption insurance and would have a
Material Adverse Effect;
(o) there shall occur the loss, suspension or revocation of, or failure to
renew, any license or permit now held or hereafter acquired by the Borrower or
any of its Subsidiaries if such loss, suspension, revocation or failure to renew
would have a Material Adverse Effect;
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(p) the Borrower or any of its Subsidiaries shall be convicted for a
federal crime, a punishment for which could include the forfeiture of any assets
of the Borrower or such Subsidiary included in the Borrowing Base or any assets
of the Borrower or such Subsidiary not included in the Borrowing Base but having
a fair market value in excess of $15,000,000;
(q) a Change of Control shall have occurred;
(r) the Availability shall at any time be less than zero;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Revolving Credit Notes and the other Loan Documents to be, and they shall
thereupon forthwith become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrower; provided that in the event of any Event of Default
specified in Sections 13.1(g) or 13.1(h), all such amounts shall become
immediately due and payable automatically and without any requirement of notice
from the Agent or any Bank.
Section 13.2. Termination of Commitments. If any one or more of the Events
of Default specified in Section 13.1(g) or Section 13.1(h) shall occur, any
unused portion of the credit hereunder shall forthwith terminate and each of the
Banks shall be relieved of all further obligations to make Revolving Credit
Loans to the Borrower and the Agent shall be relieved of all further obligations
to issue, extend or renew Letters of Credit. If any other Event of Default shall
have occurred and be continuing, the Agent may and, upon the request of the
Majority Banks, shall, by notice to the Borrower, terminate the unused portion
of the credit hereunder, and upon such notice being given such unused portion of
the credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Revolving Credit Loans and the Agent
shall be relieved of all further obligations to issue, extend or renew Letters
of Credit. No termination of the credit hereunder shall relieve the Borrower or
any of its Subsidiaries of any of the Obligations.
Section 13.3. Remedies. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Revolving Credit Loans pursuant to Section 13.1,
each Bank, if owed any amount with respect to the Revolving Credit Loans, may,
with the consent of the Majority Banks, but not otherwise, proceed to protect
and enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Credit Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to such Bank are evidenced,
including as permitted by applicable law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agent or the holder of any Revolving Credit Note or purchaser of any
Letter of Credit Participation is intended to be exclusive of any other remedy
and each and every
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remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or any
other provision of law.
Section 13.4. Distribution of Collateral Proceeds. In the event that,
following the occurrence or during the continuance of any Default or Event of
Default, the Agent or any Bank, as the case may be, receives any monies in
connection with the enforcement of any the Security Documents, or otherwise with
respect to the realization upon any of the Collateral, such monies shall be
distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the reimbursement of
the Agent for or in respect of all reasonable costs, expenses, disbursements and
losses which shall have been incurred or sustained by the Agent in connection
with the collection of such monies by the Agent, for the exercise, protection or
enforcement by the Agent of all or any of the rights, remedies, powers and
privileges of the Agent under this Credit Agreement or any of the other Loan
Documents or in respect of the Collateral or in support of any provision of
adequate indemnity to the Agent against any taxes or liens which by law shall
have, or may have, priority over the rights of the Agent to such monies;
(b) Second, to all other Obligations (other than those Obligations arising
or incurred under any ancillary facilities provided by the Agent or any Banks in
their individual capacities to the Borrower) in such order or preference as the
Majority Banks may determine; provided, however, that distributions in respect
of (i) such obligations shall be made pari passu among Obligations with respect
to the Agent's fee payable pursuant to Section 5.1 and all other Obligations and
(ii) Obligations owing to the Banks with respect to each type of Obligation such
as interest, principal, fees and expenses, shall be made among the Banks pro
rata; and provided, further, that the Agent may in its discretion make proper
allowance to take into account any Obligations not then due and payable;
(c) Third, to those Obligations arising under any cash management
services, Rate Protection Agreements or any other ancillary facilities provided
by the Agent or any other Banks in their individual capacities to the Borrower
in connection with this Agreement;
(d) Fourth, upon payment and satisfaction in full or other provisions for
payment in full satisfactory to the Banks and the Agent of all of the
Obligations, to the payment of any obligations required to be paid pursuant to
Section 9-504(1)(c) of the Uniform Commercial Code of the Commonwealth of
Massachusetts; and
(e) Fifth, the excess, if any, shall be returned to the Borrower or to
such other Persons as are entitled thereto.
Section 14. SETOFF. Regardless of the adequacy of any collateral, during
the continuance of any Event of Default, any deposits or other sums credited by
or due from any of the Banks to the Borrower and any securities or other
property of the Borrower in the possession of such Bank may be applied to or set
off by such Bank
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against the payment of Obligations and any and all other liabilities, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
the Revolving Credit Notes held by such Bank or constituting Reimbursement
Obligations owed to such Bank, such amount shall be applied ratably to such
other Indebtedness and to the Indebtedness evidenced by all such Notes held by
such Bank or constituting Reimbursement Obligations owed to such Bank and (b) if
such Bank shall receive from the Borrower, whether by voluntary payment,
exercise of the right of setoff, counterclaim, cross action, enforcement of the
claim evidenced by the Revolving Credit Notes held by, or constituting
Reimbursement Obligations owed to, such Bank by proceedings against the Borrower
at law or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall retain
and apply to the payment of the Revolving Credit Note or Notes held by, or
constituting Reimbursement Obligations owed to, such Bank any amount in excess
of its ratable portion of the payments received by all of the Banks with respect
to the Revolving Credit Notes held by all of the Banks, such Bank will make such
disposition and arrangements with the other Banks with respect to such excess,
either by way of distribution, pro tanto assignment of claims, subrogation or
otherwise as shall result in each Bank receiving in respect of the Revolving
Credit Notes held by it or Reimbursement Obligations owed it, its proportionate
payment as contemplated by this Credit Agreement; provided that if all or any
part of such excess payment is thereafter recovered from such Bank, such
disposition and arrangements shall be rescinded and the amount restored to the
extent of such recovery, but without interest.
Section 15. THE AGENT.
Section 15.1. Authorization.
(a) The Agent is authorized to take such action on behalf of each of the
Banks and to exercise all such powers as are hereunder and under any of the
other Loan Documents and any related documents delegated to the Agent, together
with such powers as are reasonably incident thereto, provided that no duties or
responsibilities not expressly assumed herein or therein shall be implied to
have been assumed by the Agent.
(b) The relationship between the Agent and each of the Banks is that of an
independent contractor. The use of the term "Agent" is for convenience only and
is used to describe, as a form of convention, the independent contractual
relationship between the Agent and each of the Banks. Nothing contained in this
Credit Agreement nor the other Loan Documents shall be construed to create an
agency, trust or other fiduciary relationship between the Agent and any of the
Banks.
(c) As an independent contractor empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities hereunder and
under the other Loan Documents, the Agent is nevertheless a "representative" of
the Banks, as that term is defined in Article 1 of the Uniform Commercial Code,
for purposes of actions
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for the benefit of the Banks and the Agent with respect to all collateral
security and guaranties contemplated by the Loan Documents. Such actions include
the designation of the Agent as "secured party", "mortgagee" or the like on all
financing statements and other documents and instruments, whether recorded or
otherwise, relating to the attachment, perfection, priority or enforcement of
any security interests, mortgages or deeds of trust in collateral security
intended to secure the payment or performance of any of the Obligations, all for
the benefit of the Banks and the Agent.
Section 15.2. Employees and Agents. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrower.
Section 15.3. No Liability. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
Section 15.4. No Representations. The Agent shall not be responsible for
the execution or validity or enforceability of this Credit Agreement, the
Revolving Credit Notes, the Letters of Credit, any of the other Loan Documents
or any instrument at any time constituting, or intended to constitute,
collateral security for the Revolving Credit Notes, or for the value of any such
collateral security or for the validity, enforceability or collectability of any
such amounts owing with respect to the Revolving Credit Notes, or for any
recitals or statements, warranties or representations made herein or in any of
the other Loan Documents or in any certificate or instrument hereafter furnished
to it by or on behalf of the Borrower or any of its Subsidiaries, or be bound to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or in any instrument at any time
constituting, or intended to constitute, collateral security for the Revolving
Credit Notes or to inspect any of the properties, books or records of the
Borrower or any of its Subsidiaries. The Agent shall not be bound to ascertain
whether any notice, consent, waiver or request delivered to it by the Borrower
or any holder of any of the Revolving Credit Notes shall have been duly
authorized or is true, accurate and complete. The Agent has not made nor does it
now make any representations or warranties, express or implied, nor does it
assume any liability to the Banks, with respect to the creditworthiness or
financial conditions of the Borrower or any of its Subsidiaries. Each Bank
acknowledges that it has, independently and without reliance upon the Agent or
any other Bank, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this Credit
Agreement.
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Section 15.5. Payments.
15.5.1. Payments to Agent. A payment by the Borrower to the Agent
hereunder or any of the other Loan Documents for the account of any Bank shall
constitute a payment to such Bank. The Agent agrees promptly to distribute to
each Bank such Bank's pro rata share of payments received by the Agent for the
account of the Banks except as otherwise expressly provided herein or in any of
the other Loan Documents.
15.5.2. Distribution by Agent. If in the opinion of the Agent the
distribution of any amount received by it in such capacity hereunder, under the
Revolving Credit Notes or under any of the other Loan Documents might involve it
in liability, it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent jurisdiction.
If a court of competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay over the
same in such manner and to such Persons as shall be determined by such court.
15.5.3. Delinquent Banks. Notwithstanding anything to the contrary
contained in this Credit Agreement or any of the other Loan Documents, any Bank
that fails (a) to make available to the Agent its pro rata share of any
Revolving Credit Loan or to purchase or make any payment on account of any
Letter of Credit Participation or (b) to comply with the provisions of Section
14 with respect to making dispositions and arrangements with the other Banks,
where such Bank's share of any payment received, whether by setoff or otherwise,
is in excess of its pro rata share of such payments due and payable to all of
the Banks, in each case as, when and to the full extent required by the
provisions of this Credit Agreement or Section 15.7, shall be deemed delinquent
(a "Delinquent Bank") and shall be deemed a Delinquent Bank until such time as
such delinquency is satisfied. A Delinquent Bank shall be deemed to have
assigned any and all payments due to it from the Borrower, whether on account of
outstanding Revolving Credit Loans, Unpaid Reimbursement Obligations, interest,
fees or otherwise, to the remaining nondelinquent Banks for application to, and
reduction of, their respective pro rata shares of all outstanding Revolving
Credit Loans and Unpaid Reimbursement Obligations. The Delinquent Bank hereby
authorizes the Agent to distribute such payments to the nondelinquent Banks in
proportion to their respective pro rata shares of all outstanding Revolving
Credit Loans and Unpaid Reimbursement Obligations. A Delinquent Bank shall be
deemed to have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Revolving Credit Loans
of the nondelinquent Banks, the Banks' respective pro rata shares of all
outstanding Revolving Credit Loans and Unpaid Reimbursement Obligations have
returned to those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency. Until such delinquency
is satisfied, the Delinquent Bank shall have no right to participate in any vote
on or consent to any matter in respect of or in connection with this Credit
Agreement.
Section 15.6. Holders of Revolving Credit Notes. The Agent may deem
and treat the payee of any Revolving Credit Note and the purchaser of any Letter
of Credit
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Participation as the absolute owner or purchaser thereof for all purposes hereof
until it shall have been furnished in writing with a different name by such
payee or by a subsequent holder, assignee or transferee.
Section 15.7. Indemnity. The Banks ratably agree hereby to indemnify and
hold harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Borrower as
required by Section 16), and liabilities of every nature and character arising
out of or related to this Credit Agreement, the Revolving Credit Notes, or any
of the other Loan Documents or the transactions contemplated or evidenced hereby
or thereby, or the Agent's actions taken hereunder or thereunder without
limiting the Borrower's and Guarantors' indemnity obligations, except to the
extent that any of the same shall be directly caused by the Agent's willful
misconduct or gross negligence.
Section 15.8. Agent as Bank. In its individual capacity, BKB shall have
the same obligations and the same rights, powers and privileges in respect to
its Commitment and the Revolving Credit Loans made by it, and as the holder of
any of the Revolving Credit Notes and as the purchaser of any Letter of Credit
Participations, as it would have were it not also the Agent.
Section 15.9. Resignation. The Agent may resign at any time by giving
sixty (60) days' prior written notice thereof to the Banks and the Borrower.
Upon any such resignation, the Majority Banks shall have the right to appoint a
successor Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Ratings Group. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
Section 15.10. Notification of Defaults and Events of Default. Each Bank
hereby agrees that, upon learning of the existence of a Default or an Event of
Default, it shall promptly notify the Agent thereof. The Agent hereby agrees
that upon receipt of any notice under this Section 15.10 it shall promptly
notify the other Banks of the existence of such Default or Event of Default.
Section 15.11. Duties in the Case of Enforcement. In case one of more
Events of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Agent shall, if (a) so
requested by the Majority
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Banks and (b) the Banks have provided to the Agent such additional indemnities
and assurances against expenses and liabilities as the Agent may reasonably
request, proceed to enforce the provisions of the Security Documents authorizing
the sale or other disposition of all or any part of the Collateral and exercise
all or any such other legal and equitable and other rights or remedies as it may
have in respect of such Collateral. The Majority Banks may direct the Agent in
writing as to the method and the extent of any such sale or other disposition,
the Banks hereby agreeing to indemnify and hold the Agent harmless from all
liabilities incurred in respect of all actions taken or omitted in accordance
with such directions, provided that the Agent need not comply with any such
direction to the extent that the Agent reasonably believes the Agent's
compliance with such direction to be unlawful or commercially unreasonable in
any applicable jurisdiction.
Section 16. EXPENSES. The Borrower agrees to pay (a) the reasonable costs
of producing and reproducing this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein, (b) any excise taxes or
current or future stamp or documentary taxes or similar charges (including any
interest and penalties in respect thereto) payable by the Agent or any of the
Banks (other than taxes based upon the Agent's or any Bank's net income) on or
with respect to the transactions contemplated by this Credit Agreement (the
Borrower hereby agreeing to indemnify the Agent and each Bank with respect
thereto), (c) the reasonable fees, expenses and disbursements of the Agent's
Special Counsel, any Co-Agent's counsel and any local counsel to the Agent
incurred in connection with the preparation, administration, interpretation or
syndication of the Loan Documents and other instruments mentioned herein, each
closing hereunder, and amendments, modifications, approvals, consents or waivers
hereto or hereunder, (d) the fees, expenses and disbursements of the Agent or
any Co-Arranger incurred by the Agent or such Co-Arranger in connection with the
preparation, administration, interpretation or syndication of the Loan Documents
and other instruments mentioned herein, including all appraisal charges and
charges of other professionals retained by the Agent or such Co-Arranger, (e)
the fees, expenses and disbursements of the Agent incurred by the Agent or its
designee in connection with all commercial finance examinations conducted by or
on behalf of the Agent, (f) any fees, costs, expenses and bank charges,
including bank charges for returned checks, incurred by the Agent in
establishing, maintaining or handling agency accounts, lock box accounts and
other accounts for the collection of any of the Collateral; (g) all reasonable
out-of-pocket expenses (including without limitation reasonable attorneys' fees
and costs, which attorneys may be employees of any Bank or the Agent, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any Bank or the Agent in connection
with (i) the enforcement of or preservation of rights under any of the Loan
Documents against the Borrower or any of its Subsidiaries or the administration
thereof after the occurrence of a Default or Event of Default and (ii) any
litigation, proceeding or dispute whether arising hereunder or otherwise, in any
way related to any Bank's or the Agent's relationship with the Borrower or any
of its Subsidiaries and (h) all reasonable fees, expenses and disbursements of
any Bank or the Agent incurred in connection with UCC searches or UCC filings.
The covenants of this Section 16 shall survive payment or satisfaction of all
other Obligations.
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Section 17. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Agent, the Co-Agents, the Co-Arrangers, the Banks and their
respective shareholders, directors, agents, officers, subsidiaries and
affiliates from and against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and reasonable expenses of every nature and character arising out of
this Credit Agreement or any of the other Loan Documents or the transactions
contemplated hereby including, without limitation, (a) any actual or proposed
use by the Borrower or any of its Subsidiaries of the proceeds of any of the
Revolving Credit Loans or Letters of Credit, (b) the reversal or withdrawal of
any provisional credits granted by the Agent upon the transfer of funds from
bank agency or lock box accounts or in connection with the provisional honoring
of checks or other items, (c) any actual or alleged infringement of any patent,
copyright, trademark, service mark or similar right of the Borrower or any of
its Subsidiaries comprised in the Collateral, (d) the Borrower or any of its
Subsidiaries entering into or performing this Credit Agreement or any of the
other Loan Documents or (e) with respect to the Borrower and its Subsidiaries
and their respective properties and assets, the violation of any Environmental
Law, the disposal, discharge, release or threatened release of any Hazardous
Substances or any action, suit, proceeding or investigation brought or
threatened with respect to any Hazardous Substances (including, but not limited
to, claims with respect to wrongful death, personal injury or damage to
property), in each case including, without limitation, the reasonable fees and
disbursements of counsel and allocated costs of internal counsel incurred in
connection with any such investigation, litigation or other proceeding,
provided, however, that the foregoing indemnity as to any Person shall not apply
to liabilities, damages, losses, settlement expenses and expenses to the extent
that they arise from the willful misconduct or gross negligence of such
indemnified person or its Affiliates. In litigation, or the preparation
therefor, each of the Banks, the Co-Agents, the Co-Arrangers and the Agent shall
be entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrower
under this Section 17 are unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment in satisfaction of such
indemnified obligations which is permissible under applicable law. The covenants
contained in this Section 17 shall survive payment or satisfaction in full of
all other Obligations.
Section 18. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein, in the Revolving Credit Notes, in
any of the other Loan Documents or in any documents or other papers delivered by
or on behalf of the Borrower or any of its Subsidiaries pursuant hereto shall be
deemed to have been relied upon by the Banks and the Agent, notwithstanding any
investigation heretofore or hereafter made by any of them, and shall survive the
making by the Banks of any of the Revolving Credit Loans and the issuance,
extension or renewal of any Letters of Credit, as herein contemplated, and shall
continue in full force and effect so long as any Letter of Credit or any amount
due under this Credit Agreement or the Revolving Credit Notes or any of the
other Loan Documents remains outstanding or any Bank has any obligation to make
any Revolving Credit Loans or the Agent has any obligation to issue, extend or
renew any Letter of Credit, and for such further time as may be otherwise
expressly specified in this Credit Agreement. All statements contained in any
certificate or other paper delivered to any Bank or the Agent at any time by or
on behalf of the Borrower or any of its
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Subsidiaries pursuant hereto or in connection with the transactions contemplated
hereby shall constitute representations and warranties by the Borrower or such
Subsidiary hereunder.
Section 19. ASSIGNMENT AND PARTICIPATION.
Section 19.1. Conditions to Assignment by Banks. Except as provided
herein, each Bank may assign to one or more Eligible Assignees all or a portion
of its interests, rights and obligations under this Credit Agreement (including
all or a portion of its Commitment Percentage and Commitment and the same
portion of the Revolving Credit Loans at the time owing to it, the Revolving
Credit Notes held by it and its participating interest in the risk relating to
any Letters of Credit); provided that (a) each of the Agent and, unless a
Default or Event of Default shall have occurred and be continuing, the Borrower
shall have given its prior written consent to such assignment, which consent, in
the case of the Borrower, will not be unreasonably withheld, (b) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Bank's rights and obligations under this Credit Agreement, (c) each
assignment shall be in an amount that is not less than $10,000,000 or the
remaining amount of its Commitment, if less, and (d) the parties to such
assignment shall execute and deliver to the Agent, for recording in the Register
(as hereinafter defined), an Assignment and Acceptance, substantially in the
form of Exhibit E hereto (an "Assignment and Acceptance"), together with any
Revolving Credit Notes subject to such assignment. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, (i) the assignee thereunder shall
be a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder, and (ii) the assigning Bank
shall, to the extent provided in such assignment and upon payment to the Agent
of the registration fee referred to in Section 19.3, be released from its
obligations under this Credit Agreement.
Section 19.2. Certain Representations and Warranties; Limitations;
Covenants. By executing and delivering an Assignment and Acceptance, the parties
to the assignment thereunder confirm to and agree with each other and the other
parties hereto as follows: (a) other than the representation and warranty that
it is the legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Bank makes no representation or
warranty, express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or mortgage; (b) the
assigning Bank makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower and its Subsidiaries or
any other Person primarily or secondarily liable in respect of any of the
Obligations, or the performance or observance by the Borrower and its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations or any of their other obligations under this Credit
Agreement or any of the other Loan
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Documents or any other instrument or document furnished pursuant hereto or
thereto; (c) such assignee confirms that it has received a copy of this Credit
Agreement, together with copies of the most recent financial statements referred
to in Section 7.4 and Section 8.4 and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (d) such assignee will, independently and
without reliance upon the assigning Bank, the Agent or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Credit Agreement; (e) such assignee represents and warrants that it is an
Eligible Assignee; (f) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this Credit
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto; (g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Credit Agreement are
required to be performed by it as a Bank; (h) such assignee represents and
warrants that it is legally authorized to enter into such Assignment and
Acceptance; and (i) such assignee acknowledges that it has made arrangements
with the assigning Bank satisfactory to such assignee with respect to its pro
rata share of Letter of Credit Fees in respect of outstanding Letters of Credit.
Section 19.3. Register. The Agent shall maintain a copy of each Assignment
and Acceptance delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to and
Letter of Credit Participations purchased by, the Banks from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this Credit
Agreement. The Register shall be available for inspection by the Borrower and
the Banks at any reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Bank agrees to pay to the
Agent a registration fee in the sum of $3,500.
Section 19.4. New Revolving Credit Notes. 19.4.Upon its receipt of an
Assignment and Acceptance executed by the parties to such assignment, together
with each Revolving Credit Note subject to such assignment, the Agent shall (a)
record the information contained therein in the Register, and (b) give prompt
notice thereof to the Borrower and the Banks (other than the assigning Bank).
Within five (5) Business Days after receipt of such notice, the Borrower, at its
own expense, shall execute and deliver to the Agent, in exchange for each
surrendered Revolving Credit Note, a new Revolving Credit Note to the order of
such Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Revolving Credit
Note to the order of the assigning Bank in an amount equal to the amount
retained by it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Revolving Credit Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Revolving Credit Notes, shall be dated the effective date of such
Assignment and
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Acceptance and shall otherwise be substantially in the form of the assigned
Revolving Credit Notes. The surrendered Revolving Credit Notes shall be canceled
and returned to the Borrower.
Section 19.5. Participations. Each Bank may sell participations to one or
more banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
that (a) each such participation shall be in an amount of not less than
$10,000,000, (b) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrower and (c) the only right of
the assignor granted to the participant pursuant to such participation
arrangements with respect to waivers, amendments or modifications of the Loan
Documents shall be such assignor's right to approve waivers, amendments or
modifications that would require the consent of all Banks affected thereby.
Section 19.6. [Intentionally Omitted]
Section 19.7. Assignee or Participant Affiliated with the Borrower. If any
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agent pursuant to Section 13.1 or Section
13.2, and the determination of the Majority Banks shall for all purposes of this
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Revolving Credit Loans. If any Bank sells a
participating interest in any of the Revolving Credit Loans to a participant,
and such participant is the Borrower or an Affiliate of the Borrower, then such
transferor Bank shall promptly notify the Agent of the sale of such
participation. A transferor Bank shall have no right to vote as a Bank hereunder
or under any of the other Loan Documents for purposes of granting consents or
waivers or for purposes of agreeing to amendments or modifications to any of the
Loan Documents or for purposes of making requests to the Agent pursuant to
Section 13.1 or Section 13.2 to the extent that such participation is
beneficially owned by the Borrower or any Affiliate of the Borrower, and the
determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to the interest of
such transferor Bank in the Revolving Credit Loans to the extent of such
participation.
Section 19.8. Miscellaneous Assignment Provisions. Any assigning Bank
shall retain its rights to be indemnified pursuant to Section 17 with respect to
any claims or actions arising prior to the date of such assignment. If any
assignee Bank is not incorporated under the laws of the United States of America
or any state thereof, it shall, prior to the date on which any interest or fees
are payable hereunder or under any of the other Loan Documents for its account,
deliver to the Borrower and the Agent certification as to its exemption from
deduction or withholding of any United States federal income taxes. If any
Reference Bank transfers all of its interest, rights and obligations under this
Credit Agreement, the Agent shall, in consultation with the Borrower and with
the consent of the Borrower and the Majority Banks, appoint another Bank to act
as a Reference Bank hereunder. Anything contained in this Section 19 to the
contrary notwithstanding, any Bank may at any time pledge all or any portion of
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its interest and rights under this Credit Agreement (including all or any
portion of its Revolving Credit Notes) to any of the twelve Federal Reserve
Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
341. No such pledge or the enforcement thereof shall release the pledgor Bank
from its obligations hereunder or under any of the other Loan Documents.
Section 19.9. Assignment by Borrower. The Borrower shall not assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
Section 20. NOTICES, ETC. Except as otherwise expressly provided in this
Credit Agreement, all notices and other communications made or required to be
given pursuant to this Credit Agreement or the Revolving Credit Notes or any
Letter of Credit Applications shall be in writing and shall be delivered in
hand, mailed by United States registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by facsimile and confirmed by
delivery via courier or postal service or by facsimile transmission
confirmation, as the case may be, addressed as follows:
(a) if to the Borrower, at 3770 Embassy Parkway, Akron, OH 44333,
Attention: Chief Executive Officer, or at such other address for notice as the
Borrower shall last have furnished in writing to the Person giving the notice;
(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts 02110,
USA, Attention: Ellen L. Heath, Managing Director, Asset Based Lending, or such
other address or addressee for notice as the Agent shall last have furnished in
writing to the Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on Schedule 1 hereto,
or such other address for notice as such Bank shall have last furnished in
writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile
with transmission confirmed and (ii) if sent by registered or certified
first-class mail, postage prepaid, on the third Business Day following the
mailing thereof.
Section 21. GOVERNING LAW. THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS
UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT
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SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE
ADDRESS SPECIFIED IN Section 20. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR
THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
Section 22. HEADINGS. The captions in this Credit Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
Section 23. COUNTERPARTS. This Credit Agreement and any amendment hereof
may be executed in several counterparts and by each party on a separate
counterpart, each of which when executed and delivered shall be an original, and
all of which together shall constitute one instrument. In proving this Credit
Agreement it shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.
Section 24. ENTIRE AGREEMENT, ETC. The Loan Documents and any other
documents executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby. Neither this Credit Agreement nor any term hereof may be changed,
waived, discharged or terminated, except as provided in Section 26.
Section 25. WAIVER OF JURY TRIAL. Each party to this Credit Agreement
hereby waives its right to a jury trial with respect to any action or claim
arising out of any dispute in connection with this Credit Agreement, the
Revolving Credit Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of which rights and
obligations. Except as prohibited by law, the Borrower and each Guarantor hereby
waives any right it may have to claim or recover in any litigation referred to
in the preceding sentence any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages. The
Borrower and each Guarantor (a) certifies that no representative, agent or
attorney of any Bank or the Agent has represented, expressly or otherwise, that
such Bank or the Agent would not, in the event of litigation, seek to enforce
the foregoing waivers and (b) acknowledges that the Agent and the Banks have
been induced to enter into this Credit Agreement, the other Loan Documents to
which it is a party by, among other things, the waivers and certifications
contained herein.
Section 26. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval
required or permitted by this Credit Agreement to be given by the Banks may be
given, and any term of this Credit Agreement, the other Loan Documents or any
other instrument related hereto or mentioned herein may be amended, and the
performance or observance by the Borrower or any of its Subsidiaries of any
terms of this Credit Agreement, the other Loan Documents or such other
instrument or the continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Borrower and the
written consent of the Majority Banks.
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Notwithstanding the foregoing, (i) any decrease in the rate of interest on the
Revolving Credit Notes (other than in connection with the waiver of Section
5.10.2), any extension of scheduled maturity of the Revolving Credit Notes, any
increase in the amount of the Commitments of the Banks, any decrease in the
amount of commitment fee, Letter of Credit Fees or any other fee hereunder (in
each case in this clause (i) except that any amendment or modification to the
definitions in this Agreement relating to the calculation of the Borrowing Base
and eligibility criteria shall be approved by the Majority Banks and each of the
Co-Agents), any release of a substantial portion of the Collateral (other than
as provided for in clauses (iv) and (v) below) and any amendment of this Section
26 requires the written consent of the Borrower and the written consent of each
Bank affected thereby, (ii) the definition of "Majority Banks" or "Supermajority
Banks" may not be amended without the written consent of all of the Banks, (iii)
the definition of "Co-Agents" may not be amended without the written consent of
all of the Co-Agents, (iv) Collateral consisting of assets disposed of pursuant
to Section 9.6 may be released in connection with such disposition, (v)
Collateral consisting of the Canton Cast-Roll Facility and pledged stock or
membership interests constituting Collateral may be released in connection with
the permitted incurrence by the Borrower of the Canton Indebtedness or the
permitted disposition of the Canton Cast-Roll Facility (without implying any
such required permission will be given by the Banks), (vi) amendments or waivers
which affect the Availability Block (other than consents or waivers which have
the effect of directly decreasing the Availability Block) and amendments and
waivers of definitions of this Credit Agreement relating to eligibility criteria
for assets included in the Borrowing Base require the consent of Majority Banks
and each of the Co-Agents, (vii) amendments or waivers which have the effect of
directly decreasing the Availability Block, increasing the Eligible Fixed Asset
Cap or the cap on the amount of the Borrowing Base that may be allocated to
Eligible Inventory set forth clause (b) of the definition of Borrowing Base and
increases in the percentages set forth in the definition of Borrowing Base
require the consent of the Super-Majority Banks (which shall include each of the
Co-Agents), and (viii) the amount of the Agent's fee, any Letter of Credit Fees
or any other fees payable for the Agent's account and Section 15 may not be
amended without the written consent of the Agent. No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the Agent or
any Bank in exercising any right shall operate as a waiver thereof or otherwise
be prejudicial thereto. No notice to or demand upon the Borrower shall entitle
the Borrower to other or further notice or demand in similar or other
circumstances.
Section 27. SEVERABILITY. The provisions of this Credit Agreement are
severable and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Credit
Agreement in any jurisdiction.
Section 28. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
<PAGE>
-107-
Section 28.1. Sharing of Information with Section 20 Subsidiary. The
Borrower acknowledges that from time to time financial advisory, investment
banking and other services may be offered or provided to the Borrower or one or
more of its Subsidiaries, in connection with this Credit Agreement or otherwise,
by a Section 20 Subsidiary. The Borrower, for itself and each of its
Subsidiaries, hereby authorizes (a) such Section 20 Subsidiary to share with the
Agent and each Bank any information delivered to such Section 20 Subsidiary by
the Borrower or any of its Subsidiaries, and (b) the Agent and each Bank to
share with such Section 20 Subsidiary any information delivered to the Agent or
such Bank by the Borrower or any of its Subsidiaries pursuant to this Credit
Agreement, or in connection with the decision of such Bank to enter into this
Credit Agreement; it being understood, in each case, that any such Section 20
Subsidiary receiving such information shall be bound by the confidentiality
provisions of this Credit Agreement. Such authorization shall survive the
payment and satisfaction in full of all of Obligations.
Section 28.2. Confidentiality. Each of the Banks and the Agent agrees, on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or any of its Subsidiaries
pursuant to this Credit Agreement that is identified by such Person as being
confidential at the time the same is delivered to the Banks or the Agent,
provided that nothing herein shall limit the disclosure of any such information
(a) after such information shall have become public other than through a
violation of this Section 28, (b) to the extent required by statute, rule,
regulation or judicial process, (c) to counsel for any of the Banks or the
Agent, (d) to bank examiners or any other regulatory authority having
jurisdiction over any Bank or the Agent, or to auditors or accountants, (e) to
the Agent, any Bank or any Section 20 Subsidiary, (f) in connection with any
litigation to which any one or more of the Banks, the Agent or any Section 20
Subsidiary is a party, or in connection with the enforcement of rights or
remedies hereunder or under any other Loan Document, (g) to a Subsidiary or
affiliate of such Bank as provided in Section 28.1 or (h) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant agrees to be bound by the provisions of Section 8.9.1. The Agent,
the Banks and any Section 20 Subsidiary may refer to any of the Borrower and its
Subsidiaries in connection with any advertising, promotion or marketing
undertaken by the Agent, such Bank or such Section 20 Subsidiary and, for such
purpose, the Agent, such Bank or such Section 20 Subsidiary may utilize any
trade name, trademark, logo or other distinctive symbol associated with the
Borrower or any of its Subsidiaries or any of their businesses.
Section 28.3. Prior Notification. Unless specifically prohibited by
applicable law or court order, each of the Banks and the Agent shall, prior to
disclosure thereof, notify the Borrower of any request for disclosure of any
such non-public information by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) or pursuant to legal
process.
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Section 28.4. Other. In no event shall any Bank or the Agent be obligated
or required to return any materials furnished to it or any Section 20 Subsidiary
by the Borrower or any of its Subsidiaries. The obligations of each Bank under
this Section 28 shall supersede and replace the obligations of such Bank under
any confidentiality letter in respect of this financing signed and delivered by
such Bank to the Borrower prior to the date hereof and shall be binding upon any
assignee of, or purchaser of any participation in, any interest in any of the
Loans or Reimbursement Obligations from any Bank.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
THE BORROWER:
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By:_____________________________________
Name:
Title:
<PAGE>
THE GUARANTORS:
REPUBLIC TECHNOLOGIES
INTERNATIONAL HOLDINGS, LLC
By:_____________________________________
Name:
Title:
RTI Capital Corp.
By:_____________________________________
Name:
Title:
Bliss & Laughlin, LLC
By:_____________________________________
Name:
Title:
<PAGE>
CANADIAN DRAWN STEEL COMPANY INC.
By:_____________________________________
Name:
Title:
NIMISHILLEN & TUSCARAWAS, LLC
By:_____________________________________
Name:
Title:
<PAGE>
THE BANKS AND THE CO-AGENTS:
BANKBOSTON, N.A., individually,
as Administrative Agent and
Co-Book Manager
By:_____________________________________
Name:
Title:
<PAGE>
BANK OF AMERICA, N.A., individually, as
Syndication Agent and Co-Book Manager
By:_____________________________________
Name:
Title:
<PAGE>
THE CHASE MANHATTAN BANK, individually,
as Documentation Agent and
Co-Book Manager
By:_____________________________________
Name:
Title:
<PAGE>
FOOTHILL CAPITAL CORPORATION
By:_____________________________________
Name:
Title:
<PAGE>
HELLER FINANCIAL, INC.
By:_____________________________________
Name:
Title:
<PAGE>
CONGRESS FINANCIAL CORPORATION
By:_____________________________________
Name:
Title:
<PAGE>
THE CIT GROUP / BUSINESS CREDIT, INC.
By:_____________________________________
Name:
Title:
<PAGE>
LASALLE BUSINESS CREDIT, INC.
By:_____________________________________
Name:
Title:
<PAGE>
MELLON BANK, N.A.
By:_____________________________________
Name:
Title:
<PAGE>
DIME COMMERCIAL CORP.
By:_____________________________________
Name:
Title:
<PAGE>
GREENTREE FINANCIAL SERVICING
CORPORATION
By:_____________________________________
Name:
Title:
<PAGE>
ORIX BUSINESS CREDIT, INC.
By:_____________________________________
Name:
Title:
<PAGE>
SUNROCK CAPITAL CORP.
By:_____________________________________
Name:
Title:
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By:_____________________________________
Name:
Title:
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of August 13, 1999, between REPUBLIC
TECHNOLOGIES INTERNATIONAL, LLC, a Delaware limited liability company, (the
"Borrower"), REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC, a Delaware
limited liability company, (the "Parent"), RTI CAPITAL CORP., a Delaware
corporation, ("RTI Capital"), Bliss & Laughlin, LLC, a Delaware limited
liability company, ("Bliss"), and NimishIllen & Tuscarawas, LLC, a Delaware
limited liability company, ("Nimishillen" and, together with RTI Capital and
Nimishellen, the "Subsidiary Guarantors"), (the Borrower, the Parent and the
Subsidiary Guarantors being collectively referred to herein as the "Companies"
and individually as a "Company") and BANKBOSTON, N.A., a national banking
association, as administrative agent (hereinafter, in such capacity, the
"Agent") for itself and other banking institutions (hereinafter, collectively,
the "Banks") which are or may become parties to a Revolving Credit Agreement of
even date herewith (as amended and in effect from time to time, the "Credit
Agreement"), among the Companies, the Banks, the Agent and the other parties
thereto.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that the
Companies execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a security agreement in substantially the form hereof; and
WHEREAS, the Companies wish to grant security interests in favor of the
Agent, for the benefit of the Banks and the Agent, as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein without definitions
shall have the respective meanings provided therefor in the Credit Agreement.
All terms defined in the Uniform Commercial Code of the Commonwealth of
Massachusetts and used herein shall have the same definitions herein as
specified therein; provided, however, that the term "instrument" shall be such
term as defined in Article 9 of the Uniform Commercial Code of such jurisdiction
rather than Article 3.
2. Grant of Security Interest.
2.1. Collateral Granted. Each Company hereby grants to the Agent,
for the benefit of the Banks and the Agent, to secure the payment and
performance in full of all of the Obligations of such Company, a security
interest in and so pledges and assigns to the Agent, for the benefit of
the Banks and the Agent, all of the following properties, assets and
rights of such Company, whether now owned or hereafter acquired or
arising, and all proceeds (including insurance proceeds) and products
thereof and all general
<PAGE>
-2-
intangibles, documents and instruments relating to any of the following
(all of the same being hereinafter called the "Collateral"):
(a) all inventory, including raw materials, work in progress
and finished goods;
(b) accounts, including accounts receivable, chattel paper,
and insurance refund claims and all other insurance claims and
proceeds to which the Agent is entitled pursuant to the provisions
of Section 8.7 of the Credit Agreement;
(c) all general intangibles (other than intellectual
property), including, without limitation, all rights to the payment
of money, to the extent relating to the Collateral described in (a)
and (b) above;
(d) all rights to all short term Investments described in
Section 9.3 of the Credit Agreement constituting Collateral
described in (a), (b), or (c) above or proceeds thereof, and to the
extent such Investments do not constitute Collateral for the Notes,
together with all income therefrom and increases therein; and
(e) all tangible personal property of every kind and nature
associated with or used in connection with the facility commonly
known as the "Cast Roll Facility" and located at 3707 Georgetown
Road, N.E., Canton, Ohio, including, without limitation, all
furniture, fixtures, equipment, raw materials, inventory, or other
goods (all of the foregoing of each Company described in this clause
(e) collectively referred to herein as the "Canton Fixed Assets"),
and all insurance refund claims and all other insurance claims, tort
claims, chattel paper and all general intangibles related to the
Canton Fixed Assets.
2.2. Delivery of Instruments, etc.
(a) Pursuant to the terms hereof, each Company has endorsed,
assigned and delivered to the Agent all negotiable or non-negotiable
instruments and chattel paper pledged by it hereunder, together with
instruments of transfer or assignment duly executed in blank as the
Agent may have specified. In the event that any Company shall, after
the date of this Agreement, acquire any other negotiable or
non-negotiable instruments or chattel paper to be pledged by it
hereunder, such Company shall forthwith endorse, assign and deliver
the same to the Agent, accompanied by such instruments of transfer
or assignment duly executed in blank as the Agent may from time to
time specify.
(b) To the extent that any Company is a beneficiary under any
written letter of credit constituting Collateral now or hereafter
<PAGE>
-3-
issued in favor of such Company and pledged by it hereunder, such
Company shall deliver such letter of credit to the Agent. The Agent
shall from time to time, at the request and expense of such Company,
make such arrangements with such Company as are in the Agent's
reasonable judgment necessary and appropriate so that such Company
may make any drawing to which such Company is entitled under such
letter of credit, without impairment of the Agent's perfected
security interest in such Company's rights to proceeds of such
letter of credit or in the actual proceeds of such drawing. At the
Agent's request, such Company shall, for any such letter of credit,
whether or not written, now or hereafter issued in favor of such
Company as beneficiary, execute and deliver to the issuer and any
confirmer of such letter of credit an assignment of proceeds form,
in favor of the Agent and satisfactory to the Agent and such issuer
or (as the case may be) such confirmer, requiring the proceeds of
any drawing under such letter of credit to be paid directly to the
Agent for application as provided in the Credit Agreement.
2.3. Excluded Collateral. Notwithstanding the foregoing provisions
of this Section 2, such grant of security interest shall not extend to,
and the term "Collateral" shall not include, any chattel paper, general
intangibles and any intellectual property which are now or hereafter held
by any Company as licensee, lessee or otherwise, to the extent that (i)
such chattel paper, general intangibles and such intellectual property are
not assignable or capable of being encumbered as a matter of law or under
the terms of the license, lease or other agreement applicable thereto (but
solely to the extent that any such restriction shall be enforceable under
applicable law), without the consent of the licensor or lessor thereof or
other applicable party thereto and (ii) such consent has not been
obtained; provided, however, that the foregoing grant of security interest
shall extend to, and the term "Collateral" shall include, (A) any and all
proceeds of such chattel paper, general intangibles and such intellectual
property to the extent that the assignment or encumbering of such proceeds
is not so restricted and (B) upon any such licensor, lessor or other
applicable party consent with respect to any such otherwise excluded
chattel paper, general intangibles and such intellectual property being
obtained (including, without limitation, any such consent contained in the
Other Asset Intercreditor Agreement), thereafter such chattel paper,
general intangibles and such intellectual property as well as any and all
proceeds thereof that might have theretofore have been excluded from such
grant of a security interest and the term "Collateral".
2.4. Pledge Agreement. Concurrently herewith certain of the
Companies are executing and delivering to the United States Trust Company
of New York, a bank and trust company organized under the New York Bank
Law, as collateral agent (the "Collateral Agent") for the benefit of the
Banks, the Agent, the Noteholders, the Trustee and each of their
successors and assigns (collectively, the "Secured Parties") for the
benefit of the Secured
<PAGE>
-4-
Parties, a Master Pledge Agreement pursuant to which certain Companies are
pledging to the Collateral Agent, for the benefit of the Secured Parties,
all the shares of the capital stock or membership interests, as the case
may be, of the Companies' subsidiary or subsidiaries. Such pledge shall be
governed by the terms of such Master Pledge Agreement and not by the terms
of this Agreement.
3. Title to Collateral, etc. Each Company is the owner of the Collateral
pledged by it free from any adverse lien, security interest or other
encumbrance, except for the security interest created by this Agreement and
other liens permitted by the Credit Agreement. None of the Collateral
constitutes, or is the proceeds of, "farm products" as defined in Section
9-109(3) of the Uniform Commercial Code of the Commonwealth of Massachusetts.
None of the account debtors in respect of any accounts, chattel paper or general
intangibles and none of the obligors in respect of any instruments included in
the Collateral is a governmental authority subject to the Federal Assignment of
Claims Act, unless the relevant account is not included in the Borrowing Base.
4. Continuous Perfection. Each Company's place of business or, if more
than one, chief executive office is indicated on the Perfection Certificates
delivered to the Agent herewith (the "Perfection Certificates"). No Company will
change the same, or the name, identity or corporate structure of such Company in
any manner, without providing at least thirty (30) days prior written notice to
the Agent. The Collateral, to the extent not delivered to the Agent pursuant to
Section 2.2, will be kept at those locations listed on the Perfection
Certificates and no Company will remove the Collateral from such locations,
without providing at least thirty (30) days prior written notice to the Agent,
unless such Collateral is removed to another location in which the Agent has a
perfected security interest.
5. No Liens. Except for the security interest herein granted and liens
permitted by the Credit Agreement, each Company shall be the owner of the
Collateral pledge by it hereunder free from any lien, security interest or other
encumbrance, and each Company shall defend the same against all claims and
demands of all persons at any time claiming the same or any interests therein
adverse to the Agent or any of the Banks. No Company shall pledge, mortgage or
create, or suffer to exist a security interest in the Collateral in favor of any
person other than the Agent, for the benefit of the Banks and the Agent, except
for liens permitted by the Credit Agreement.
6. No Transfers. No Company will sell or offer to sell or otherwise
transfer the Collateral or any interest therein except for (i) sales of
inventory in the ordinary course of business, (ii) sales or other dispositions
of obsolescent items of equipment in the ordinary course of business consistent
with past practices, and (iii) as otherwise permitted by the Credit Agreement.
7. Maintenance of Collateral; Compliance with Law. Each Company will keep
the Collateral in good order and repair and will not use the same in violation
of law or any policy of insurance thereon except where the failure to do so
<PAGE>
-5-
would not reasonably be expected to have a Material Adverse Effect. The Agent,
or its designee, may inspect, wherever located, the Collateral at such
reasonable times and intervals as the Agent may request. Each Company will pay
promptly when due all taxes, assessments, governmental charges and levies upon
the Collateral or incurred in connection with the use or operation of such
Collateral or incurred in connection with this Agreement, except as permitted by
Section 8.8 of the Credit Agreement. Each Company has at all times operated, and
each Company will continue to operate, its business in compliance with all
applicable provisions of the federal Fair Labor Standards Act, as amended, and
with all applicable provisions of federal, state and local statutes and
ordinances dealing with the control, shipment, storage or disposal of hazardous
materials or substances, except where failure to do so would not have a Material
Adverse Effect.
8. Collateral Protection Expenses; Preservation of Collateral.
8.1. Expenses Incurred by Agent. In its discretion, the Agent may
discharge taxes and other encumbrances at any time levied or placed on any
of the Collateral, make repairs thereto and pay any necessary filing fees.
The Companies jointly and severally agree to reimburse the Agent on demand
for any and all expenditures so made. The Agent shall have no obligation
to any Company to make any such expenditures, nor shall the making thereof
relieve any Company of any default.
8.2. Agent's Obligations and Duties. Anything herein to the contrary
notwithstanding, each Company shall remain liable under each contract or
agreement comprised in the Collateral to be observed or performed by such
Company thereunder. Neither the Agent nor any Bank shall have any
obligation or liability under any such contract or agreement by reason of
or arising out of this Agreement or the receipt by the Agent or any Bank
of any payment relating to any of the Collateral, nor shall the Agent or
any Bank be obligated in any manner to perform any of the obligations of
any Company under or pursuant to any such contract or agreement, to make
inquiry as to the nature or sufficiency of any payment received by the
Agent or any Bank in respect of the Collateral or as to the sufficiency of
any performance by any party under any such contract or agreement, to
present or file any claim, to take any action to enforce any performance
or to collect the payment of any amounts which may have been assigned to
the Agent or to which the Agent or any Bank may be entitled at any time or
times. The Agent's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under Section
9-207 of the Uniform Commercial Code of the Commonwealth of Massachusetts
or otherwise, shall be to deal with such Collateral in the same manner as
the Agent deals with similar property for its own account.
9. Securities and Deposits. The Agent may at any time during an Event of
Default, at its option, transfer to itself or any nominee any securities
constituting Collateral, receive any income thereon and hold such income as
additional Collateral or apply it to the Obligations. The Agent may at any time
during an Event of
<PAGE>
-6-
Default, demand, sue for, collect, or make any settlement or compromise which it
deems desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Agent or any Bank to any Company may at
any time be applied to or set off against any of the Obligations.
10. Notification to Account Debtors and Other Obligors. If an Event of
Default shall have occurred and be continuing, each Company shall, at the
request of the Agent, notify account debtors on accounts, chattel paper and
general intangibles of such Company pledged by it hereunder and obligors on
instruments pledged by it hereunder for which such Company is an obligee of the
security interest of the Agent in any account, chattel paper, general intangible
or instrument and that payment thereof is to be made directly to the Agent or to
any financial institution designated by the Agent as the Agent's agent therefor
(except to the extent that such payment is already being made to the Agent to
the satisfaction of the Agent), and the Agent may itself, if an Event of Default
shall have occurred and be continuing, without notice to or demand upon any
Company, so notify such account debtors and obligors. After the making of such a
request or the giving of any such notification, each Company shall hold any
proceeds of collection received by such Company of accounts, chattel paper,
general intangibles and instruments pledged by it hereunder as trustee for the
Agent, for the benefit of the Banks and the Agent, without commingling the same
with other funds of any Company and shall turn the same over to the Agent in the
identical form received, together with any necessary endorsements or
assignments. The Agent shall apply the proceeds of collection received by the
Agent of accounts, chattel paper, general intangibles and instruments pledged by
a Company to the Obligations in accordance with the Credit Agreement, such
proceeds to be immediately entered after final payment in cash or solvent
credits of the items giving rise to them.
11. Further Assurances. Each Company, at its own expense, shall do, make,
execute and deliver all such additional and further acts, things, deeds,
assurances and instruments as the Agent may reasonably require more completely
to vest in and assure to the Agent and the Banks their respective rights
hereunder or in any of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
continuation statements under the Uniform Commercial Code, (ii) if available,
after taking reasonable steps within the power of such Company, obtaining
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other applicable party
referred to in Section 2.3, (iii) if available, after taking reasonable steps
within the power of such Company, obtaining waivers from mortgagees and
landlords and (iv) taking all actions required by Sections 8-313 and 8-321 of
the Uniform Commercial Code (1990) or Sections 8-106 and 9-115 of the Uniform
Commercial Code (1994), as applicable in each relevant jurisdiction, with
respect to certificated and uncertificated securities.
12. Power of Attorney.
<PAGE>
-7-
12.1. Appointment and Powers of Agent. Each Company hereby
irrevocably constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the place
and stead of such Company or in the Agent's own name, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments that may be
necessary or desirable to accomplish the purposes of this Agreement and,
without limiting the generality of the foregoing, hereby gives said
attorneys the power and right, on behalf of such Company, without notice
to or assent by any Company, to do the following (it being agreed that no
such Person shall exercise such power except during the continuation of an
Event of Default):
(a) upon the occurrence and during the continuance of an Event
of Default, generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral in such
manner as is consistent with the Uniform Commercial Code of the
Commonwealth of Massachusetts and as fully and completely as though
the Agent were the absolute owner thereof for all purposes, and to
do at such Company' expense, at any time, or from time to time, all
acts and things which the Agent deems necessary to protect, preserve
or realize upon the Collateral and the Agent's security interest
therein, in order to effect the intent of this Agreement, all as
fully and effectively as such Company might do, including, without
limitation, (i) the filing and prosecuting of registration and
transfer applications with the appropriate federal or local agencies
or authorities with respect to trademarks, copyrights and patentable
inventions and processes and (ii) the execution, delivery and
recording, in connection with any sale or other disposition of any
Collateral, of the endorsements, assignments or other instruments of
conveyance or transfer with respect to such Collateral; and
(b) to file such financing statements with respect hereto,
with or without such Company's signature, or a photocopy of this
Agreement in substitution for a financing statement, as the Agent
may deem appropriate and to execute in such Company's name such
financing statements and amendments thereto and continuation
statements which may require such Company's signature.
12.2. Ratification by Companies. To the extent permitted by law,
each Company hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
12.3. No Duty on Agent. The powers conferred on the Agent hereunder
are solely to protect the interests of the Agent and the Banks in the
Collateral and shall not impose any duty upon the Agent to exercise any
such powers. The Agent shall be accountable only for the amounts that it
<PAGE>
-8-
actually receives as a result of the exercise of such powers and neither
it nor any of its officers, directors, employees or agents shall be
responsible to any Company for any act or failure to act, except for the
Agent's own gross negligence or willful misconduct.
13. Remedies. If an Event of Default shall have occurred and be
continuing, the Agent may, without notice to or demand upon any Company, declare
this Agreement to be in default, and the Agent shall thereafter have in any
jurisdiction in which enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Agent may, so far as the
Companies can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The Agent may in its
discretion require any number or all of the Companies to assemble all or any
part of the Collateral at such location or locations within the state(s) of any
Company's principal office(s) or at such other locations as the Agent may
designate. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the Agent
shall give to the Companies at least ten (10) Business Days prior written notice
of the time and place of any public sale of Collateral or of the time after
which any private sale or any other intended disposition is to be made. Each
Company hereby acknowledges that ten (10) Business Days prior written notice of
such sale or sales shall be reasonable notice. In addition, each Company waives
any and all rights that it may have to a judicial hearing in advance of the
enforcement of any of the Agent's rights hereunder, including, without
limitation, its right following an Event of Default to take immediate possession
of the Collateral and to exercise its rights with respect thereto. To the extent
that any of the Obligations are to be paid or performed by a person other than
any Company, such Company waives and agrees not to assert any rights or
privileges which it may have under Section 9-112 of the Uniform Commercial Code
of the Commonwealth of Massachusetts.
14. No Waiver, etc. Each Company waives demand, notice, protest, notice of
acceptance of this Agreement, notice of loans made, credit extended, Collateral
received or delivered or other action taken in reliance hereon and all other
demands and notices of any description. With respect to both the Obligations and
the Collateral, each Company assents to any extension or postponement of the
time of payment or any other indulgence, to any substitution, exchange or
release of or failure to perfect any security interest in any Collateral, to the
addition or release of any party or person primarily or secondarily liable, to
the acceptance of partial payment thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Agent may deem advisable. The Agent shall have no duty as to the collection or
protection of the Collateral or any income thereon, nor as to the preservation
of rights against prior parties, nor as to the preservation of any rights
pertaining thereto beyond the safe custody thereof as set forth in Section 8.2.
The Agent shall not be deemed to have waived any of its rights upon or under the
Obligations or the Collateral unless such waiver shall be in writing and signed
by the Agent with the consent of the Majority Banks. No delay
<PAGE>
-9-
or omission on the part of the Agent in exercising any right shall operate as a
waiver of such right or any other right. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right on any future occasion. All
rights and remedies of the Agent with respect to the Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers, shall
be cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Agent deems expedient.
15. Marshalling. Neither the Agent nor any Bank shall be required to
marshal any present or future collateral security (including but not limited to
this Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and of the Agent or any Bank in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, each Company hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
each Company hereby irrevocably waives the benefits of all such laws.
16. Proceeds of Dispositions; Expenses. The Companies jointly and
severally promise to pay to the Agent on demand any and all reasonable expenses,
including reasonable attorneys' fees and disbursements, incurred or paid by the
Agent in protecting, preserving or enforcing the Agent's rights under or in
respect of any of the Obligations or any of the Collateral. After deducting all
of said expenses, the residue of any proceeds of collection or sale of the
Obligations or Collateral shall, to the extent actually received in cash, be
applied to the payment of the Obligations in such order or preference as is
provided in the Credit Agreement, proper allowance and provision being made for
any Obligations not then due. Upon the final payment and satisfaction in full of
all of the Obligations and after making any payments required by Section
9-504(1)(c) of the Uniform Commercial Code of the Commonwealth of Massachusetts,
any excess shall be returned to the Companies, and each Company shall remain
liable for any deficiency in the payment of the Obligations.
17. Overdue Amounts. Until paid, all amounts due and payable by any
Company hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
18. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED TO
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. Each Company
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the
<PAGE>
-10-
Commonwealth of Massachusetts or any federal court sitting therein and consents
to the non-exclusive jurisdiction of such court and to service of process in any
such suit being made upon such Company by mail at the address specified in
Section 20 of the Credit Agreement. Each Company hereby waives any objection
that it may now or hereafter have to the venue of any such suit or any such
court or that such suit is brought in an inconvenient court.
19. Waiver of Jury Trial. EACH COMPANY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, each Company waives
any right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. Each Company (i)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers and (ii) acknowledges that, in entering into the Credit
Agreement and the other Loan Documents to which the Agent or any Bank is a
party, the Agent and the Banks are relying upon, among other things, the waivers
and certifications contained in this Section 19.
20. Termination. At such time as all of the Obligations have been finally
paid and satisfied in full in cash and the commitments have been terminated,
this Security Agreement shall terminate and the Agent shall, upon the written
request and at the expense of the Company, execute and deliver to the Company
all releases, assignments and other instruments as may be necessary or proper to
terminate the Agent's security interest granted hereunder, as fully as if this
Security Agreement had not been made, subject to any disposition of all or any
part thereof that may have been made by the Agent pursuant hereto. Upon the sale
of any Collateral in accordance with the provisions of the Credit Agreement, the
Agent shall, upon the written request and at the expense of the Company, execute
and deliver to the Company, all releases, assignments and other instruments as
may be necessary or proper to terminate the Agent's security interest in such
Collateral. Notwithstanding the foregoing, this Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by the Agent, any Co-Agent or any Bank in respect of the Obligations is
rescinded or must otherwise be restored or returned by the Agent, any Co-Agent
or any Bank upon insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower, upon the appointment of any intervenor or
conservator of, or trustee or similar official for the Borrower or any
substantial part of its assets, or otherwise, all as though such payments had
not been made.
21. Concerning Revised Article 9 of the Uniform Commercial Code. The
parties acknowledge and agree to the following provisions of this Agreement in
anticipation of the possible application, in one or more jurisdictions to
<PAGE>
-11-
the transactions contemplated hereby, of the revised Article 9 of the Uniform
Commercial Code in the form or substantially in the form approved in 1998 by the
American Law Institute and the National Conference of Commissioners on Uniform
State Law ("Revised Article 9").
21.1. Perfection by Filing. The Agent may at any time and from time
to time, pursuant to the provisions of Section 12, file financing
statements, continuation statements and amendments thereto that describe
the Collateral as all assets of each Company of the kind pledged hereunder
and which contain any other information required by Part 5 of Revised
Article 9 for the sufficiency or filing office acceptance of any financing
statement, continuation statement or amendment, including whether such
Company is an organization, the type of organization and any organization
identification number issued to such Company. Each Company agrees to
furnish any such information to the Agent promptly upon request. Any such
financing statements, continuation statements or amendments may be signed
by the Agent on behalf of any Company, as provided in Section 12, and may
be filed at any time in any jurisdiction whether or not Revised Article 9
is then in effect in that jurisdiction.
21.2. Other Perfection, etc. Each Company shall at any time and from
time to time, whether or not Revised Article 9 is in effect in any
particular jurisdiction, take such steps as the Agent may reasonably
request for the Agent (a) use reasonable efforts to obtain an
acknowledgement, in form and substance satisfactory to the Agent, of any
bailee having possession of any of the Collateral that the bailee holds
such Collateral for the Agent, (b) use reasonable efforts to obtain
"control" of any Collateral consisting of investment property, deposit
accounts, letter-of-credit rights or electronic chattel paper (as such
terms are defined in Revised Article 9 with corresponding provisions in
Rev. Sections 9-104, 9-105, 9-106 and 9-107 relating to what constitutes
"control" for such items of Collateral), with any agreements establishing
control to be in form and substance satisfactory to the Agent, and (c)
otherwise to insure the continued perfection and priority of the Agent's
security interest in any of the Collateral and of the preservation of its
rights therein, whether in anticipation and following the effectiveness of
Revised Article 9 in any jurisdiction.
21.3. Other Provisions. In applying the law of any jurisdiction in
which Revised Article 9 is in effect, the following references to sections
in this Agreement to existing Article 9 of that jurisdiction shall be to
the Revised Article 9 Section of that jurisdiction indicated below:
--------------------------------------------------------------------------
Agreement Section Existing Article 9 Revised Article 9
--------------------------------------------------------------------------
3 Section 9-103(3) Rev. Section 9-102(a)(34)
--------------------------------------------------------------------------
8.2 Section 9-207 Rev. Section 9-207
--------------------------------------------------------------------------
11 Sections 8-106 and Rev. Sections 8-106 and 9-106
9-115 (1994)
--------------------------------------------------------------------------
<PAGE>
-12-
--------------------------------------------------------------------------
16 Section 9-504(1)(c) Rev. Sections 9-608(a)(1)(C)
and 9-615(a)(3)
--------------------------------------------------------------------------
21.4. Savings Clause. Nothing contained in this Section 21 shall be
construed to narrow the scope of the Agent's security interest in any of
the Collateral or the perfection or priority thereof or to impair or
otherwise limit any of the rights, powers, privileges or remedies of the
Agent or any Bank hereunder except (and then only to the extent) mandated
by Revised Article 9 to the extent then applicable.
22. Miscellaneous. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon each
Company and its respective successors and assigns, and shall inure to the
benefit of the Agent, the Banks and their respective successors and assigns. If
any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. Each
Company acknowledges receipt of a copy of this Agreement.
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, each Company has caused
this Agreement to be duly executed as of the date first above written.
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By:________________________________
Title:
REPUBLIC TECHNOLOGIES INTERNATIONAL
HOLDINGS, LLC
By:________________________________
Title:
RTI CAPITAL CORP.
By:________________________________
Title:
Bliss & Laughlin, LLC
By:________________________________
Title:
Nimishillen & Tuscarawas, LLC
By:________________________________
Title:
Accepted:
BANKBOSTON, N.A., as Agent,
By:___________________________
Title:
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________________)
) ss.
COUNTY OF ______________________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ______ day of August, 1999, personally appeared
_________________________ to me known personally, and who, being by me duly
sworn, deposes and says that he is the [____________________] of Republic
Technologies International, LLC and that said instrument was signed and sealed
on behalf of said corporation by authority of its [______________], and said
[____________________] acknowledged said instrument to be the free act and deed
of said corporation.
______________________________
Notary Public
My commission expires:
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________________)
) ss.
COUNTY OF ______________________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ______ day of August, 1999, personally appeared
_________________________ to me known personally, and who, being by me duly
sworn, deposes and says that he is the [____________________] of Republic
Technologies International Holdings, LLC and that said instrument was signed and
sealed on behalf of said corporation by authority of its [_____________], and
said [____________________] acknowledged said instrument to be the free act and
deed of said corporation.
______________________________
Notary Public
My commission expires:
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________________)
) ss.
COUNTY OF ______________________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ______ day of August, 1999, personally appeared
_________________________ to me known personally, and who, being by me duly
sworn, deposes and says that he is the [____________________] of RTI Capital
Corp., and that said instrument was signed and sealed on behalf of said
corporation by authority of its Board of Directors, and said
[____________________] acknowledged said instrument to be the free act and deed
of said corporation.
______________________________
Notary Public
My commission expires:
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________________)
) ss.
COUNTY OF ______________________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ______ day of August, 1999, personally appeared
_________________________ to me known personally, and who, being by me duly
sworn, deposes and says that he is the [____________________] of Bliss &
Laughlin, LLC, and that said instrument was signed and sealed on behalf of said
corporation by authority of its [_______________], and said
[____________________] acknowledged said instrument to be the free act and deed
of said corporation.
______________________________
Notary Public
My commission expires:
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________________)
) ss.
COUNTY OF ______________________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ______ day of August, 1999, personally appeared
_________________________ to me known personally, and who, being by me duly
sworn, deposes and says that he is the [____________________] of Nimishillen &
Tuscarawas, LLC, and that said instrument was signed and sealed on behalf of
said corporation by authority of its [____________], and said
[____________________] acknowledged said instrument to be the free act and deed
of said corporation.
______________________________
Notary Public
My commission expires:
<PAGE>
TRADEMARK COLLATERAL
SECURITY AND PLEDGE AGREEMENT
TRADEMARK COLLATERAL SECURITY AND PLEDGE AGREEMENT dated as of August 13,
1999 (the "Trademark Agreement"), between REPUBLIC TECHNOLOGIES INTERNATIONAL,
LLC, a Delaware limited liability company having its principal place of business
at 3770 Embassy Parkway, Akron, OH 44333, (the "Borrower"), and BANKBOSTON,
N.A., a national banking association having an office at 100 Federal Street,
Boston, MA 02110, as administrative agent (hereinafter, in such capacity, the
"Agent") for itself and other lending institutions (hereinafter, collectively,
the "Banks") which are, or may in the future become, parties to a Revolving
Credit Agreement of even date herewith (as amended and in effect from time to
time, the "Credit Agreement"), among the Borrower, the Banks, the Agent and the
other parties thereto.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that the
Borrower execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a trademark agreement in substantially the form hereof;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided therefor in the Credit Agreement. In addition,
the following terms shall have the meanings set forth in this Section 1 or
elsewhere in this Trademark Agreement referred to below:
Assignment of Marks. See Section 2.1.
Associated Goodwill. All goodwill of the Borrower and its business,
products and services appurtenant to, associated with or symbolized by the
Trademarks and the use thereof.
Pledged Trademarks. All of the Borrower's right, title and interest in and
to all of the Trademarks, the Trademark Registrations, the Trademark License
Rights, the Trademark Rights, the Associated Goodwill, the Related Assets, and
all accessions to, substitutions for, replacements of, and all proceeds of any
and all of the foregoing.
PTO. The United States Patent and Trademark Office.
Related Assets. All assets, rights and interests of the Borrower that
uniquely reflect or embody the Associated Goodwill, (other than any assets,
rights and
<PAGE>
-2-
interests of a type in which the Agent does not otherwise have a security
interest pursuant to the Security Agreement or the Patent Agreement) including
the following:
(a) all patents, inventions, copyrights, trade secrets, confidential
information, formulae, methods or processes, compounds, recipes, know-how,
methods and operating systems, drawings, descriptions, formulations,
manufacturing and production and delivery procedures, quality control
procedures, product and service specifications, catalogs, price lists, and
advertising materials, relating to the manufacture, production, delivery,
provision and sale of goods or services under or in association with any
of the Trademarks; and
(b) the following documents and things, if any, in the possession or
under the control of the Borrower, or subject to its demand for possession
or control, related to the production, delivery, provision and sale by the
Borrower, or any affiliate, franchisee, licensee or contractor, of
products or services sold by or under the authority of the Borrower in
connection with the Trademarks or Trademark Rights, whether prior to, on
or subsequent to the date hereof:
(i) all lists, contracts, ancillary documents and other
information that identify, describe or provide information with
respect to any customers, dealers or distributors of the Borrower,
its affiliates or franchisees or licensees or contractors, for
products or services sold under or in connection with the Trademarks
or Trademark Rights, including all lists and documents containing
information regarding each customer's, dealer's or distributor's
name and address, credit, payment, discount, delivery and other sale
terms, and history, pattern and total of purchases by brand,
product, style, size and quantity;
(ii) all agreements (including franchise agreements), product
and service specification documents and operating, production and
quality control manuals relating to or used in the design,
manufacture, production, delivery, provision and sale of products or
services under or in connection with the Trademarks or Trademark
Rights;
(iii) all documents and agreements relating to the identity
and locations of all sources of supply, all terms of purchase and
delivery, for all materials, components, raw materials and other
supplies and services used in the manufacture, production,
provision, delivery and sale of products or services under or in
connection with the Trademarks or Trademark Rights; and
(iv) all agreements and documents constituting or concerning
the present or future, current or proposed advertising and promotion
by the Borrower (or any of its affiliates, franchisees,
<PAGE>
-3-
licensees or contractors) of products or services sold under or in
connection with the Trademarks or Trademark Rights.
Trademark Agreement. This Trademark Collateral Security and Pledge
Agreement, as amended and in effect from time to time.
Trademark License Rights. Any and all past, present or future rights and
interests of the Borrower pursuant to any and all past, present and future
franchising or licensing agreements in favor of the Borrower, or to which the
Borrower is a party, pertaining to any Trademarks, Trademark Registrations, or
Trademark Rights owned or used by third parties in the past, present or future,
including the right (but not the obligation) in the name of the Borrower or the
Agent after the occurrence of an Event of Default to enforce, and sue and
recover for, any breach or violation of any such agreement to which the Borrower
is a party.
Trademark Registrations. All past, present or future federal, state and
foreign registrations of the Trademarks, all past, present and future
applications for any such registrations (and any such registrations thereof upon
approval of such applications), together with the right (but not the obligation)
to apply for such registrations (and prosecute such applications) in the name of
the Borrower or the Agent after the occurrence of an Event of Default, and to
take any and all actions necessary or appropriate to maintain such registrations
in effect and renew and extend such registrations.
Trademark Rights. Any and all past, present or future rights in, to and
associated with the Trademarks throughout the world, whether arising under
federal law, state law, common law, foreign law or otherwise, including the
following: all such rights arising out of or associated with the Trademark
Registrations; the right (but not the obligation) to register claims under any
state, federal or foreign trademark law or regulation; the right (but not the
obligation) to sue or bring opposition or cancellation proceedings in the name
of the Borrower or the Agent after the occurrence of an Event of Default for any
and all past, present and future infringements or dilution of or any other
damages or injury to the Trademarks, the Trademark Rights, or the Associated
Goodwill, and the rights to damages or profits due or accrued arising out of or
in connection with any such past, present or future infringement, dilution,
damage or injury; and the Trademark License Rights.
Trademarks. All of the trademarks, service marks, designs, logos, indicia,
trade names, corporate names, company names, business names, fictitious business
names, trade styles, elements of package or trade dress, and other source and
product or service identifiers, used or associated with or appurtenant to the
products, services and businesses of the Borrower, that (i) are set forth on
Schedule A hereto, or (ii) have been adopted, acquired, owned, held or used by
the Borrower or are now owned, held or used by the Borrower, in the Borrower's
business, or with the Borrower's products and services, or in which the Borrower
has any right, title or interest, or (iii) are in the future adopted, acquired,
owned, held and used by the Borrower in the Borrower's business or with the
Borrower's
<PAGE>
-4-
products and services, or in which the Borrower in the future acquires any
right, title or interest.
use. With respect to any Trademark, all uses of such Trademark by, for or
in connection with the Borrower or its business or for the benefit of the
Borrower or its business, including all such uses by the Borrower itself, by any
of the affiliates of the Borrower, or by any franchisee, licensee or contractor
of the Borrower.
Unless otherwise provided herein, the rules of interpretation set forth in
Section 1.2 of the Credit Agreement shall be applicable to this Trademark
Agreement.
2. GRANT OF SECURITY INTEREST.
2.1. Security Interest; Assignment of Marks. As collateral security for
the payment and performance in full of all of the Obligations, the Borrower
hereby unconditionally grants to the Agent, for the benefit of the Banks and the
Agent, a continuing security interest in and first priority lien on the Pledged
Trademarks, and pledges and mortgages (but does not transfer title to) the
Pledged Trademarks to the Agent for the benefit of the Banks and the Agent.
2.2. Conditional Assignment. In addition to, and not by way of limitation
of, the grant, pledge and mortgage of the Pledged Trademarks provided in Section
2.1, the Borrower grants, assigns, transfers, conveys and sets over to the
Agent, for the benefit of the Banks and the Agent, the Borrower's entire right,
title and interest in and to the Pledged Trademarks; provided that such grant,
assignment, transfer and conveyance shall be and become of force and effect only
(i) upon or after the occurrence and during the continuance of an Event of
Default and (ii) either (A) upon the written demand of the Agent at any time
during such continuance or (B) immediately and automatically (without notice or
action of any kind by the Agent) upon an Event of Default for which acceleration
of the Loans is automatic under the Credit Agreement or upon the sale or other
disposition of or foreclosure upon the Collateral pursuant to the Credit
Agreement and applicable law (including the transfer or other disposition of the
Collateral by the Borrower to the Agent or its nominee in lieu of foreclosure).
2.3. Assignment of Marks. The Assignor agrees to execute and deliver to
the Agent, upon the request of the Agent given after the occurrence and during
the continuance of an Event of Default, an assignment of federally registered
trademarks substantially in the form of Exhibit 1 attached hereto (the
"Assignment of Marks"). The Assignor hereby authorizes the Agent to complete as
assignee and record with the PTO the Assignment of Marks upon the occurrence and
during the continuance of an Event of Default and the proper exercise of the
Agent's remedies under the Trademark Agreement and the Security Agreement. In
addition, the Assignor hereby constitutes and appoints the Agent as its
attorney-in-fact to execute and deliver the Assignment of Marks as provided in
Section 10 below.
<PAGE>
-5-
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Borrower represents, warrants and covenants that except to the extent
the failure of the following, individually or in the aggregate, to be true would
not have a Material Adverse Effect: (i) Schedule A sets forth a true and
complete list of all material subsisting trademark registrations (state, federal
and foreign) and pending trademark registration applications (state, federal and
foreign) and common law trademarks now owned by the Borrower (collectively, the
"Section 3 Marks"); (ii) the Section 3 Marks are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part, and there is no
litigation or proceeding pending concerning the validity or enforceability of
the Section 3 Marks; (iii) to the best of the Borrower's knowledge, each of the
Section 3 Marks is valid and enforceable; (iv) to the best of the Borrower's
knowledge, there is no infringement by others of the Section 3 Marks which could
reasonably be expected to have a Material Adverse Effect; (v) no claim is
pending that the use of any of the Section 3 Marks does or may violate the
rights of any third person, and to the best of the Borrower's knowledge, there
is no infringement by the Borrower of the trademark rights of others; (vi) the
Borrower owns each of the Section 3 Marks, free and clear of any liens, charges,
encumbrances and adverse claims, including pledges, assignments, licenses,
registered user agreements and covenants by the Borrower not to sue third
persons, other than the security interest and assignment created by the this
Trademark Agreement and security interests permitted by the Credit Agreement
(provided, that with respect to any Trademarks registered in a jurisdiction
other than the United States or Canada, such representation is to the Borrower's
knowledge); (vii) the Borrower has the right to enter into this Trademark
Agreement and to perform its terms and has entered and will enter into
appropriate agreements with all relevant present and future employees, agents,
consultants, licensors and licensees that will enable them to comply with the
covenants herein contained; (viii) the Borrower has used, and will continue to
use, proper statutory and other appropriate proprietary notices in connection
with its use of the Trademarks consistent with its reasonable business judgment;
(ix) the Borrower has used, and will continue to use for the duration of this
Trademark Agreement, consistent standards of quality with respect to products
and services sold or provided under the Trademarks consistent with its
reasonable business judgment; (x) this Trademark Agreement will create in favor
of the Agent a valid and perfected first priority security interest in the
Section 3 Marks upon making the filings referred to in clause (xi) of this
Section 3; and (xi) except for the filing of financing statements in the State
of Ohio under the Uniform Commercial Code and the recording of this Trademark
Agreement with the PTO, no authorization, approval or other action by, and no
notice to or filing with, any governmental or regulatory authority, agency or
office is required either (A) for the grant by the Borrower or the effectiveness
of the security interest granted hereby or for the execution, delivery and
performance of this Trademark Agreement by the Borrower, or (B) for the
perfection of or the exercise by the Agent of any of its rights and remedies
hereunder.
<PAGE>
-6-
4. INSPECTION RIGHTS.
The Borrower hereby grants to each of the Agent and the Banks and its
employees and agents the right to visit the Borrower's plants and facilities
that manufacture, inspect or store products sold under any of the Trademarks,
and to inspect the products and quality control records relating thereto in each
case at such reasonable times during regular business hours and at such
reasonable intervals as the Agent or any Bank may reasonably request, and prior
to an Event of Default, upon reasonable notice, in all cases subject to the
confidentiality provisions contained in Section 8.9.1 of the Credit Agreement.
5. NO TRANSFER OR INCONSISTENT AGREEMENTS.
Without the Agent's prior written consent, and except for licenses of
Pledged Trademarks in the ordinary course of the Borrower's business or as
permitted by the Credit Agreement, the Borrower will not (i) mortgage, pledge,
assign, encumber, grant a security interest in, transfer, license or alienate
any of the Pledged Trademarks, or (ii) enter into any agreement (for example, a
license agreement) that is inconsistent with the Borrower's obligations under
this Trademark Agreement or the Credit Agreement.
6. AFTER-ACQUIRED TRADEMARKS, ETC.
6.1. After-acquired Trademarks. If, before the Obligations shall have been
finally paid and satisfied in full, the Borrower shall obtain any right, title
or interest in or to any other or new Trademarks, Trademark Registrations or
Trademark Rights, the provisions of this Trademark Agreement shall automatically
apply thereto and the Borrower shall promptly provide to the Agent notice
thereof in writing and execute and deliver to the Agent such documents or
instruments as the Agent may reasonably request further to implement, preserve
or evidence the Agent's interest therein.
6.2. Amendment to Schedule. The Borrower authorizes the Agent to modify
this Trademark Agreement and the Assignment of Marks, without the necessity of
the Borrower's further approval or signature, only to amend Exhibit A hereto and
the Annex to the Assignment of Marks to include any future or other Trademarks,
Trademark Registrations or Trademark Rights under Section 2 or Section 6.
7. TRADEMARK PROSECUTION.
7.1 Borrower Responsible. The Borrower shall assume full and complete
responsibility for the prosecution, defense, enforcement or any other necessary
or desirable actions in connection with the Pledged Trademarks, and shall hold
each of the Agent and the Banks harmless from any and all reasonable costs,
damages, liabilities and expenses that may be incurred by the Agent or any Bank
in connection with the Agent's interest in the Pledged Trademarks or any other
action or failure to act in connection with this Trademark Agreement or the
transactions
<PAGE>
-7-
contemplated hereby. In respect of such responsibility, the Borrower shall
retain qualified counsel.
7.2. Borrower's Duties, etc. The Borrower shall have the right and the
duty, consistent with its reasonable business judgment, through qualified
counsel, to prosecute diligently any trademark registration applications of the
Section 3 Marks pending as of the date of this Trademark Agreement or thereafter
with respect to any other Trademarks, to preserve and maintain all rights in the
Trademark Registrations and material unregistered Trademarks, including the
filing of appropriate renewal applications and other instruments to maintain in
effect the Trademark Registrations and the payment when due of all registration
renewal fees and other fees, taxes and other expenses that shall be incurred or
that shall accrue with respect to any of the Trademark Registrations and
material unregistered Trademarks. Any expenses incurred in connection with such
applications and actions shall be borne by the Borrower. Except in the exercise
of its reasonable business judgment, the Borrower shall not abandon any filed
trademark registration application, or any Trademark Registration or material
unregistered Trademark, without the consent of the Agent, which consent shall
not be unreasonably withheld.
7.3. Borrower's Enforcement Rights. The Borrower shall have the right and
the duty, consistent with its reasonable business judgment, to bring suit or
other action in the Borrower's own name to maintain and enforce the Trademarks,
the Trademark Registrations and the Trademark Rights. The Borrower may require
the Agent to join in such suit or action as necessary to assure the Borrower's
ability to bring and maintain any such suit or action in any proper forum if
(but only if) the Agent is completely satisfied that such joinder will not
subject the Agent or any Bank to any risk of liability. The Borrower shall
promptly, upon demand, reimburse and indemnify the Agent for all damages, costs
and expenses, including reasonable legal fees, incurred by the Agent pursuant to
this Section 7.3.
7.4. Protection of Trademarks, etc. In general, the Borrower shall take
any and all such actions (including institution and maintenance of suits,
proceedings or actions), consistent with its reasonable business judgment, as
may be necessary or appropriate to properly maintain, protect, preserve, care
for and enforce the Pledged Trademarks in all material respects. The Borrower
shall not knowingly take or fail to take any action, nor permit any action to be
taken or not taken by others under its control, that would materially adversely
affect the validity, grant or enforcement of the Pledged Trademarks.
7.5. Notification by Borrower. Promptly upon obtaining knowledge thereof,
the Borrower will notify the Agent in writing of the institution of, or any
final adverse determination in, any proceeding in the PTO or any similar office
or agency of the United States or any foreign country, or any court, regarding
the validity of any of the Trademarks or Trademark Registrations (other than
routine office action developments) or the Borrower's rights, title or interests
in and to the Pledged Trademarks, and of any event that does or reasonably could
materially adversely affect the value of any of the Pledged Trademarks, the
ability of the Borrower or the Agent to dispose of any of the Pledged Trademarks
or the rights and
<PAGE>
-8-
remedies of the Agent in relation thereto (including but not limited to the levy
of any legal process against any of the Pledged Trademarks).
8. REMEDIES.
Upon the occurrence and during the continuance of an Event of Default, the
Agent shall have, in addition to all other rights and remedies given it by this
Trademark Agreement (including, without limitation, those set forth in Section
2.2, the Credit Agreement and the other Loan Documents), those allowed by law
and the rights and remedies of a secured party under the Uniform Commercial Code
as enacted in the Commonwealth of Massachusetts, and, without limiting the
generality of the foregoing, the Agent may immediately, without demand of
performance and without other notice (except as set forth next below) or demand
whatsoever to the Borrower, all of which are hereby expressly waived, sell or
license at public or private sale or otherwise realize upon the whole or from
time to time any part of the Pledged Trademarks, or any interest that the
Borrower may have therein, and after deducting from the proceeds of sale or
other disposition of the Pledged Trademarks all expenses incurred by the Agent
in attempting to enforce this Trademark Agreement (including all reasonable
expenses for broker's fees and legal services), shall apply the residue of such
proceeds toward the payment of the Obligations as set forth in or by reference
in the Credit Agreement. Notice of any sale, license or other disposition of the
Pledged Trademarks shall be given to the Borrower at least ten (10) days before
the time that any intended public sale or other public disposition of the
Pledged Trademarks is to be made or after which any private sale or other
private disposition of the Pledged Trademarks may be made, which the Borrower
hereby agrees shall be reasonable notice of such public or private sale or other
disposition. At any such sale or other disposition, the Agent may, to the extent
permitted under applicable law, purchase or license the whole or any part of the
Pledged Trademarks or interests therein sold, licensed or otherwise disposed of.
9. COLLATERAL PROTECTION.
If the Borrower shall fail to do any act that it has covenanted to do
hereunder, or if any representation or warranty of the Borrower shall be
breached, the Agent, in its own name or that of the Borrower (in the sole
discretion of the Agent), may (but shall not be obligated to) do such act or
remedy such breach (or cause such act to be done or such breach to be remedied),
and the Borrower agrees promptly to reimburse the Agent for any reasonable cost
or expense incurred by the Agent in so doing.
10. POWER OF ATTORNEY.
If any Event of Default shall have occurred and be continuing, the
Borrower does hereby make, constitute and appoint the Agent (and any officer or
agent of the Agent as the Agent may select in its exclusive discretion) as the
Borrower's true and lawful attorney-in-fact, with full power of substitution and
with the power to endorse the Borrower's name on all applications, documents,
papers and
<PAGE>
-9-
instruments necessary for the Agent to use the Pledged Trademarks, or to grant
or issue any exclusive or nonexclusive license of any of the Pledged Trademarks
to any third person, or to take any and all actions necessary for the Agent to
assign, pledge, convey or otherwise transfer title in or dispose of any of the
Pledged Trademarks or any interest of the Borrower therein to any third person
including without limitation executing the Assignment of Marks and completing
the same as assignee, if applicable, and, in general, to execute and deliver any
instruments or documents and do all other acts that the Borrower is obligated to
execute and do hereunder. The Borrower hereby ratifies all that such attorney
shall lawfully do or cause to be done by virtue hereof and releases each of the
Agent and the Banks from any claims, liabilities, causes of action or demands
arising out of or in connection with any action taken or omitted to be taken by
the Agent under this power of attorney (except for the Agent's or any such
Person's gross negligence or willful misconduct). This power of attorney is
coupled with an interest and shall be irrevocable for the duration of this
Trademark Agreement.
11. FURTHER ASSURANCES.
The Borrower shall, at any time and from time to time, and at its expense,
make, execute, acknowledge and deliver, and file and record as necessary or
appropriate with governmental or regulatory authorities, agencies or offices,
such agreements, assignments, documents and instruments, and do such other and
further acts and things (including, without limitation, obtaining consents of
third parties), as the Agent may request as necessary to implement and effect
fully the intentions, purposes and provisions of this Trademark Agreement, or to
assure and confirm to the Agent the grant, perfection and priority of the
Agent's security interest in the Pledged Trademarks.
12. TERMINATION.
At such time as all of the Obligations have been finally paid and
satisfied in full, this Trademark Agreement shall terminate and the Agent shall,
upon the written request and at the expense of the Borrower, execute and deliver
to the Borrower all deeds, assignments and other instruments as may be necessary
or proper to release the security interest in and lien on the Pledged Trademarks
hereunder and to reassign to the Borrower any Pledged Trademarks conditionally
assigned pursuant to Section 2.2 hereof previously granted, assigned,
transferred and conveyed to the Agent by the Borrower pursuant to this Trademark
Agreement, as fully as if this Trademark Agreement had not been made, subject to
any disposition of all or any part thereof that may have been made by the Agent
pursuant hereto or the Security Agreement.
13. COURSE OF DEALING.
No course of dealing between the Borrower and the Agent, nor any failure
to exercise, nor any delay in exercising, on the part of the Agent, any right,
power or privilege hereunder or under the Credit Agreement or any other
agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right,
<PAGE>
-10-
power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
14. EXPENSES.
Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and expenses incurred by the
Agent in connection with the preparation of this Trademark Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance or renewal fees,
encumbrances, or otherwise protecting, maintaining or preserving the Pledged
Trademarks, or in defending or prosecuting any actions or proceedings arising
out of or related to the Pledged Trademarks, shall be borne and paid by the
Borrower.
15. OVERDUE AMOUNTS.
Until paid, all amounts due and payable by the Borrower hereunder shall be
a debt secured by the Pledged Trademarks and other Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE
AGENT NOR ANY BANK ASSUMES ANY LIABILITIES OF THE BORROWER WITH RESPECT TO ANY
CLAIM OR CLAIMS REGARDING THE BORROWER'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR
RIGHTS OR PURPORTED RIGHTS ARISING FROM, ANY OF THE PLEDGED TRADEMARKS OR ANY
USE, LICENSE OR SUBLICENSE THEREOF, WHETHER ARISING OUT OF ANY PAST, CURRENT OR
FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR OTHERWISE. ALL OF SUCH
LIABILITIES SHALL BE EXCLUSIVELY THE RESPONSIBILITY OF THE BORROWER, AND THE
BORROWER SHALL INDEMNIFY THE AGENT AND THE BANKS FOR ANY AND ALL REASONABLE
COSTS, EXPENSES, DAMAGES AND CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE AGENT
OR ANY BANK WITH RESPECT TO SUCH LIABILITIES.
17. NOTICES.
All notices and other communications made or required to be given pursuant
to this Trademark Agreement shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first-class mail, postage
prepaid, or sent by telegraph, telecopy or telex and confirmed by delivery via
courier or postal service, addressed as set forth in Section 20 of the Credit
Agreement.
<PAGE>
-11-
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand to a responsible officer
of the party to which it is directed, at the time of the receipt thereof by such
officer, (ii) if sent by registered or certified first-class mail, postage
prepaid, two (2) Business Days after the posting thereof, and (iii) if sent by
telegraph, telecopy, or telex, at the time of the dispatch thereof, if in normal
business hours in the country of receipt, or otherwise at the opening of
business on the following Business Day.
18. AMENDMENT AND WAIVER.
This Trademark Agreement is subject to modification only by a writing
signed by the Agent (with the consent of the Majority Banks) and the Borrower,
except as provided in Section 6.2. The Agent shall not be deemed to have waived
any right hereunder unless such waiver shall be in writing and signed by the
Agent and the Majority Banks. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right on any future occasion.
19. GOVERNING LAW; CONSENT TO JURISDICTION.
THIS TRADEMARK AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT
AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS. The Borrower agrees that any suit for the
enforcement of this Trademark Agreement may be brought in the courts of the
Commonwealth of Massachusetts or any federal court sitting therein and consents
to the non-exclusive jurisdiction of such court and to service of process in any
such suit being made upon the Borrower by mail at the address specified in
Section 17. The Borrower hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such suit
is brought in an inconvenient court.
20. WAIVER OF JURY TRIAL.
THE BORROWER WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS TRADEMARK AGREEMENT,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, the Borrower waives any right which it
may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrower (i)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers, and (ii) acknowledges that, in entering into the Credit
Agreement and the other Loan Documents to which the Agent or any Bank is a
party, the Agent and the Banks are relying upon, among other things, the waivers
and certifications contained in this Section 20.
<PAGE>
-12-
21. OTHER ASSET INTERCREDITOR AGREEMENT.
This Agreement is subject to the terms of the Other Asset Intercreditor
Agreement.
22. MISCELLANEOUS.
The headings of each section of this Trademark Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Trademark Agreement and all rights and obligations hereunder shall be binding
upon the Borrower and its respective successors and assigns, and shall inure to
the benefit of the Agent, the Banks and their respective successors and assigns.
In the event of any irreconcilable conflict between the provisions of this
Trademark Agreement and the Credit Agreement, the provisions of the Credit
Agreement shall control. If any term of this Trademark Agreement shall be held
to be invalid, illegal or unenforceable, the validity of all other terms hereof
shall in no way be affected thereby, and this Trademark Agreement shall be
construed and be enforceable as if such invalid, illegal or unenforceable term
had not been included herein. The Borrower acknowledges receipt of a copy of
this Trademark Agreement.
<PAGE>
IN WITNESS WHEREOF, this Trademark Agreement has been executed as of the
day and year first above written.
REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC
By:_____________________________________
Name:
Title:
BANKBOSTON, N.A., as Agent
By:_____________________________________
Name:
Title:
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF____________)
) ss.
COUNTY OF __________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this __ day of August, 1999, personally appeared
_____________________________________ to me known personally, and who, being by
me duly sworn, deposes and says that he is the
___________________________________________ of REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC, and that said instrument was signed and sealed on behalf of
said corporation by authority of its [______________], and said
_____________________________________ acknowledged said instrument to be the
free act and deed of said corporation.
__________________________
Notary Public
My commission expires:
<PAGE>
SCHEDULE A
Trademarks and Trademark Registrations
U.S. TRADEMARKS:
Trademark Registrations --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
- ------------------------------------- --------------- -----------------
MULTICUT 772,111 06/30/64
HP 9-4 875,008 08/19/69
CENTURY SERIES 880,328 11/11/69
LINE-FREE 1,229,261 03/08/83
TUFF-LINE 1,240,859 06/07/83
MULTIFORM 1,351,299 07/30/85
DK1210 1,394,644 05/27/86
JALLOY 1,597,154 05/22/90
IMP 1,597,155 05/22/90
REPUBLIC ENGINEERED STEELS and Design 1,638,873 03/26/91
REPUBLIC ENGINEERED STEELS 1,638,874 03/26/91
C-R 2,046,480 03/18/97
Trademarks Pending with U.S. Patent
and Trademark Office
Trademark Pending Applications
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
- ----------------------------------- ----------------------------------
CAST-ROLL 74/663,754 04/20/95
CAST-ROLL and Design 74/678,211 05/22/95
AGATHON 75/399,659 12/03/97
REPUBLIC TECHNOLOGIES INTERNATIONAL 75/549,790 09/09/98
REPUBLIC TECHNOLOGIES INTERNATIONAL 75/549,791 09/09/98
<PAGE>
-2-
FOREIGN TRADEMARKS:
ARGENTINA:
TITLE REG. NO. APP. NO.
REPUBLIC TECHNOLOGIES INTERNATIONAL 2206519
REPUBLIC TECHNOLOGIES INTERNATIONAL and Design 2206520
BRAZIL:
TITLE REG. NO. APP. NO.
REPUBLIC TECHNOLOGIES INTERNATIONAL and Design 821462008
REPUBLIC TECHNOLOGIES INTERNATIONAL 821462016
CANADA:
TITLE REG. NO. APP. NO.
BISMA-LED 131,688
REPUBLIC ENGINEERED STEELS 418,420
BETTER BY EXPERIENCE 461,922
Design Only (Stylized Bar and Maple Leaf Design) 465,947
CHINA:
TITLE REG. NO. APP. NO.
REPUBLIC TECHNOLOGIES INTERNATIONAL 9900021774
REPUBLIC TECHNOLOGIES INTERNATIONAL and Design 9900021775
<PAGE>
-3-
CTM:
TITLE REG. NO. APP. NO.
REPUBLIC ENGINEERED STEELS 218321
REPUBLIC ENGINEERED STEELS and Design 218370
EL SALVADOR:
TITLE REG. NO. APP. NO.
REPUBLIC STEEL 182
FRANCE:
TITLE REG. NO. APP. NO.
REPUBLIC ENGINEERED STEELS 1581607
GERMANY:
TITLE REG. NO. APP. NO.
REPUBLIC ENGINEERED STEELS 39405602
REPUBLIC TECHNOLOGIES INTERNATIONAL 39913296.8/06
REPUBLIC TECHNOLOGIES INTERNATIONAL and Design 39913296.1/06
ISRAEL:
TITLE REG. NO. APP. NO.
REPUBLIC ENGINEERED STEELS 75718
JAPAN:
TITLE REG. NO. APP. NO.
REPUBLIC ENGINEERED STEELS 2526903
REPUBLIC TECHNOLOGIES INTERNATIONAL and Design 20824/1999
<PAGE>
-4-
KOREA:
TITLE REG. NO. APP. NO.
REPUBLIC TECHNOLOGIES INTERNATIONAL 40-1999-7072
REPUBLIC TECHNOLOGIES INTERNATIONAL and Design 40-1999-7071
MEXICO:
TITLE REG. NO. APP. NO.
REPUBLIC ENGINEERED STEELS 418095
REPUBLIC TECHNOLOGIES INTERNATIONAL 366755
REPUBLIC TECHNOLOGIES INTERNATIONAL and Design 366754
TAIWAN:
TITLE REG. NO. APP. NO.
REPUBLIC TECHNOLOGIES INTERNATIONAL 88009877
REPUBLIC TECHNOLOGIES INTERNATIONAL and Design 88009878
UNITED KINGDOM:
TITLE REG. NO. APP. NO.
REPUBLIC ENGINEERED STEELS 1418821
REPUBLIC TECHNOLOGIES INTERNATIONAL 2191262
REPUBLIC TECHNOLOGIES INTERNATIONAL & Design 2191260
MATERIAL UNREGISTERED TRADEMARKS:
<PAGE>
EXHIBIT 1
ASSIGNMENT OF TRADEMARKS AND SERVICE MARKS
WHEREAS, REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a limited liability
company organized and existing under the laws of the State of Delaware, having a
place of business at 3770 Embassy Parkway, Akron, OH 44333 (the "Borrower"), has
adopted and used and is using the trademarks and service marks (the "Marks")
identified on the Annex hereto, and is the owner of the registrations of and
pending registration applications for such Marks in the United States Patent and
Trademark Office and in the foreign trademark offices identified on such Annex;
and
WHEREAS, __________________________________________________________, a
_________________________________ organized and existing under the laws of
_______________________________, having a place of business at
___________________________________ (the "Assignee"), is desirous of acquiring
the Marks and the registrations thereof and registration applications therefor;
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the Borrower does hereby assign, sell and transfer unto the
Assignee all right, title and interest in and to the Marks, together with (i)
the registrations of and registration applications for the Marks, (ii) the
goodwill of the business symbolized by and associated with the Marks and the
registrations thereof, and (iii) the right to sue and recover for, and the right
to profits or damages due or accrued arising out of or in connection with, any
and all past, present or future infringements or dilution of or damage or injury
to the Marks or the registrations thereof or such associated goodwill.
This Assignment of Trademarks and Service Marks is intended to and shall
take effect as a sealed instrument at such time as the Assignee shall complete
this instrument by inserting its name in the second paragraph above and signing
its acceptance of this Assignment of Trademarks and Service Marks below.
<PAGE>
IN WITNESS WHEREOF, the Borrower, by its duly authorized officer, has
executed this assignment, as an instrument under seal, on this __ day of
_____________, ____.
REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC
By:______________________________
Title:
The foregoing assignment of the Marks and the registrations thereof and
registration applications therefor by the Borrower to the Assignee is hereby
accepted as of the __ day of __________, ____.
_________________________________
By:______________________________
Title:
<PAGE>
COMMONWEALTH OR STATE OF ______________________________)
) ss.
COUNTY OF _____________________________________________)
On this the __ day of August, 1999, before me appeared
________________________________, the person who signed this instrument, who
acknowledged that (s)he is the
__________________________________________________ of REPUBLIC TECHNOLOGIES
INTERNATIONAL MARKETING, LLC and that being duly authorized (s)he signed such
instrument as a free act on behalf of REPUBLIC TECHNOLOGIES INTERNATIONAL
MARKETING, LLC.
__________________________________
Notary Public
[Seal]
My commission expires:
<PAGE>
ANNEX
Trademark Registrations --
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
[List chronologically in ascending numerical order]
[TO BE COMPLETED BY BORROWER]
Trademark Pending Applications --
or United States Patent and Trademark Office
Service Mark Serial No. Filing Date
[List chronologically in ascending numerical order]
[TO BE COMPLETED BY BORROWER]
<PAGE>
PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
PATENT COLLATERAL SECURITY AND PLEDGE AGREEMENT dated as of August 13,
1999 (the "Patent Agreement"), between REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC,
a Delaware limited liability company having its principal place of business at
3770 Embassy Parkway, Akron, OH 44333, (the "Borrower"), and BANKBOSTON, N.A., a
national banking association having an office at 100 Federal Street, Boston,
Massachusetts 02110, as administrative agent (hereinafter, in such capacity, the
"Agent") for itself and other lending institutions (hereinafter, collectively,
the "Banks") which are, or may in the future become, parties to a Revolving
Credit Agreement of even date herewith (as amended and in effect from time to
time, the "Credit Agreement"), among the Borrower, the Banks, the Agent and the
other parties thereto.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that the
Borrower execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a patent agreement in substantially the form hereof;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided therefor in the Credit Agreement. In addition,
the following terms shall have the meanings set forth in this Section 1 or
elsewhere in this Patent Agreement referred to below:
Cast-Roll Patents. All Patents relating to equipment of the Borrower or
any of its Subsidiaries that is used exclusively or primarily at the Canton
Cast-Roll Facility.
Patent Agreement. This Patent Collateral Assignment and Security
Agreement, as amended and in effect from time to time.
Patent Collateral. All of the Borrower's right, title and interest in and
to all of the Pledged Patents, the Patent License Rights, and all other Patent
Rights, and all additions, improvements, and accessions to, all substitutions
for and replacements of, and all products and Proceeds (including insurance
proceeds) of any and all of the foregoing, and all books and records and
technical information and data describing or used in connection with any and all
such rights, interests, assets or property.
<PAGE>
-2-
Patent License Rights. Any and all past, present or future rights and
interests of the Borrower pursuant to any and all past, present and future
licensing agreements in favor of the Borrower, or to which the Borrower is a
party, pertaining to any Pledged Patents, or Patent Rights, owned or used by
third parties in the past, present or future, including the right in the name of
the Borrower or the Agent to enforce, and sue and recover for, any past, present
or future breach or violation of any such agreement.
Patent Rights. Any and all past, present or future rights in, to and
associated with the Pledged Patents throughout the world, whether arising under
federal law, state law, common law, foreign law, or otherwise, including but not
limited to the following: all such rights arising out of or associated with the
Pledged Patents; the right (but not the obligation) to register claims under any
federal, state or foreign patent law or regulation; the right (but not the
obligation) to sue or bring opposition or bring cancellation proceedings in the
name of the Borrower or the Agent for any and all past, present and future
infringements of or any other damages or injury to the Pledged Patents or the
Patent Rights, and the rights to damages or profits due or accrued arising out
of or in connection with any such past, present or future infringement, damage
or injury; and the Patent License Rights.
Patents. All patents and patent applications, whether United States or
foreign, that are owned by the Borrower or in which the Borrower has any right,
title or interest, now or in the future, including, without limitation;
(a) all letters patent of the United States or any other country,
and all applications for letters patent of the United States or any other
country;
(b) all re-issues, continuations, divisions, continuations-in-part,
renewals or extensions thereof;
(c) the inventions disclosed or claimed therein, including the right
to make, use, practice and/or sell (or license or otherwise transfer or
dispose of) the inventions disclosed or claimed therein; and
(d) the right (but not the obligation) to make and prosecute
applications for such Patents.
Pledged Patents. All Patents, including, without limitation, the Cast-Roll
Patents and the patents and patent applications listed on Schedule A hereto (as
the same may be amended pursuant hereto from time to time).
Proceeds. Any consideration received from the sale, exchange, license,
lease or other disposition or transfer of any right, interest, asset or property
which constitutes all or any part of the Patent Collateral, any value received
as a consequence of the ownership, possession, use or practice of any Patent
Collateral, and any payment received from any insurer or other person or entity
as a result of the destruction or the loss, theft or other involuntary
conversion of whatever nature
<PAGE>
-3-
of any right, interest, asset or property which constitutes all or any part of
the Patent Collateral.
PTO. The United States Patent and Trademark Office.
2. GRANT OF SECURITY INTEREST.
To secure the payment and performance in full of all of the Obligations,
the Borrower hereby unconditionally grants to the Agent, for the benefit of the
Banks, a continuing security interest in and first priority lien on the Patent
Collateral; and in furtherance thereof, the Borrower hereby grants, assigns,
transfers and conveys to the Agent, for the benefit of the Banks and the Agent,
BY WAY OF COLLATERAL SECURITY, all of the Patent Collateral. NEITHER THE AGENT
NOR ANY OF THE BANKS ASSUMES ANY LIABILITY ARISING IN ANY WAY BY REASON OF ITS
HOLDING SUCH COLLATERAL SECURITY.
Notwithstanding the foregoing provisions of this Section 2, such grant of
security interest shall not extend to, and the term "Patent Collateral" shall
not include, any chattel paper, general intangibles and any intellectual
property which are now or hereafter held by the Borrower as licensee, lessee or
otherwise, to the extent that (i) such chattel paper, general intangibles and
such intellectual property are not assignable or capable of being encumbered as
a matter of law or under the terms of the license, lease or other agreement
applicable thereto (but solely to the extent that any such restriction shall be
enforceable under applicable law), without the consent of the licensor or lessor
thereof or other applicable party thereto and (ii) such consent has not been
obtained; provided, however, that the foregoing grant of security interest shall
extend to, and the term "Patent Collateral" shall include, (A) any and all
proceeds of such chattel paper, general intangibles and such intellectual
property to the extent that the assignment or encumbering of such proceeds is
not so restricted and (B) upon any such licensor, lessor or other applicable
party consent with respect to any such otherwise excluded chattel paper, general
intangibles and such intellectual property being obtained (including, without
limitation, any such consent contained in the Other Asset Intercreditor
Agreement), thereafter such chattel paper, general intangibles and such
intellectual property as well as any and all proceeds thereof that might have
theretofore have been excluded from such grant of a security interest and the
term "Patent Collateral".
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Borrower represents, warrants and covenants that: except, to the
extent the failure of the following to be true would not have a Material Adverse
Effect, (i) Schedule A attached hereto sets forth a true and complete list of
all of the subsisting patents (federal and foreign) and pending patent
applications (federal and foreign) owned by the Borrower (the "Section 3
Patents"); (ii) the issued Section 3 Patents are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part, and there is no
litigation or proceeding pending concerning the validity or enforceability of
the issued Section 3 Patents; (iii) to the best of the Borrower's knowledge,
each of the issued Section 3 Patents is valid and enforceable; (iv) to the best
of the Borrower's knowledge, there
<PAGE>
-4-
is no infringement by others of the issued Section 3 Patents or Patent Rights;
(v) no claim is pending that the use by the Borrower, or to the knowledge of the
Borrower, any licensee of the Borrower, of any of the Section 3 Patents does or
may violate the rights of any third person, and to the best of the Borrower's
knowledge there is no infringement by the Borrower of the patent rights of
others; (vi) the Borrower owns the Section 3 Patents, free and clear of any
liens, charges, encumbrances and adverse claims, including without limitation
pledges, assignments, licenses, shop rights and covenants by the Borrower not to
sue third persons, other than the security agreement and mortgage created by the
Security Agreement and this Patent Agreement and other security interests
permitted by the Credit Agreement; (vii) the Borrower has the right to enter
into this Patent Agreement and perform its terms and has entered and will enter
into appropriate agreements with all relevant present and future employees,
agents, consultants, licensors and licensees which will enable it to comply with
the covenants herein contained; (viii) this Patent Agreement, together with the
Security Agreement, will create in favor of the Agent, for the benefit of the
Banks, a valid and perfected first priority security interest in the Section 3
Patents upon making the filings referred to in clause (ix) of this Section 3;
and (ix) except for the filing of financing statements in the State of Ohio
under the Uniform Commercial Code and the filing of this Patent Agreement with
the PTO, no authorization, approval or other action by, and no notice to or
filing with, any governmental or regulatory authority, agency or office is
required either (1) for the grant by the Borrower or the effectiveness of the
security interest and assignment granted hereby or for the execution, delivery
and performance of this Patent Agreement by the Borrower, or (2) for the
perfection of or the exercise by the Agent of any of its rights and remedies
hereunder.
4. NO TRANSFER OR INCONSISTENT AGREEMENTS.
Without the Agent's prior written consent, and except for the license of
Patent Collateral in the ordinary course of the Borrower's business or as
permitted by the Credit Agreement, the Borrower will not (i) mortgage, pledge,
assign, encumber, grant a security interest in, transfer, license or alienate
any of the Patent Collateral, or (ii) enter into any agreement (for example, a
license agreement) that is inconsistent with the Borrower's obligations under
this Patent Agreement or the Security Agreement.
5. AFTER-ACQUIRED PATENTS, ETC.
5.1. After-acquired Patents. If, before the Obligations shall have been
finally paid and satisfied in full, the Borrower shall obtain any right, title
or interest in or to any other or new patents, patent applications or patentable
inventions or become entitled to the benefit of any patent application or patent
or any reissue, division, continuation, renewal, extension, or
continuation-in-part of any of the Patent Collateral or any improvement on any
of the Patent Collateral, the provisions of this Patent Agreement shall
automatically apply thereto and the Borrower shall provide to the Agent on a
quarterly basis a written notice of any new or additional patents (federal or
foreign) and patent applications (federal or foreign) of the Borrower in writing
and execute and deliver to the Agent such documents or
<PAGE>
-5-
instruments as the Agent may reasonably request further to transfer title
thereto to the Agent, for the benefit of the Banks and the Agent to validate the
Agent's rights hereunder.
5.2. Amendment to Schedule. The Borrower authorizes the Agent to modify
this Patent Agreement, without the necessity of the Borrower's further approval
or signature, only to amend Schedule A hereto to include any future or other
Pledged Patents or Patent Rights under Section 2 or Section 5 hereof.
6. PATENT PROSECUTION.
6.1. Borrower Responsible. The Borrower shall assume full and complete
responsibility for the prosecution, grant, enforcement or any other necessary or
desirable actions in connection with the Patent Collateral, and shall hold the
Agent and the Banks harmless from any and all reasonable costs, damages,
liabilities and expenses which may be incurred by the Agent or any of the Banks
in connection with the Agent's title to any of the Patent Collateral or any
other action or failure to act in connection with this Patent Agreement or the
transactions contemplated hereby. In respect of such responsibility, the
Borrower shall retain qualified counsel.
6.2. Borrower's Duties, etc. The Borrower shall have the duty, consistent
with its reasonable business judgment through qualified counsel, to prosecute
diligently any patent applications of the Patents pending as of the date of this
Patent Agreement or thereafter that constitute Pledged Patents, to make
application for unpatented but reasonably patentable inventions and to preserve
and maintain all rights in the Pledged Patents, including without limitation the
payment when due of all maintenance fees and other fees, taxes and other
expenses which shall be incurred or which shall accrue with respect to any of
the Pledged Patents. Any expenses incurred in connection with such applications
and actions shall be borne by the Borrower. Except in the exercise of its
reasonable business judgment, the Borrower shall not abandon any filed patent
application, or any pending patent application or patent, without the consent of
the Agent, which consent shall not be unreasonably withheld. The Agent hereby
appoints the Borrower as its agent for all matters referred to in the foregoing
provisions of this Section 6 and agrees to execute any documents necessary to
confirm such appointment. Upon the occurrence and during the continuance of an
Event of Default, the Agent may terminate such agency by providing written
notice of termination to the Borrower.
6.3. Borrower's Enforcement Rights. The Borrower shall have the right and
the duty, consistent with its reasonable business judgment, to bring suit or
other action in the Borrower's own name to enforce the Pledged Patents and the
Patent Rights. The Agent shall be required to join in such suit or action as may
be necessary to assure the Borrower's ability to bring and maintain any such
suit or action in any proper forum so long as the Agent is completely satisfied
that such joinder will not subject the Agent or any of the Banks to any risk of
liability. The Borrower shall promptly, upon demand, reimburse and indemnify the
Agent and the
<PAGE>
-6-
Banks for all damages, costs and expenses, including reasonable legal fees,
incurred by the Agent and any of the Banks pursuant to this Section 6.
6.4. Protection of Patents, etc. In general, the Borrower shall take any
and all such actions (including but not limited to institution and maintenance
of suits, proceedings or actions) consistent with its reasonable business
judgment as may be necessary or appropriate to properly maintain, protect,
preserve, care for and enforce the material Patent Collateral. The Borrower
shall not knowingly take or fail to take any action, nor knowingly permit any
action to be taken or not taken by others under its control, which would
materially affect the validity, grant or enforcement of any of the Patent
Collateral.
6.5. Notification by Borrower. Promptly upon obtaining knowledge thereof,
the Borrower will notify the Agent in writing of the institution of, or any
final adverse determination in, any proceeding in the PTO or any similar office
or agency of the United States or any foreign country, or any court, regarding
the validity of any of the Pledged Patents or the Borrower's rights, title or
interests in and to any of the Patent Collateral, and of any event which does or
reasonably could materially adversely affect the value of any of the Patent
Collateral, the ability of the Borrower or the Agent to dispose of any of the
Patent Collateral or the rights and remedies of the Agent and the Banks in
relation thereto (including but not limited to the levy of any legal process
against any of the Patent Collateral).
7. LICENSE BACK TO BORROWER.
Unless and until there shall have occurred and be continuing an Event of
Default and the Agent has notified the Borrower that the license granted
hereunder is terminated, the Agent hereby grants to the Borrower the sole and
exclusive, nontransferable, royalty-free, worldwide right and license under the
Patent Collateral to make, have made for it, use, sell and otherwise practice
the inventions disclosed and claimed in the Patent Collateral for the Borrower's
own benefit and account and for none other; provided, however, that the
foregoing right and license shall be no greater in scope than, and limited by,
the rights assigned to the Agent, for the benefit of the Banks and the Agent, by
the Borrower hereby. Except as permitted under the Credit Agreement, the
Borrower agrees not to sell, assign, transfer, encumber or sublicense its
interest in the license granted to the Borrower in this Section 7, without the
prior written consent of the Agent. Except as permitted under the Credit
Agreement, any such sublicenses granted on or after the date hereof shall be
terminable by the Agent upon termination of the Borrower's license hereunder.
8. REMEDIES.
If any Event of Default shall have occurred and be continuing, then at the
discretion of the Agent, or upon instructions by the Majority Banks to the
Agent, and upon notice by the Agent to the Borrower: (i) the Borrower's license
with respect to the Patents as set forth in Section 7 shall terminate; (ii) the
Borrower shall immediately cease and desist from the practice, manufacture, use
and sale of the inventions
<PAGE>
-7-
claimed, disclosed or covered by the Patents; and (iii) the Agent shall have, in
addition to all other rights and remedies given it by this Patent Agreement, the
Credit Agreement, the Security Agreement, and the other Loan Documents, those
allowed by law and the rights and remedies of a secured party under the Uniform
Commercial Code as enacted in the Commonwealth of Massachusetts and, without
limiting the generality of the foregoing, the Agent may immediately, without
demand of performance and without other notice (except as set forth next below)
or demand whatsoever to the Borrower, all of which are hereby expressly waived,
and without advertisement, sell or license at public or private sale or
otherwise realize upon the whole or from time to time any part of the Patent
Collateral, or any interest which the Borrower may have therein, and after
deducting from the proceeds of sale or other disposition of the Patent
Collateral all expenses (including all reasonable expenses for broker's fees and
legal services), shall apply the residue of such proceeds toward the payment of
the Obligations as set forth in the Security Agreement. Notice of any sale,
license or other disposition of any of the Patent Collateral shall be given to
the Borrower at least ten (10) days before the time that any intended public
sale or other disposition of such Patent Collateral is to be made or after which
any private sale or other disposition of such Patent Collateral may be made,
which the Borrower hereby agrees shall be reasonable notice of such public or
private sale or other disposition. At any such sale or other disposition, the
Agent may, to the extent permitted under applicable law, purchase or license the
whole or any part of the Patent Collateral or interests therein sold, licensed
or otherwise disposed of.
9. COLLATERAL PROTECTION.
If the Borrower shall fail to do any act that it has covenanted to do
hereunder, or if any representation or warranty of the Borrower shall be
breached, the Agent, in its own name or that of the Borrower (in the sole
discretion of the Agent), may (but shall not be obligated to) do such act or
remedy such breach (or cause such act to be done or such breach to be remedied),
and the Borrower agrees promptly to reimburse the Agent for any reasonable cost
or expense incurred by the Agent in so doing.
10. POWER OF ATTORNEY.
If any Event of Default shall have occurred and be continuing, the
Borrower does hereby make, constitute and appoint the Agent (and any officer or
agent of the Agent as the Agent may select in its exclusive discretion) as the
Borrower's true and lawful attorney-in-fact, with the power to endorse the
Borrower's name on all applications, documents, papers and instruments necessary
for the Agent to use any of the Patent Collateral, to practice, make, use or
sell the inventions disclosed or claimed in any of the Patent Collateral, to
grant or issue any exclusive or nonexclusive license of any of the Patent
Collateral to any third person, or necessary for the Agent to assign, pledge,
convey or otherwise transfer title in or dispose of the Patent Collateral or any
part thereof or interest therein to any third person, and, in general, to
execute and deliver any instruments or documents and do all other acts which the
Borrower is obligated to execute and do hereunder. The Borrower hereby
<PAGE>
-8-
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof, and releases the Agent from any claims, liabilities, causes of action or
demands arising out of or in connection with any action taken or omitted to be
taken by the Agent under this power of attorney (except for the Agent's or any
Such Person's gross negligence or willful misconduct). This power of attorney
shall be irrevocable for the duration of this Patent Agreement.
11. FURTHER ASSURANCES.
The Borrower shall, at any time and from time to time, and at its expense,
make, execute, acknowledge and deliver, and file and record as necessary or
appropriate with governmental or regulatory authorities, agencies or offices,
such agreements, assignments, documents and instruments, and do such other and
further acts and things (including, without limitation, obtaining consents of
third parties), as the Agent may request as necessary to implement and effect
fully the intentions, purposes and provisions of this Patent Agreement, or to
assure and confirm to the Agent the grant, perfection and priority of the
Agent's security interest in any of the Patent Collateral.
12. TERMINATION.
At such time as all of the Obligations have been finally paid and
satisfied in full, this Patent Agreement shall terminate and the Agent shall,
upon the written request and at the expense of the Borrower, execute and deliver
to the Borrower all deeds, assignments and other instruments as may be necessary
or proper to reassign and reconvey to and re-vest in the Borrower the entire
right, title and interest to the Patent Collateral previously granted, assigned,
transferred and conveyed to the Agent and the Banks by the Borrower pursuant to
this Patent Agreement, as fully as if this Patent Agreement had not been made,
subject to any disposition of all or any part thereof which may have been made
by the Agent and the Banks pursuant hereto or the Security Agreement.
13. COURSE OF DEALING.
No course of dealing among the Borrower, the Banks and the Agent, nor any
failure to exercise, nor any delay in exercising, on the part of the Agent or
any of the Banks, any right, power or privilege hereunder or under the Security
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
14. EXPENSES.
Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses incurred by
the Agent in connection with the preparation of this Patent Agreement and all
other documents relating hereto, the consummation of the transactions
contemplated hereby or the enforcement hereof, the filing or recording of any
documents (including all taxes in
<PAGE>
-9-
connection therewith) in public offices, the payment or discharge of any taxes,
counsel fees, maintenance fees, encumbrances or otherwise protecting,
maintaining or preserving any of the Patent Collateral, or in defending or
prosecuting any actions or proceedings arising out of or related to any of the
Patent Collateral, shall be borne and paid by the Borrower.
15. OVERDUE AMOUNTS.
Until paid, all amounts due and payable by the Borrower hereunder shall be
a debt secured by the Patent Collateral and other Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
16. NO ASSUMPTION OF LIABILITY; INDEMNIFICATION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER THE
AGENT NOR ANY BANK ASSUMES ANY LIABILITIES OF THE BORROWER WITH RESPECT TO ANY
CLAIM OR CLAIMS REGARDING THE BORROWER'S OWNERSHIP OR PURPORTED OWNERSHIP OF, OR
RIGHTS OR PURPORTED RIGHTS ARISING FROM, ANY OF THE PATENT COLLATERAL OR ANY
PRACTICE, USE, LICENSE OR SUBLICENSE THEREOF, OR ANY PRACTICE, MANUFACTURE, USE
OR SALE OF ANY OF THE INVENTIONS DISCLOSED OR CLAIMED THEREIN, WHETHER ARISING
OUT OF ANY PAST, CURRENT OR FUTURE EVENT, CIRCUMSTANCE, ACT OR OMISSION OR
OTHERWISE. ALL OF SUCH LIABILITIES SHALL BE EXCLUSIVELY BORNE BY THE BORROWER,
AND THE BORROWER SHALL INDEMNIFY THE AGENT AND THE BANKS FOR ANY AND ALL COSTS,
EXPENSES, DAMAGES AND CLAIMS, INCLUDING LEGAL FEES, INCURRED BY THE AGENT OR ANY
BANK WITH RESPECT TO SUCH LIABILITIES.
17. RIGHTS AND REMEDIES CUMULATIVE.
All of the Agent's and the Banks' rights and remedies with respect to the
Patent Collateral, whether established hereby or by the Security Agreement or by
any other agreements or by law, shall be cumulative and may be exercised
singularly or concurrently.
18. NOTICES.
All notices and other communications made or required to be given pursuant
to this Patent Agreement shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first-class mail, postage
prepaid, or sent by telegraph, telecopy or telex and confirmed by delivery via
courier or postal service, addressed as set forth in Section 20 of the Credit
Agreement.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand to a responsible officer
of the party to which it is directed, at the time of the receipt thereof by such
officer, (ii) if
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sent by registered or certified first-class mail, postage prepaid, two (2)
Business Days after the posting thereof, and (iii) if sent by telegraph,
telecopy, or telex, at the time of the dispatch thereof, if in normal business
hours in the country of receipt, or otherwise at the opening of business on the
following Business Day.
19. AMENDMENT AND WAIVER.
This Patent Agreement is subject to modification only by a writing signed
by the Agent (with the consent of the Majority Banks) and the Borrower, except
as provided in Section 5.2. The Agent shall not be deemed to have waived any
right hereunder unless such waiver shall be in writing and signed by the Agent
and the Majority Banks. A waiver on any one occasion shall not be construed as a
bar to or waiver of any right on any future occasion.
20. GOVERNING LAW; CONSENT TO JURISDICTION.
THIS PATENT AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT
AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS. The Borrower agrees that any suit for the
enforcement of this Patent Agreement may be brought in the courts of the
Commonwealth of Massachusetts or any federal court sitting therein and consents
to the non-exclusive jurisdiction of such court and to service of process in any
such suit being made upon the Borrower by mail at the address specified in
Section 18. The Borrower hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such suit
is brought in an inconvenient court.
21. WAIVER OF JURY TRIAL.
THE BORROWER WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS PATENT AGREEMENT,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, the Borrower waives any right which it
may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrower (i)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers, and (ii) acknowledges that, in entering into the Credit
Agreement and the other Loan Documents to which the Agent or any Bank is a
party, the Agent and the Banks are relying upon, among other things, the waivers
and certifications contained in this Section 21.
<PAGE>
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22. OTHER ASSET INTERCREDITOR AGREEMENT.
This Agreement is subject to the terms of the Other Asset Intercreditor
Agreement.
23. MISCELLANEOUS.
The headings of each section of this Patent Agreement are for convenience
only and shall not define or limit the provisions thereof. This Patent Agreement
and all rights and obligations hereunder shall be binding upon the Borrower and
its respective successors and assigns, and shall inure to the benefit of the
Agent, the Banks and their respective successors and assigns. In the event of
any irreconcilable conflict between the provisions of this Patent Agreement and
the Credit Agreement, or between this Patent Agreement and the Security
Agreement, the provisions of the Credit Agreement or the Security Agreement, as
the case may be, shall control. If any term of this Patent Agreement shall be
held to be invalid, illegal or unenforceable, the validity of all other terms
hereof shall in no way be affected thereby, and this Patent Agreement shall be
construed and be enforceable as if such invalid, illegal or unenforceable term
had not been included herein. The Borrower acknowledges receipt of a copy of
this Patent Agreement.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, this Patent Agreement has been executed as of the day
and year first above written.
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By:________________________________
Name:
Title:
BANKBOSTON, N.A., as Agent
By:________________________________
Name:
Title:
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF _______________________)
) ss.
COUNTY OF ______________________________________)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this __ day of August, 1999, personally appeared
_______________________________ to me known personally, and who, being by me
duly sworn, deposes and says that he is the ______________________________ of
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, and that said instrument was signed
and sealed on behalf of said corporation by authority of its [___________], and
said _______________________________ acknowledged said instrument to be the free
act and deed of said corporation.
______________________________
Notary Public
My commission expires:
<PAGE>
SCHEDULE A
ISSUED AND PENDING PATENTS
Patents Issued by U.S. Patent
and Trademark Office
Patent No. Issue Date Inventor(s) Title
- ---------- ---------- ----------- -----
4,238,230 12/09/80 Bucher, et al. Process for Producing
Free-Machining Steel [Casting]
4,289,548 09/15/81 Bucher, et al. High Strength Cold Finished Bars
[Steels Containing Vanadium and
Nitrogen]
4,507,949 04/02/85 Killilea Apparatus for Cooling a
Hot-Rolled Product
4,520,861 06/04/85 Sobolewski, et al. Method and Apparatus for
Alloying Continuously Cast Steel
Products
4,538,669 09/03/85 Markarian, et al. Distortion Measurement in Casting
4,741,786 05/03/88 Birman, et al. Cold Drawn Free-Machining Steel
Bar Including Bismuth
4,806,177 02/21/89 Held, et al. As-Hot Rolled Bar Steel
4,880,479 11/14/89 Birman, et al. Cold Drawn Free-Machining
Resulfurized and Rephosphorized
Steel Bars Having Controlled
Mechanical Properties and
Controlled Machinability
[Tensile Strength]
5,854,749 12/29/98 Kellams, et al. Custom Quality Control
Monitoring Of A Steel Making
Process
5,820,364 10/13/98 Hazard Reheat Furnace Apparatus And
Method Of Use
5,833,044 11/10/98 Canzutti, et al. Method And Apparatus For
Manipulating The Orientation Of
Workpieces
PCT/US96/12648
Patents Pending with U.S. Patent
and Trademark Office
Serial No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- -----
08/924,068
09/033,127
09/039,034
09/065,298
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Serial No. Filing Date Inventor(s) Title
- ---------- ----------- ----------- -----
09/065,804
09/074,140
09/074,797
Foreign Patents and Patent Applications
CANADA
Patent No. Issue Date Inventor(s) Title
- ---------- ---------- ----------- -----
1,137,593 12/14/82 Hostetter, et al. Control System for Bar Mill
Roll Housings
1,125,915 6/15/82 Clymer, et al. Electro-optical gauging system
for dimensions and profile
<PAGE>
CANADIAN SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of August 13, 1999, between CANADIAN
DRAWN STEEL COMPANY INC. (the "Guarantor"), a Canadian company, and BANKBOSTON,
N.A., a national banking association, as administrative agent (hereinafter in
such capacity, the "Agent") for itself and other lending institutions
(hereinafter, collectively, the "Banks") which are or may become parties to a
Revolving Credit Agreement of even date herewith (as amended and in effect from
time to time, the "Credit Agreement"), among the Guarantor, the Banks, the Agent
and the other parties thereto.
WHEREAS, it is a condition precedent to the Banks' making any loans
or otherwise extending credit to the Borrower under the Credit Agreement that
the Guarantor execute and deliver to the Agent, for the benefit of the Banks and
the Agent, a security agreement in substantially the form hereof; and
WHEREAS, the Guarantor wishes to grant security interests in favor
of the Agent, for the benefit of the Banks and the Agent, as herein provided;
NOW THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1.0 Definitions.
All capitalized terms used herein without definitions shall have the
respective meanings provided therefor in the Credit Agreement. All terms not
defined in the Credit Agreement but defined in the Personal Property Security
Act (Ontario) ("PPSA") and used herein shall have the same definitions herein as
specified therein.
2.0 Grant of Security Interest.
2.1 Collateral Granted.
The Guarantor hereby grants to the Agent, for the benefit of the
Banks and the Agent, to secure the payment and performance in full
of all of the Obligations of the Guarantor, a security interest in
and so pledges and assigns to the Agent, for the benefit of the
Banks and the Agent, all of the following properties, assets and
rights of the Guarantor, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof and all general
intangibles, documents and instruments relating to any of the
following (all of the same being hereinafter called the
"Collateral"):
(a) all inventory, including raw materials, work in progress and
finished goods;
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(b) accounts, including accounts receivable, and chattel paper,
insurance refund claims and all other insurance claims and
proceeds to which the Agent is entitled pursuant to the
provisions of Section 8.7 of the Credit Agreement;
(c) all general intangibles (other than intellectual property),
including, without limitation, all rights to the payment of
money, to the extent relating to the Collateral described in
(a) and (b) above;
(d) all rights to all short term Investments described in section
9.3 of the Credit Agreement constituting Collateral described
in (a), (b) or (c) above or proceeds thereof, and to the
extent such Investments do not constitute Collateral for the
Notes , together with all income therefrom and increases
therein; and
(e) all patents, trademarks, trade names, including without
limitation, all right, title and interest of the Guarantor in
and to the trademarks, service marks, registrations of
trademarks and service marks and applications therefor,
patents and applications for patents set forth on the attached
Schedule "A" (collectively, the "Patents and Trademarks"),
together with all right, title and interest of the Guarantor
in and to all patents and trademarks which the Guarantor may
hereinafter acquire, the right to file and prosecute
applications for patents and trademarks, including the Patents
and Trademarks, and similar intellectual property anywhere in
the world and the good will of the business connected with the
use of and symbolized by the Patents and Trademarks, together
with all assets which uniquely reflect the good will of the
business of the Guarantor, including but not limited to, the
Guarantor's trade names, customer lists, trade secrets,
corporate and other business records, license rights,
advertising materials, operating manuals, methods, processes,
know-how, sales literature, drawings, specifications,
descriptions, inventions, name plates, catalogues, copyrights,
dealer contracts, supplier contracts, distribution agreements,
confidential information, consulting agreements, engineering
contracts and engineering drawings (all of the foregoing
described in this clause (d) collectively referred to herein
as the "Intellectual Property").
2.2 Delivery of Instruments, etc.
(a) Pursuant to the terms hereof, the Guarantor has endorsed,
assigned and delivered to the Agent all negotiable or non-negotiable
instruments and chattel paper pledged by it hereunder, together with
instruments of transfer or assignment duly executed in blank as the
Agent may have specified. In the event that the Guarantor shall,
after the date of this Agreement, acquire any other negotiable or
non-negotiable instruments or chattel paper to be pledged by it
hereunder, the Guarantor shall forthwith endorse, assign and deliver
the same to the Agent, accompanied by such instruments of transfer
or assignment duly executed in blank as the Agent may from time to
time specify.
<PAGE>
-3-
(b) To the extent that the Guarantor is a beneficiary under any
written letter of credit constituting Collateral now or hereafter
issued in favor of the Guarantor and pledged by it hereunder, the
Guarantor shall deliver such letter of credit to the Agent. The
Agent shall from time to time, at the request and expense of the
Guarantor, make such arrangements with the Guarantor as are in the
Agent's reasonable judgment necessary and appropriate so that the
Guarantor may make any drawing to which the Guarantor is entitled
under such letter of credit, without impairment of the Agent's
perfected security interest in the Guarantor's rights to proceeds of
such letter of credit or in the actual proceeds of such drawing. At
the Agent's request, the Guarantor shall, for any such letter of
credit, now or hereafter issued in favor of the Guarantor as
beneficiary, execute and deliver to the issuer and any confirmer of
such letter of credit an assignment of proceeds form, in favor of
the Agent and satisfactory to the Agent and such issuer or (as the
case may be) such confirmer, requiring the proceeds of any drawing
under such letter of credit to be paid directly to the Agent for
application as provided in the Credit Agreement, and the Guarantor
shall deliver to the Agent a consent in writing to such assignment
from the issuer of such letter of credit.
2.3 Excluded Collateral.
Notwithstanding the foregoing provisions of this Agreement, such
grant of security interest shall not extend to, and the term
"Collateral" shall not include, any chattel paper, general
intangibles and any intellectual property which are now or hereafter
held by the Guarantor as licensee, lessee or otherwise, to the
extent that (i) such chattel paper, general intangibles and such
intellectual property are not assignable or capable of being
encumbered as a matter of law or under the terms of the license,
lease or other agreement applicable thereto (but solely to the
extent that any such restriction shall be enforceable under
applicable law), without the consent of the licensor or lessor
thereof or other applicable party thereto and (ii) such consent has
not been obtained; provided, however, that the foregoing grant of
security interest shall extend to, and the term "Collateral" shall
include, (A) any and all proceeds of such chattel paper, general
intangibles and such intellectual property to the extent that the
assignment or encumbering of such proceeds is not so restricted and
(B) upon any such licensor, lessor or other applicable party consent
with respect to any such otherwise excluded chattel paper, general
intangibles and such intellectual property being obtained
(including, without limitation, any such consent contained in the
Other Asset Intercreditor Agreement), thereafter such chattel paper,
general intangibles and such intellectual property as well as any
and all proceeds thereof that might have theretofore been excluded
from such grant of a security interest and the term "Collateral".
2.4 Patent and Trademark Assignments.
Concurrently herewith, the Guarantor is also executing and
delivering to the Agent, for the benefit of the Banks and the Agent,
the Assignment of Intellectual Property pursuant
<PAGE>
-4-
to which the Guarantor is assigning to the Agent, for the benefit of
the Banks and the Agent, certain Collateral consisting of patents
and patent rights and trademarks, service marks and trademark and
service mark rights, together with the goodwill appurtenant thereto.
The provisions of the Assignment of Intellectual Property are
supplemental to the provisions of this Agreement, and nothing
contained in the Assignment of Intellectual Property shall derogate
from any of the rights or remedies of the Agent or any of the Banks
hereunder. Nor shall anything contained in the Assignment of
Intellectual Property be deemed to prevent or extend the time of
attachment or perfection of any security interest in such Collateral
created hereby.
3.0 Title to Collateral, etc.
The Guarantor is the owner of the Collateral pledged by it free from
any adverse lien, security interest or other encumbrance, except for the
security interest created by this Agreement and other liens permitted by the
Credit Agreement. None of the account debtors in respect of any accounts,
chattel paper or general intangibles and none of the obligors in respect of any
instruments included in the Collateral is a governmental authority subject to
the Financial Administrations Act.
4.0 Continuous Perfection.
The Guarantor's place of business or, if more than one, chief
executive office is indicated on the Perfection Certificate delivered to the
Agent herewith and the Guarantor will not change the same, or the name, identity
or corporate structure of the Guarantor in any manner, without providing at
least thirty (30) days prior written notice to the Agent. The Collateral, to the
extent not delivered to the Agent pursuant to this Agreement, will be kept at
those locations listed on Schedule "B" and except in the regular course of
business, will not remove the Collateral from such locations, without providing
at least thirty (30) days prior written notice to the Agent, unless such
Collateral is removed to another location in which the Agent has a perfected
security interest.
5.0 No Liens.
Except for the security interest herein granted and liens permitted
by the Credit Agreement, the Guarantor shall be the owner of the Collateral
pledged by it hereunder free from any lien, security interest or other
encumbrance, and the Guarantor shall defend the same against all claims and
demands of all persons at any time claiming the same or any interests therein
adverse to the Agent or any of the Banks. The Guarantor shall not pledge,
mortgage or create, or suffer to exist a security interest in the Collateral in
favor of any person other than the Agent, for the benefit of the Banks and the
Agent, except for liens permitted by the Credit Agreement.
6.0 No Transfers.
The Guarantor will not sell or offer to sell or otherwise transfer
the Collateral or any interest therein except for (i) sales of inventory in the
ordinary course of business, (ii) sales or other
<PAGE>
-5-
dispositions of obsolescent items of equipment in the ordinary course of
business consistent with past practices, and (iii) as otherwise permitted by the
Credit Agreement.
7.0 Maintenance of Collateral; Compliance with Law.
The Guarantor will keep the Collateral in good order and repair and
will not use the same in violation of law or any policy of insurance thereon,
except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect. The Agent, or its designee, may inspect, wherever
located, the Collateral at such reasonable times and intervals as the Agent may
request. The Guarantor will pay promptly when due all taxes, assessments,
governmental charges and levies upon the Collateral or incurred in connection
with the use or operation of such Collateral or incurred in connection with this
Agreement, except as permitted by Section 8.8 of the Credit Agreement. The
Guarantor has at all times operated, and the Guarantor will continue to operate,
its business in compliance with all applicable provisions of federal, provincial
and local statutes and ordinances dealing with the control, shipment, storage or
disposal of hazardous materials or substances, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect.
8.0 Collateral Protection Expenses; Preservation of Collateral.
8.1 Expenses Incurred by Agent.
In its discretion, the Agent may discharge taxes and other
encumbrances at any time levied or placed on any of the Collateral,
make repairs thereto and pay any necessary filing fees. The
Guarantor agrees to reimburse the Agent on demand for any and all
expenditures so made. The Agent shall have no obligation to the
Guarantor to make any such expenditures, nor shall the making
thereof relieve the Guarantor of any default.
8.2 Agent's Obligations and Duties.
Anything herein to the contrary notwithstanding, the Guarantor shall
remain liable under each contract or agreement comprised in the
Collateral to be observed or performed by the Guarantor thereunder.
Neither the Agent nor any Bank shall have any obligation or
liability under any such contract or agreement by reason of or
arising out of this Agreement or the receipt by the Agent or any
Bank of any payment relating to any of the Collateral, nor shall the
Agent or any Bank be obligated in any manner to perform any of the
obligations of the Guarantor under or pursuant to any such contract
or agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Agent or any Bank in respect of the
Collateral or as to the sufficiency of any performance by any party
under any such contract or agreement, to present or file any claim,
to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to the Agent or
to which the Agent or any Bank may be entitled at any time or times.
The Agent's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession shall be
to deal
<PAGE>
-6-
with such Collateral in the same manner as the Agent deals with
similar property for its own account.
9.0 Securities and Deposits.
The Agent may at any time during an Event of Default, at its option,
transfer to itself or any nominee any securities constituting
Collateral, receive any income thereon and hold such income as
additional Collateral or apply it to the Obligations. The Agent may
at any time during an Event of Default demand, sue for, collect, or
make any settlement or compromise which it deems desirable with
respect to the Collateral. Regardless of the adequacy of Collateral
or any other security for the Obligations, any deposits or other
sums at any time credited by or due from the Agent or any Bank to
the Guarantor may at any time be applied to or set off against any
of the Obligations.
10.0 Notification to Account Debtors and Other Obligors.
If an Event of Default shall have occurred and be continuing, the
Guarantor shall, at the request of the Agent, notify account debtors
on accounts, chattel paper and general intangibles of the Guarantor
pledged by it hereunder and obligors on instruments pledged by it
hereunder for which the Guarantor is an obligee of the security
interest of the Agent in any account, chattel paper, general
intangible or instrument and that payment thereof is to be made
directly to the Agent or to any financial institution designated by
the Agent as the Agent's agent therefor (except to the extent that
such payment is already being made to the Agent to the satisfaction
of the Agent), and the Agent may itself, if a Default or an Event of
Default shall have occurred and be continuing, with notice to the
Guarantor, so notify such account debtors and obligors. After the
making of such a request or the giving of any such notification, the
Guarantor shall hold any proceeds of collection received by the
Guarantor of accounts, chattel paper, general intangibles and
instruments pledged by it hereunder as trustee for the Agent, for
the benefit of the Banks and the Agent, without commingling the same
with other funds of the Guarantor and shall turn the same over to
the Agent in the identical form received, together with any
necessary endorsements or assignments. The Agent shall apply the
proceeds of collection received by the Agent of accounts, chattel
paper, general intangibles and instruments pledged by the Guarantor
to the Obligations in accordance with the Credit Agreement, such
proceeds to be immediately entered after final payment in cash or
solvent credits of the items giving rise to them.
11.0 Further Assurances.
The Guarantor, at its own expense, shall do, make, execute and
deliver all such additional and further acts, things, deeds,
assurances and instruments as the Agent may reasonably require more
completely to vest in and assure to the Agent and the Banks their
respective rights hereunder or in any of the Collateral, including,
without limitation, (i) executing, delivering and, where
appropriate, filing financing statements
<PAGE>
-7-
and financing change statements under the PPSA, (ii) if available,
after taking reasonable steps within the powers of the Guarantor,
obtaining governmental and other third party consents and approvals,
including without limitation any consent of any licensor, lessor or
other applicable party referred to in this Agreement, and (iii)
obtaining waivers from mortgagees and landlords.
12.0 Power of Attorney.
12.1 Appointment and Powers of Agent.
The Guarantor hereby irrevocably constitutes and appoints the Agent
and any officer or agent thereof, with full power of substitution,
as its true and lawful attorneys-in-fact with full irrevocable power
and authority in the place and stead of the Guarantor or in the
Agent's own name, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any
and all documents and instruments that may be necessary or desirable
to accomplish the purposes of this Agreement and, without limiting
the generality of the foregoing, hereby gives said attorneys the
power and right, on behalf of the Guarantor, without notice to or
assent by the Guarantor (it being agreed that no such Person shall
exercise such power except during the continuance of an Event of
Default), upon the occurrence and during the continuance of a
Default or an Event of Default, generally to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of the
Collateral in such manner as is consistent with the PPSA and as
fully and completely as though the Agent were the absolute owner
thereof for all purposes, and to do at the Guarantor's expense, at
any time, or from time to time, all acts and things which the Agent
deems necessary to protect, preserve or realize upon the Collateral
and the Agent's security interest therein, in order to effect the
intent of this Agreement, all as fully and effectively as the
Guarantor might do, including, without limitation (i) the filing and
prosecuting of registration and transfer applications with the
appropriate federal or local agencies or authorities with respect to
trademarks, copyrights ad patentable inventions and processes and
(ii) the execution, delivery and recording, in connection with any
sale or other disposition of any Collateral, of the endorsements,
assignments or other instruments of conveyance or transfer with
respect to such Collateral.
12.2 Ratification by Guarantor.
To the extent permitted by law, the Guarantor hereby ratifies all
that said attorneys shall lawfully do or cause to be done by virtue
hereof. This power of attorney is a power coupled with an interest
and shall be irrevocable.
12.3 No Duty on Agent.
The powers conferred on the Agent hereunder are solely to protect
the interests of the Agent and the Banks in the Collateral and shall
not impose any duty upon the Agent to
<PAGE>
-8-
exercise any such powers. The Agent shall be accountable only for
the amounts that it actually receives as a result of the exercise of
such powers and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Guarantor for any
act or failure to act, except for the Agent's own gross negligence
or willful misconduct.
13.0 Remedies.
If an Event of Default shall have occurred and be continuing, the
Agent may, with notice to the Guarantor, declare this Agreement to be in
default, and the Agent shall thereafter have in any jurisdiction in which
enforcement hereof is sought, in addition to all other rights and remedies, the
rights and remedies of a secured party under the PPSA, including, without
limitation, the right to take possession of the Collateral, and for that purpose
the Agent may, so far as the Guarantor can give authority therefor, enter upon
any premises on which the Collateral may be situated and remove the same
therefrom. The Agent may in its discretion require the Guarantor to assemble all
or any part of the Collateral at such location or locations of the Guarantor's
principal office(s) or at such other locations as the Agent may designate.
Unless the Collateral is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, the Agent shall give to
the Guarantor at least fifteen (15) Business Days prior written notice of the
time and place of any public sale of Collateral or of the time after which any
private sale or any other intended disposition is to be made. The Guarantor
hereby acknowledges that fifteen (15) Business Days prior written notice of such
sale or sales shall be reasonable notice. In addition, the Guarantor waives any
and all rights that it may have to a judicial hearing in advance of the
enforcement of any of the Agent's rights hereunder, including, without
limitation, its right following an Event of Default to take immediate possession
of the Collateral and to exercise its rights with respect thereto. To the extent
that any of the Obligations are to be paid or performed by a person other than
the Guarantor, the Guarantor waives and agrees not to assert any rights or
privileges which it may have under the PPSA.
14.0 No Waiver, etc.
The Guarantor waives demand, notice, protest, notice of acceptance
of this Agreement, notice of loans made, credit extended, Collateral received or
delivered or other action taken in reliance hereon and all other demands and
notices of any description. With respect to both the Obligations and the
Collateral, the Guarantor assents to any extension or postponement of the time
of payment or any other indulgence, to any substitution, exchange or release of
or failure to perfect any security interest in any Collateral, to the addition
or release of any party or person primarily or secondarily liable, to the
acceptance of partial payment thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Agent may deem advisable. The Agent shall have no duty as to the collection or
protection of the Collateral or any income thereon, nor as to the preservation
of rights against prior parties, nor as to the preservation of any rights
pertaining thereto beyond the safe custody thereof as set forth in this
Agreement. The Agent shall not be deemed to have waived any of its rights upon
or under the Obligations or the Collateral unless such waiver shall be in
writing and signed by the Agent with the consent of the Majority Banks. No delay
or omission on the part of the Agent in exercising any right shall operate as a
waiver of such right or any other right. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right on any future occasion. All
rights
<PAGE>
-9-
and remedies of the Agent with respect to the Obligations or the Collateral,
whether evidenced hereby or by any other instrument or papers, shall be
cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Agent deems expedient.
15.0 Marshalling.
Neither the Agent nor any Bank shall be required to marshal any
present or future collateral security (including but not limited to this
Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and of the Agent or any Bank in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, the Guarantor hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Guarantor hereby irrevocably waives the benefits of all such laws.
16.0 Proceeds of Dispositions; Expenses.
The Guarantor promises to pay to the Agent on demand any and all
reasonable expenses, including reasonable attorneys' fees and disbursements,
incurred or paid by the Agent in protecting, preserving or enforcing the Agent's
rights under or in respect of any of the Obligations or any of the Collateral.
After deducting all of said expenses, the residue of any proceeds of collection
or sale of the Obligations or Collateral shall, to the extent actually received
in cash, be applied to the payment of the Obligations in such order or
preference as is provided in the Credit Agreement, proper allowance and
provision being made for any Obligations not then due. Upon the final payment
and satisfaction in full of all of the Obligations and after making any payments
required by the PPSA, any excess shall be returned to the Guarantor, and the
Guarantor shall remain liable for any deficiency in the payment of the
Obligations.
17.0 Overdue Amounts.
Until paid, all amounts due and payable by the Guarantor hereunder
shall be a debt secured by the Collateral and shall bear, whether before or
after judgment, interest at the rate of interest for overdue principal set forth
in the Credit Agreement.
18.0 Termination
At such time as all of the Obligations have been finally paid and
satisfied in full in cash and the commitments have been terminated, this
Agreement shall terminate and the Agent shall, upon the written request and at
the expense of the Guarantor, execute and deliver to the Guarantor all releases,
assignments and other instruments as may be necessary or proper to terminate the
Agent's security
<PAGE>
-10-
interest granted hereunder, as fully as if this Agreement had not been made,
subject to any disposition of all or any part thereof that may have been made by
the Agent pursuant hereto. Upon the sale of any Collateral in accordance with
the provisions of the Credit Agreement, the Agent shall, upon the written
request and at the expense of the Guarantor, execute and deliver to the
Guarantor, all releases, assignments and other instruments as may be necessary
or proper to terminate the Agent's security interest in such Collateral.
Notwithstanding the foregoing, this Agreement shall continue to be effective or
be reinstated, as the case may be, if at any time any amount received by the
Agent, any Co-Agent or any Bank in respect of the Obligations is rescinded or
must otherwise be restored or returned by the Agent, any Co-Agent or any Bank
upon insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower, upon the appointment of any intervenor or conservator of, or trustee
or similar official for the Borrower or any substantial part of its assets, or
otherwise, all as though such payments had not been made.
19.0 Governing Law; Consent to Jurisdiction.
THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE
OF ONTARIO. The Guarantor agrees that any suit for the enforcement of this
Agreement may be brought in the courts of the Province of Ontario and consents
to the non-exclusive jurisdiction of such court and to service of process in any
such suit being made upon the Guarantor by mail at the address specified in the
Credit Agreement. The Guarantor hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such suit
is brought in an inconvenient court.
20.0 Savings Clause.
Nothing contained in this Agreement shall be construed to narrow the
scope of the Agent's security interest in any of the Collateral or the
perfection or priority thereof or to impair or otherwise limit any of the
rights, powers, privileges or remedies of the Agent or any Bank hereunder.
21.0 Miscellaneous.
The headings of each section of this Agreement are for convenience
only and shall not define or limit the provisions thereof. This Agreement and
all rights and obligations hereunder shall be binding upon the Guarantor and its
respective successors and assigns, and shall inure to the benefit of the Agent,
the Banks and their respective successors and assigns. If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall in no way be affected thereby, and this Agreement
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein. The Guarantor acknowledges
receipt of a copy of this Agreement.
<PAGE>
-11-
IN WITNESS WHEREOF, intending to be legally bound, the Guarantor has
caused this Agreement to be duly executed as of the date first above written.
CANADIAN DRAWN STEEL COMPANY INC.
Per:
----------------------------------------
Name:
Title:
----------------------------------------
Name:
Title:
I/We have authority to bind the
Corporation.
Accepted:
BANKBOSTON N.A., as Agent
Per:
- --------------------------------------
Name:
Title:
- --------------------------------------
Name:
Title:
I/We have authority to bind the Agent.
<PAGE>
ASSIGNMENT OF INTELLECTUAL PROPERTY
WHEREAS Republic Technologies International, LLC (as "Borrower"), Republic
Technologies International Holdings, LLC, RTI Capital Corp., Bliss & Laughlin,
LLC , Nimishellen & Tuscarawas, LLC, Canadian Drawn Steel Company Inc. (as
"Guarantors) and BankBoston, N.A., a national banking association, as
administrative agent for itself and other lending institutions (the "Assignee")
have entered into a revolving credit agreement (the "Credit Agreement") dated as
of the date hereof;
AND WHEREAS pursuant to the Credit Agreement, Canadian Drawn Steel Company Inc.
(the "Assignor") is obligated to grant an assignment of its intellectual
property;
NOW THEREFORE for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Assignor and Assignee agree as follows:
1. The Assignor, a corporation whose full postal address and whose principal
place of business is 153-155 Chatham Street, Hamilton, hereby sells and
assigns to the Assignee, a national banking association and whose
principal place of business is 100 Federal Street, Boston, Massachusetts
all of the Assignor's right, title and interest in and to the following
intellectual property:
the trade-marks listed in Schedule "A" hereto, including any
copyright in the designs forming part of such trade-marks, and
including any registrations (the "Trade-marks"), including the
goodwill associated with the Trade-marks and the right to sue for
past infringement and retain any damages as a result of such action;
(collectively, the "Intellectual Property").
2. The Assignee hereby accepts the assignments set out in paragraph 1 above.
3. The recording or registration of the assignments granted hereunder shall
be in the sole discretion of and shall be the sole responsibility of the
Assignee; however, the Assignor agrees to execute any instruments
necessary and to do all things necessary to ensure the Assignee can record
and register the assignments.
1. (a) The Assignor represents and warrants to the Assignee that the
Intellectual Property listed in Schedule "A" is owned exclusively by
the Assignor and the Assignor has all right and authority to make
these assignments.
(b) To the best of the Assignor's knowledge, there are no current claims
against the Assignor with respect to the Intellectual property.
5. This Agreement shall enure to the benefit of and be binding upon the
parties and their respective successors and assigns.
<PAGE>
EXECUTED at New York, New York, this 13th day of August, 1999.
CANADIAN DRAWN STEEL COMPANY INC.
Per:
----------------------------------------------
Name:
Title:
I have authority to bind the Assignor company.
BANKBOSTON, N.A., as Agent
Per:
----------------------------------------------
Name:
Title:
I have authority to bind the Assignee
<PAGE>
SCHEDULE "A"
TRADE-MARKS
Trade-mark Reg. No. Reg. Date Expiry
- ---------- -------- --------- ------
BISMA-LED TMA 131,688 1963-07-05 2008-07-05
BETTER BY EXPERIENCE TMA 461,922 1996-08-23 2011-08-23
STYLIZED BAR AND TMA 465,947 1996-11-12 2011-11-12
MAPLE LEAF DESIGN
(as set out in Exhibit 1, attached)
<PAGE>
Recording Office: Stark County, Ohio
OPEN-END MORTGAGE,
SECURITY AGREEMENT, ASSIGNMENT OF RENTS, INCOME AND PROCEEDS
DATED as of August ___, 1999
from
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
to
BANKBOSTON, N.A., as Administrative Agent
Notice: This instrument secures, inter alia, obligations which
may provide for:
(a) a variable rate of interest;
(b) future and/or revolving credit advances or
readvances, which when made, shall have the same priority as
advances or readvances made on the date hereof whether or not
(i) any advances or readvances were made on the date hereof
and (ii) any indebtedness is outstanding at the time any
advance or readvance is made; and/or
(c) after-acquired property provisions and secures
future advances pursuant to a line of credit for business or
commercial purposes.
Notwithstanding anything to the contrary contained herein, the
maximum principal indebtedness secured under any contingency
by this instrument shall in no event exceed $425,000,000.00.
<PAGE>
Recording Office: Stark County, Ohio
OPEN-END MORTGAGE,
SECURITY AGREEMENT, ASSIGNMENT OF RENTS, INCOME AND PROCEEDS
THE MAXIMUM AMOUNT OF INDEBTEDNESS,
EXCLUSIVE OF INTEREST,
SECURED BY THIS MORTGAGE IS $425,000,000.00
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC (successor to Republic Engineered
Steels, Inc., a Delaware corporation ("RES"), Bar Technologies Inc., a Delaware
corporation ("BarTech") and USS/Kobe Steel Company, an Ohio general partnership
("USS/Kobe")), a Delaware limited liability company having its principal place
of business at 3770 Embassy Parkway, Akron, OH 44333 (the "Mortgagor"), for
consideration paid, grants, with Mortgage Covenants (as defined in 5302.13, Ohio
Revised Code), to BANKBOSTON, N.A., a national banking association having a
principal place of business at 100 Federal Street, Boston, MA 02110, as
Administrative and Documentation Agent for itself and the other Banks who are or
may become parties to the Credit Agreement, as defined in the Mortgage Rider
attached hereto as Exhibit C (in such capacity, hereinafter called the
"Mortgagee"), and grants Mortgagee a security interest in, the Property (as such
term is defined and described in the Mortgage Rider attached hereto as Exhibit
C), as of August ___, 1999.
This Mortgage is given upon the Statutory Condition (as defined in
5302.14, Ohio Revised Code), to secure the payment and full performance of the
Obligations (as defined in the Mortgage Rider) and also to secure the
performance of all covenants and agreements herein contained. The Obligations
under the Credit Agreement are due and payable in full on _______, 2004. The
covenants, agreements, conditions, representations and warranties contained in
the Mortgage Rider which is annexed hereto as Exhibit C are incorporated herein
by reference as if fully set out herein; and all references to covenants,
agreements, conditions, representations and warranties contained in this
Mortgage shall be deemed to include the covenants, agreements, conditions,
representations and warranties contained in said Mortgage Rider.
Without limiting the remedies available to the Mortgagee under this
Mortgage, upon the occurrence of an Event of Default (as defined in
<PAGE>
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the Mortgage Rider) which provides for acceleration of the Obligations, or upon
abandonment of the Property by the Mortgagor, the Mortgagee, with or without
judicially appointed receiver (which receiver shall be appointed, as matter of
right, regardless of the adequacy of the security for the Obligations then
secured by this Mortgage and may be appointed upon five (5) days prior notice to
Mortgagor), shall be entitled to enter upon, take possession of, and manage the
Property and to collect the rents for the Property, including those past due,
and any rents collected by the Mortgagee or by the receiver shall be applied
first to payment of costs of the management of the Property and the collection
of rents, including, but not limited to, receiver's bonds and reasonable
attorneys' fees, and then to the payment of the Obligations secured by this
Mortgage. Mortgagee's agents, employees or attorneys may be appointed as
receiver. This Mortgage secures payments for taxes, insurance and other payments
for the protection of the Property.
"Statutory Condition" is defined in Section 5302.14 of the Ohio Revised
Code and provides generally that if the Mortgagor pays the principal and
interest secured by this Mortgage, performs the other obligations secured hereby
and the conditions of any prior mortgage, pays all taxes and assessments,
maintains insurance against fire and other hazards, and does not commit or
suffer waste, and if no further advances may be obtained under the Credit
Agreement or any of the other Obligations, and if no amounts remain available
for drawing under any letter of credit or similar Obligation, then this Mortgage
shall be void.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
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Signed the _____________ day of August, 1999.
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By: ____________________________________
Name: __________________________________
Title: _________________________________
Signed and acknowledged in
the presence of:
___________________________
Witness: __________________
Name: _____________________
___________________________
Witness: __________________
Name: _____________________
<PAGE>
-4-
STATE OF _______________
COUNTY OF __________, ss.
On this ______________, 1999, before me appeared ___________________, to
me personally known, or established on the basis of satisfactory evidence to be
the person who signed the within instrument, who, being by me duly sworn, did
say that he is the ___________________________ of REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC, a Delaware limited liability company, and in his capacity as
such officer acknowledged that said instrument was signed in behalf of said
limited liability company, and was the free act and deed of said limited
liability company.
________________________________________
Notary Public: ____________________
My Commission expires: ___________
This instrument was prepared
by and, after recording, should
be returned to:
ANGELIQUE M.S. MAGLIULO, ESQ.
BINGHAM DANA LLP
150 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(617) 951-8000
<PAGE>
Recording Office: Stark County, Ohio
EXHIBIT A
DESCRIPTION OF PREMISES
<PAGE>
Recording Office: Stark County, Ohio
EXHIBIT B
PERMITTED ENCUMBRANCES
<PAGE>
Recording Office: Stark County, Ohio
EXHIBIT C
MORTGAGE RIDER
Mortgage Rider attached to and made a part of that certain Open-End
Mortgage, Security Agreement, Assignment of Rents, Income and Proceeds, dated as
of August ___, 1999 (the "Mortgage") from REPUBLIC TECHNOLOGIES INTERNATIONAL,
LLC (successor to Republic Engineered Steels, Inc., a Delaware corporation
("RES"), Bar Technologies Inc., a Delaware corporation ("BarTech") and USS/Kobe
Steel Company, an Ohio general partnership ("USS/Kobe")), a Delaware limited
liability company having its principal place of business at 3770 Embassy
Parkway, Akron, OH 44333 (the "Mortgagor"), to BankBoston, N.A., a national
banking association, having its principal office at 100 Federal Street, Boston,
Massachusetts 02110, as Administrative and Agent for itself and the other Banks
who are or may become parties to the Credit Agreement (in such capacity, the
"Mortgagee").
With intent to be legally bound, Mortgagor and Mortgagee agree that the
following terms and conditions are herein made a part of the Mortgage as an
integral part thereof. The provisions of this Mortgage Rider are supplementary
to the provisions of the Mortgage to which this Mortgage Rider is attached and
to the extent any provision of this Mortgage Rider deals with the same subject
matter as similar provisions of the Mortgage, the provisions hereof are to be
construed to expand such similar provisions and not to limit the general
application of any general provision contained in the Mortgage. To the extent
any provision of this Mortgage Rider conflicts with the Mortgage, the language
in the Mortgage shall control. In case any one or more provisions of this
Mortgage Rider may be found to be invalid or unenforceable for any reason or in
any respect, such invalidity or unenforceability shall not limit or impair
enforcement of any other provisions of this Mortgage Rider. Unless otherwise
defined herein, capitalized terms used in the Mortgage and this Mortgage Rider
shall have meanings ascribed to them in the Credit Agreement.
1. REPRESENTATIONS AND WARRANTIES.
The Mortgagor hereby represents, covenants and warrants to Mortgagee as
follows.
1.1. Title to Property. The Mortgagor warrants its title to the Property,
subject only to the Permitted Encumbrances.
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1.2. Authority; No Encumbrances. The Property is now free and clear of all
encumbrances whatsoever except Permitted Encumbrances, and the Mortgagor has
good right and lawful authority to mortgage and convey the same in the manner
and form hereby mortgaged and conveyed.
1.3. Governmental Filings. Other than the recording of this Mortgage and
the filing of financing statements with the appropriate recording and filing
offices in the state where the Property is located, no approval, authorization
or other action by, or filing with, any federal, state, or local commission,
board or agency, is required under existing law in connection with the execution
and delivery by Mortgagor of this Mortgage.
1.4. No Leases. There are presently in effect no leases of the Property or
any part thereof.
1.5. Absence of Litigation. There are no actions, suits, proceedings or
investigations, including, without limitation, condemnation and eminent domain
proceedings, pending or, to the best of Mortgagor's knowledge, threatened,
against or affecting the Property, or which may involve or affect the validity
of this Mortgage, and Mortgagor is not in default with respect to any order,
writ, injunction, decree or demand of any court or any administrative agency or
governmental authority affecting the Property or the use thereof.
1.6. Compliance with Law. The Property is in compliance with all
applicable laws and governmental regulations, including but not limited to those
governing zoning, land use, subdivision control, health, safety, fire protection
and protection of the environment.
2. CERTAIN COVENANTS AND CONDITIONS.
The Mortgagor covenants and agrees as follows.
2.1. Governmental Charges. Mortgagor shall pay before the same become
delinquent all taxes, charges, sewer use fees, water rates and assessments of
every name and nature, whether or not assessed against Mortgagor, if applicable
or related to the Property, or any interest therein, or applicable or related to
any of the Obligations, which, if unpaid, might by law become a lien or charge
upon all or any part of the Property; provided, however, that so long as no
distraint, foreclosure sale or other levy upon or transfer with respect to the
Property or any part thereof shall have been effected or threatened, Mortgagor
shall not be required to pay any such taxes, charges, fees, rates and
assessments by reason of this Section 2.1 if (i) the amount, applicability or
validity thereof is currently being contested by Mortgagor in
<PAGE>
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good faith by appropriate legal proceedings, (ii) such contest operates to
suspend enforcement of compliance with and/or collection thereof, (iii)
Mortgagor shall have set aside on its books reserves (segregated to the extent
required by sound accounting principles and practices) reasonably deemed by
Mortgagee to be adequate with respect thereto, and (iv) if requested by
Mortgagee, Mortgagor shall provide to Mortgagee a bond or other security of such
nature and in such amount as Mortgagee deems sufficient as security for payment
thereof.
2.2. Provision for Payment of Governmental Charges and Other Obligations.
To assure the payment of all taxes, charges, sewer use fees, water rates, ground
rents and assessments of every name and nature, or any other obligations which
may have or acquire priority over this Mortgage, and which are assessed or
payable with reference to the Property, upon the occurrence and during the
continuance of an Event of Default, Mortgagor, if so requested by Mortgagee,
shall deposit with Mortgagee, on the first day of each month, a sum determined
by Mortgagee to be sufficient to provide, in the aggregate, a fund adequate to
pay any such amounts at least ten (10) days before the same become delinquent;
and whenever Mortgagee determines sums accumulated under the provisions of this
Section 2.2 to be insufficient to meet the obligation for which such deposits
were made, Mortgagor shall pay, on the demand of Mortgagee, any amount required
to cover the deficiency therein. Every such deposit may, at the option of
Mortgagee, be applied directly against the obligation with reference to which it
was made, or, to the fullest extent permissible according to law, any other
obligation of Mortgagor secured hereby. Such deposits may, to the fullest extent
permitted by law, be commingled with other assets of Mortgagee and, in the
discretion of Mortgagee, invested by Mortgagee for its own account, without any
obligation to pay income from such investment, or interest on such deposits, to
Mortgagor, or to account to Mortgagor for such income in any manner.
2.3. Maintenance of Property; Alterations. Mortgagor shall keep and
maintain the Property in good condition, repair and working order, damage from
casualty expressly not excepted, shall make all such needful and proper repairs,
replacements, additions and improvements thereto as shall be necessary for the
proper conduct of its business thereon, and shall not permit or commit waste on
the Property. Mortgagor shall not permit removal or alteration of anything which
constitutes a part of the Property without the consent of Mortgagee except that
Mortgagor may remove personal property or fixtures which have become obsolete,
provided that Mortgagor shall substitute personal property or fixtures of equal
utility and equal or greater value for the items so removed. The Mortgagor shall
have
<PAGE>
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the right at all times to make or permit such alterations, improvements or new
construction, structural or otherwise, (herein sometimes called collectively
"alterations"), of or on the Property to be made in all cases subject to the
following conditions:
(a) all work done in connection with any alterations shall be done
promptly and in a first-class and workmanlike manner;
(b) the cost of all alterations shall be paid promptly so as to keep
the Property free of all liens;
(c) no alterations of any kind shall be made to the Property which
shall change the use or reduce the value of the Property in any respect;
and
(d) no alteration involving an estimated cost of materials and
construction labor as estimated by a licensed architect or contractor
reasonably approved by the Mortgagor in excess of $1,000,000 shall be
undertaken without the prior written consent of Mortgagee, which shall not
be unreasonably withheld or delayed.
Mortgagor shall permit Mortgagee to enter the Property at any reasonable time to
determine whether Mortgagor is in compliance with its obligations under this
Mortgage. All construction on the Property shall comply with, and each and every
part of the Property shall be maintained and used in accordance with, all
applicable federal, state and local laws and governmental regulations, and any
lawful private restrictions or other requirements or provisions, relating to the
maintenance or use thereof.
2.4. Insurance. The Mortgagor agrees, at Mortgagor's sole cost and
expense, to keep the Property insured at all times throughout the term of this
Mortgage with policies of insurance as follows:
(a) property or physical hazard insurance on an "all risks" basis,
with broad form flood and earthquake coverages, and building code,
valuable papers, extra expenses, extended period of indemnity and
electronic data processing coverages, with a full replacement cost
endorsement (including builder's risk during any period or periods of time
that construction or remodeling is being performed on the Property) and an
"agreed amount" clause, in an amount equal to 100% of the full replacement
cost of all improvements (excluding only the reasonable value of footings
and foundations) and Mortgagor's contents therein, such amount to be
determined annually by an insurer or qualified appraiser selected and paid
for by Mortgagor and acceptable
<PAGE>
-5-
to Mortgagee, and in any event in an amount sufficient to prevent
Mortgagor from incurring any coinsurance liability; and
(b) if at any time the Property or any portion thereof is located in
a "Flood Hazard Area" pursuant to the Flood Disaster Protection Act of
1973 (or any successor thereto), flood insurance in such total amount as
Mortgagee shall reasonably require from time to time (or the maximum
amount available, if less); and
(c) insurance with respect to other insurable risks and coverages
relating to the Property (including, without limitation, commercial
general liability insurance (broad form), boiler insurance, builder's risk
insurance and worker's compensation insurance) in such amounts and
containing such terms and conditions as Mortgagee may reasonably require
from time to time.
The Mortgagor shall deposit certified copies of all insurance policies (or
certificates thereof acceptable to Mortgagee) providing coverage applicable to
the Property, whether or not required by this Mortgage, with Mortgagee forthwith
after the binding thereof, and shall deliver to Mortgagee new policies (or
certificates acceptable to Mortgagee) for any insurance about to expire at least
thirty (30) days before such expiration. All such insurance policies (other than
liability policies) shall be first payable in case of loss to Mortgagee by means
of a standard non-contributory mortgagee clause, shall be written by such
companies, on such terms, in such form and for such periods and amounts as
Mortgagee shall from time to time approve, shall be primary and without right of
contribution from other insurance which may be available, shall waive any right
of setoff, counterclaim, subrogation, or any deduction in respect of any
liability of Mortgagor and Mortgagee, shall provide that with respect to
Mortgagee, the insurance shall not be invalidated by any action or inaction by
Mortgagor including without limitation any representations made by Mortgagor in
the procurement of such insurance, and shall provide that such policies shall
not be canceled or amended without at least thirty (30) days prior written
notice to Mortgagee. All liability insurance policies shall include Mortgagee as
an additional insured. All such insurance policies shall provide that all losses
thereunder shall be adjusted by (but not disbursed to) Mortgagor, so long as no
Event of Default has occurred and is continuing provided, however, that in no
event shall Mortgagor approve or consent to any final adjustment in an amount
exceeding _______________________________________ dollars ($_____________)
without obtaining Mortgagee's prior written approval of the amount of such
adjustment, and after an Event of Default has occurred and so long as any such
Event of Default continues, Mortgagor shall not consent to a final adjustment in
any amount without obtaining Mortgagee's prior written
<PAGE>
-6-
approval. After the occurrence of an Event of Default, Mortgagor hereby
grants Mortgagee full power and authority as irrevocable attorney-in-fact of
Mortgagor to cancel or transfer such insurance, to collect and endorse any
checks issued in the name of Mortgagor and to retain any premium and to apply
the same to the Obligations secured hereby.
2.5. Casualties and Takings. All proceeds of any property or hazard
insurance or awards of damages on account of any taking or condemnation for
public use of or injury to the Property shall (a) so long as no Default or Event
of Default has occurred and is continuing, be disbursed to the Mortgagor and
applied by Mortgagor in the manner provided in Section 3.2(b). of the Credit
Agreement, and (b) in all other circumstances, be held by Mortgagee as cash
collateral for the Obligations. The Mortgagee may, at its sole option, disburse
from time to time all or any part of such proceeds so held as cash collateral,
upon such terms and conditions as Mortgagee may reasonably prescribe, for direct
application by Mortgagor solely to the repair or replacement of the Property or
portion thereof so damaged or destroyed, or Mortgagee may apply all or any part
of such proceeds to the Obligations.
2.6. Notice of Condemnation. Mortgagor, immediately upon obtaining
knowledge of the institution of any proceeding for the condemnation or
requisition of the Property or any portion thereof, shall notify Mortgagee of
the pendency of such proceeding. The Mortgagee may participate in such
proceeding, and Mortgagor from time to time shall deliver to Mortgagee all
instruments requested by Mortgagee to permit such participation.
2.7. Leases; Assignments; Subordination. Mortgagor shall not lease the
Property or any part thereof without the prior written consent of Mortgagee. If
Mortgagor shall enter into a lease with the consent of Mortgagee, Mortgagor
shall faithfully keep, observe and satisfy all the obligations on the part of
the lessor to be kept, performed and satisfied under every lease from time to
time in force with reference to the Property, and shall not alter or terminate
any such lease, or any guarantee of such lease, except in the ordinary course of
business, or accept any rentals for more than one month in advance. Mortgagor
hereby assigns to Mortgagee all rents and profits under any and all leases of
the Property, provided, however, that Mortgagor shall be entitled to retain such
rents and profits until an Event of Default shall have occurred. At any time on
notice from Mortgagee, Mortgagor shall submit to Mortgagee for examination all
such leases and on the demand of Mortgagee, shall execute and deliver a separate
instrument collaterally assigning any or all such leases, or the rents and
profits thereof, in form satisfactory to Mortgagee. The Mortgagee shall have the
right, by the execution of suitable written instruments from time to time, to
<PAGE>
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subordinate this Mortgage, and the rights of Mortgagee hereunder, to any lease
or leases from time to time in force with reference to the Property, and, on the
execution of any such instrument, this Mortgage shall be subordinate to the
lease for which such subordination is applicable with the same force and effect
as if such lease had been executed and delivered, and a notice thereof recorded
to the extent required to give notice to third persons, prior to the execution,
delivery and recording of this Mortgage.
2.8. Prior Mortgages. If this Mortgage, by its terms, is now, or at any
time hereafter, becomes subject or subordinate to a prior Mortgage or mortgage,
Mortgagor shall fully perform its obligations under such prior Mortgage or
mortgage and shall not, without the consent of Mortgagee, agree to the
modification, amendment or extension of the terms or conditions of such prior
Mortgage or mortgage. Nothing contained in this Section 2.8 is intended, nor
shall it be deemed, to constitute consent by Mortgagee to a subordination of the
lien of this Mortgage.
2.9. Encumbrances. Mortgagor shall not create or permit to be created or
permit to exist any encumbrance on the Property (other than any lien for
property taxes not yet due and payable and the Permitted Encumbrances) even if
such encumbrance is inferior to this Mortgage, without the prior express written
consent of Mortgagee.
2.10. Transfers of Ownership. Mortgagor shall not sell or permit any
transfer of any interest in the Property, or any part thereof, without the prior
express written consent of Mortgagee, except as expressly permitted by the
Credit Agreement.
2.11. Priority of Lien; After-Acquired Property. This Mortgage is and will
be maintained as a valid Mortgage lien on the Property subject only to the
Permitted Encumbrances. All property of every kind acquired by Mortgagor after
the date hereof which, by the terms hereof, is required or intended to be
subjected to the lien of this Mortgage shall, immediately upon the acquisition
thereof by Mortgagor, and without any further mortgage, conveyance, assignment
or transfer, become subject to the lien of this Mortgage. The Mortgagor will do,
execute, acknowledge and deliver all and every such further conveyances,
mortgages, and assurances as Mortgagee shall reasonably require for
accomplishing the purposes of this Mortgage. If any action or proceeding shall
be instituted to recover possession of the Property or for the foreclosure of
any other mortgage or Mortgage or for any other purpose affecting the Property
or this Mortgage, Mortgagor will immediately, upon service thereof on or by
Mortgagor, deliver to Mortgagee a true copy of each precept, petition, summons,
complaint, notice of motion,
<PAGE>
-8-
order to show cause, and all other process, pleadings and papers, however
designated, served in any such action or proceeding.
2.12. Fixtures and Equipment; Financing Statement. This Mortgage
constitutes a security agreement under the Uniform Commercial Code, and
Mortgagor hereby grants to Mortgagee to secure the payment and performance of
the Obligations and also to secure the performance of all agreements and
covenants herein contained, a security interest in all fixtures, Building
Service Equipment and any other property included in the Property, now owned or
hereafter acquired by Mortgagor, which might otherwise be deemed "personal
property" (and all accessions thereto and the proceeds thereof). Some of such
"personal property" is now or is to become fixtures on the Premises. Mortgagor
covenants and agrees that, upon the subsequent acquisition of fixtures, Building
Service Equipment or such personal property included in the Property, it will
provide to Mortgagee such further assurances as may be required by Mortgagee to
establish Mortgagee's first and prior security interest in such fixtures,
Building Service Equipment and property. IT IS INTENDED BY MORTGAGOR AND
MORTGAGEE THAT THIS MORTGAGE BE EFFECTIVE AS A FINANCING STATEMENT FILED WITH
THE REAL ESTATE RECORDS AS A FIXTURE FILING. For this purpose, Mortgagor is the
"debtor" and Mortgagee is the "secured party." A mailing address for the
Mortgagor and an address of Mortgagee from which information concerning the
security interest may be obtained are set forth in the introductory paragraph of
this Mortgage. Mortgagor shall execute, deliver and cause to be recorded and
filed from time to time with all necessary public offices, at Mortgagor's sole
cost and expense, continuances and such other instruments as will maintain
Mortgagee's priority of security in all fixtures, Building Service Equipment and
other personal property included in the Property. The remedies for any violation
of the covenants, terms and conditions of the security agreement herein
contained shall be (i) as prescribed herein, or (ii) as prescribed by general
law, or (iii) as prescribed by the specific statutory consequences now or
hereafter enacted and specified in said Uniform Commercial Code, all at
Mortgagee's sole election.
2.13. Environmental Assessments. At any time after an Event of Default
shall have occurred and be continuing hereunder, or, whether or not an Event of
Default shall have occurred, at any time after Mortgagee shall receive notice of
a Release or threatened Release of Hazardous Substances from Mortgagor, or shall
have received notice from any other source deemed reliable by Mortgagee that a
Release of Hazardous Substances may have occurred, Mortgagee may at its election
after five (5) days prior notice to
<PAGE>
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Mortgagor obtain one or more environmental assessments of the Property prepared
by a geohydrologist, an independent engineer or other qualified consultant or
expert approved by Mortgagee evaluating or confirming (i) whether any Hazardous
Substances are present in the soil or water at or adjacent to the Property, and
(ii) whether the use and operation of the Property comply with all applicable
Environmental Laws (as hereinafter defined). Environmental assessments may
include detailed visual inspections of the Property including, without
limitation, any and all storage areas, storage tanks, drains, dry wells and
leaching areas, and the taking of soil samples, surface water samples and ground
water samples, as well as such other investigations or analyses as are necessary
or appropriate for a complete determination of the compliance of the Property
and the use and operation thereof with all applicable Environmental Laws. All
such environmental assessments shall be at the sole cost and expense of
Mortgagor.
3. DEFAULT AND REMEDIES.
3.1. Default; Acceleration of Obligations. If an Event of Default shall
occur and be continuing then Mortgagee may exercise the remedies provided under
this Mortgage, under the Credit Agreement, under any and all other instruments
and documents providing security for the Obligations, or under the laws of the
state where the Property is situated, or any one or more of such remedies.
3.2. Remedies Cumulative. No remedy herein conferred on Mortgagee is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing.
3.3. Right of Mortgagee to Cure an Event of Default. If an Event of
Default shall occur and be continuing, Mortgagee shall have the right, but
without any obligation so to do, to cure such default for the account of
Mortgagor and to make any payment or take any action necessary to effect such
cure. Without limiting the generality of the foregoing, Mortgagor hereby
authorizes Mortgagee to pay all taxes, sewer use fees, water rates and
assessments, with interest, costs and charges accrued thereon, which may at any
time be a lien upon the Property, or any part thereof; to pay the premiums for
any insurance required hereunder; to incur and pay reasonable expenses in
protecting its rights hereunder and the security hereby granted; and to pay any
balance due under any security agreement on any fixtures and equipment included
as a part of the Property; and the payment of all amounts so incurred shall be
secured hereby as fully and effectually as any other obligation of Mortgagor
secured hereby. If Mortgagee shall make any
<PAGE>
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payment or take action in accordance with this Section 3.3, Mortgagee will give
to Mortgagor written notice of the making of any such payment or the taking of
any such action. In any such event, Mortgagee and any person designated by
Mortgagee shall have, and is hereby granted, the right to enter upon the
Property at reasonable times and from any time and from time to time for the
purpose of taking any such action, and all monies expended by Mortgagee in
connection therewith (including, but not limited to, reasonable legal expenses
and disbursements), together with interest thereon at an annual rate of interest
equal to the rate applicable to overdue payments under the Credit Agreement (or
the highest rate permitted by law, whichever shall be less), from the date of
each such expenditure, shall be paid by Mortgagor to Mortgagee forthwith upon
demand by Mortgagee, and shall be secured by this Mortgage, and Mortgagee shall
have, in addition to any other right or remedy of Mortgagee, the same rights and
remedies in the event of non-payment of any such sums by Mortgagor as in the
case of a default by Mortgagor in the payment of any installment of principal or
interest due and payable under the Credit Agreement.
3.4. Operation of Property. Upon the occurrence of an Event of Default,
Mortgagee may hold, lease, manage, operate or otherwise use or permit the use of
the Property, either itself or by other persons, firms or entities, in such
manner, for such time and upon such other terms as Mortgagee may deem to be
prudent and reasonable under the circumstances (making such repairs,
alterations, additions and improvements thereto and taking any and all other
action with reference thereto, from time to time, as Mortgagee shall deem
necessary or desirable), and apply all rents, profits and other amounts
collected in connection therewith in accordance with the other provisions of
this Mortgage.
3.5. Receiver. Upon the occurrence and during the continuance of an Event
of Default, or any actual or threatened waste to all or any part of the
Property, or at any time while a suit is pending to foreclose or reform this
Mortgage or to enforce any provision hereof, Mortgagee shall have the right to
apply without notice for the appointment of a receiver of all or any part of the
Property and the rents and profits thereof, and such receiver shall have all the
broad and effective functions and powers anywhere entrusted by a court to a
receiver. Mortgagee shall be entitled to the appointment of said receiver
forthwith as a matter of absolute right, without regard to the adequacy or
inadequacy of the value of the Property or the solvency or insolvency of
Mortgagor or any other defendant, and Mortgagor hereby waives any right to
object to the appointment of such receiver and expressly consents thereto. The
income, profits, rents, issues and revenues from the
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Property shall be applied by such receiver according to the provisions of this
Mortgage and the practice of the court appointing such receiver.
3.6. Certain Terms of Foreclosure Sale. At any foreclosure sale, any
combination, or all, of the Property or security given to secure the
indebtedness secured hereby, may be offered for sale for one total price, and
the proceeds of such sale accounted for in one account without distinction
between the items of security or without assigning to them any proportion of
such proceeds, Mortgagor hereby waiving the application of any doctrine of
marshaling; and, in case Mortgagee, in the exercise of the power of sale herein
given, elects to sell in parts or parcels, said sales may be held from time to
time, and the power shall not be fully executed until all of the property or
security not previously sold shall have been sold.
3.7. Uniform Commercial Code. If the provisions of the Uniform Commercial
Code are applicable to any property or security given to secure the indebtedness
secured hereby which is sold in combination with or as a part of the Property,
or any part thereof, at one or more foreclosure sales, any notice required under
such provisions shall be fully satisfied by the notice given in execution of the
power of sale or other provision in accordance with which the sale of real
property pursuant to such foreclosure is held with respect to the Property or
any part thereof.
3.8. Other Mortgage Instruments. The Obligations secured by this Mortgage
may also be secured by various other deeds of trust and/or mortgages or both
(collectively, including this Mortgage, the "Mortgage Instruments") conveying or
encumbering real estate in the state in which the Property is situated and in
other jurisdictions. An Event of Default under the Credit Agreement shall be an
Event of Default under all Mortgage Instruments. Except as may be expressly
stated in this Mortgage or in such other Mortgage Instruments, all the property
conveyed or encumbered by the Mortgage Instruments is security for the
Obligations secured by the Mortgage Instruments without allocation of any one or
more of the parcels or properties serving as security under the Mortgage
Instruments to any part of the Obligations. The Mortgagee may act at the same
time or at different times to pursue a remedy or remedies under the Mortgage
Instruments or under any of them by proceedings appropriate to the state in
which the property serving as security lies, and no such action shall stay or
bar enforcement, or be construed as a waiver of, any remedy of Mortgagee under
any other instrument in the same state or jurisdiction or in any other state or
jurisdiction.
3.9. Rights Cumulative. Each right, power and remedy conferred upon
Mortgagee by this Mortgage, the Credit Agreement and by all other
<PAGE>
-12-
documents evidencing or securing the Obligations and conferred by law or in
equity is cumulative and in addition to every other right, power and remedy
herein or therein set forth or otherwise so existing, may be exercised from time
to time, as often, and in such order, as may be deemed expedient by Mortgagee,
and the exercise or the beginning of the exercise of one right, power or remedy
shall not be a waiver of the right to exercise at the same time or thereafter
any other right, power or remedy, and no delay or omission of, or discontinuance
by, Mortgagee in the exercise of any right, power or remedy accruing hereunder
or arising otherwise shall impair any such right, power or remedy, or be
construed to be a waiver of any default or acquiescence therein. To constitute a
waiver, there must be a writing signed by an officer of Mortgagee and directed
to Mortgagor, specifying the waiver.
In case Mortgagee shall have proceeded to enforce any right or remedy
under this Mortgage or the Credit Agreement by foreclosure, entry or otherwise,
and such proceedings shall have been discontinued or abandoned for any reason,
or shall have been determined adversely to Mortgagee, then and in every such
case Mortgagor and Mortgagee shall be restored to their former positions and
rights hereunder, and all rights, powers and remedies of Mortgagee shall
continue as if no such proceeding had been taken. In the event of a breach or
default under this Mortgage or under the Credit Agreement or any other document
evidencing or securing the Obligations, Mortgagor agrees to pay and to indemnify
and hold harmless Mortgagee and the Banks for all reasonable expenses,
attorneys' fees, taxes and other court costs occasioned by such breach or
default.
4. DEFINITIONS.
The following terms as used herein shall have the following meanings:
"Banks" shall mean BankBoston, N.A. and such other lending institutions
which are or may become parties to the Credit Agreement.
"Borrower" shall mean Republic Technologies International, LLC, a Delaware
limited liability company.
"Building Service Equipment" shall mean all apparatus, fixtures and
articles of personal property owned by Mortgagor now or hereafter attached to or
used or procured for use in connection with the operation or maintenance of any
building, structure or other improvement located on or included in the Property
(except apparatus, fixtures or articles of personal property belonging to
lessees or other occupants of such building or to persons other than Mortgagor
unless the same be abandoned by any such
<PAGE>
-13-
lessee or other occupant or person), together with any and all replacements
thereof and additions thereto.
"Credit Agreement" shall mean that certain Revolving Credit Agreement
dated as of August ___, 1999, by and among the Borrower, the Banks and the
Mortgagee, pursuant to which the Banks have agreed (a) to make a revolving
credit loan to the Borrower, and to issue letters of credit for the account of
the Borrower, in an aggregate outstanding principal amount of up to and
including $425,000,000.00, as such Revolving Credit Agreement is originally
executed, or if varied, supplemented, amended or restated from time to time, as
so varied, supplemented, amended or restated.
"Default" shall mean any Default under the Credit Agreement (as therein
defined).
"Event of Default" shall mean any Event of Default under the Credit
Agreement (as therein defined).
"Hazardous Substances" shall have the meaning assigned to it is Section
7.18(b) of the Credit Agreement.
"Letter of Credit" shall mean a standby or documentary letter credit in
such form as may be requested from time to time by the Borrower and agreed to by
the Agent (as defined in the Credit Agreement), all as further defined in
Section 4.1 of the Credit Agreement.
"Letter of Credit Application" shall mean a letter of credit application
on the customary form of Mortgagee.
"Loan Documents" shall mean the Credit Agreement, the Notes, the Letter of
Credit Applications, the Letters of Credit, the Intercreditor Agreement (as
defined in the Credit Agreement), and the Security Documents (as defined in the
Credit Agreement).
"Loans" shall mean the Revolving Credit Loans (as defined in the Credit
Agreement).
"Mortgage" shall have the meaning assigned to it in the recitals to this
Mortgage Rider.
"Mortgage Instruments" shall have the meaning assigned to it in Section
3.8 hereof.
"Mortgagee" shall mean the grantee or mortgagee named at the beginning of
this instrument, any subsequent holder or holders of this
<PAGE>
-14-
Mortgage or the indebtedness secured hereby, or any state or county official
engaged in any part of the enforcement of the lien of this Mortgage, and their
respective successors and assigns. The word "Mortgagee" as used in this Mortgage
Rider shall also mean, if this instrument forms part of a deed of trust, the
beneficiary of this Mortgage Instrument and any subsequent owner of the
beneficiary's interest in the Property or this Mortgage Instrument.
"Mortgagor" shall mean the person or persons named at the beginning of
this instrument as Mortgagor, and any subsequent owner or owners of the equity
of redemption of the Property.
"Note(s)" shall mean the Revolving Credit Notes (as defined in the Credit
Agreement).
"Obligations" shall mean all indebtedness, obligations and liabilities of
any of the Borrower and its Subsidiaries, including the Mortgagor, to any of the
Banks and the Mortgagee individually or collectively, existing on the date of
the Credit Agreement or arising thereafter, direct or indirect, joint or
several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract, operation of law or
otherwise, arising or incurred under the Credit Agreement or any of the other
Loan Documents or in respect of any of the Loans made or Reimbursement
Obligations incurred or any of the Notes, Letter of Credit Application, Letter
of Credit, Rate Protection Agreements entered into with any of the Banks, or any
documents, agreements or instruments executed in connection therewith, or other
instruments at any time evidencing any thereof.
"Permitted Encumbrances" shall mean the encumbrances listed on Exhibit B
to this Mortgage and incorporated herein by reference as if fully set out
herein.
"Premises" shall mean all that certain tract or parcel of land more
particularly described and set forth in Exhibit A attached to this Mortgage and
made a part hereof.
"Property" shall mean all of the described property, rights, privileges,
interests and franchises more particularly described in paragraphs (a) through
(i) below:
(a) the Premises;
(b) All and singular the tenements, hereditaments, easements,
appurtenances, passages (and all waters, water courses and riparian
rights, if any), pipes, conduits, electrical and other utility lines,
other
<PAGE>
-15-
rights, liberties and privileges thereof or in any way now or hereafter
appertaining to the Premises, including any other claim at law or in
equity as well as any after acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof, and all of
the estate, right, title, claim or demand whatsoever of Mortgagor therein
and in the streets, ways and areas adjacent thereto;
(c) All buildings and other improvements of every kind and
description now or hereafter erected or placed on the Premises or any part
thereof owned by the Mortgagor, and all of the right, title and interest
of Mortgagor in and to all materials intended for construction,
reconstruction, alteration and repairs of such improvements now or
hereafter erected thereon, all of which materials shall be deemed to be
included within the Premises immediately upon the delivery thereof to the
Premises, and all fixtures, Building Service Equipment, and all renewals
or replacements thereof or articles in substitution therefor; it being
mutually agreed that all the aforesaid property owned or to be owned by
Mortgagor and placed by it on the Premises and such buildings and
improvements shall, so far as permitted by law, be deemed to be affixed
thereto and covered by this Mortgage;
(d) All of the estate, right, title and interest now owned or
hereafter acquired by Mortgagor in and to any and all sidewalks and
alleys, and all strips and gores of land, adjacent to or in connection
with the Premises;
(e) All present and future leases and licenses of the Premises or of
space in the buildings and improvements now or hereafter erected on the
Premises (collectively "leases", and individually "lease") and the rents,
revenues, income, issues and profits thereunder subject, however, to the
right of Mortgagor to receive and use the same and to exercise all rights
and privileges as landlord under all of the leases until an Event of
Default shall have occurred and be continuing under this Mortgage,
together with all the rights and privileges of the Mortgagor as landlord
thereunder;
(f) All unearned premiums accrued, accruing or to accrue under any
and all insurance policies now or hereafter obtained by the Mortgagor
pursuant to the provisions of the Mortgage;
(g) All proceeds of the conversion, voluntary or involuntary, of any
of the foregoing into cash or liquidated claims, including, but without
limitation, proceeds of insurance provided for in this Mortgage
<PAGE>
-16-
and proceeds of condemnation awards and awards for restriction of access
to, or change of grade of, streets;
(h) All transferable building service, building maintenance,
construction, management and other similar agreements and contracts,
written or oral, express or implied, now or hereafter entered into arising
or in any manner related to the construction, design, improvement, use,
operation, occupation, enjoyment, sale, conversion or other disposition
(voluntary or involuntary) of the Premises, or the buildings and
improvements now or hereafter located thereon, or any other interest in
the Premises, or any combination thereof, including all property
management agreements, sales contracts, contract deposits, earnest money
deposits, prepaid items and payments due and to become due thereunder, and
further including all payment and performance bonds, construction
guaranties, warranties, construction contracts, architects agreements,
general contract agreements, design agreements, engineering agreements,
technical service agreements, architectural plans and specifications,
sewer and water and other utility agreements, permits, approvals,
licenses, building permits, service contracts, advertising contracts,
purchase orders and equipment leases; and
(i) All proceeds and products of the foregoing of every type.
"Reimbursement Obligation" shall mean the Borrower's obligation to
reimburse Mortgagee and the Banks on account of any drawing under any Letter of
Credit as provided in Section 5.2 of the Credit Agreement.
"Release" shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601
et seq. ("CERCLA") and the term "Disposal" (or "disposed") shall have the
meaning specified in the Resource Conservation and Recovery Act of 1976, 42
U.S.C. 6901 et seq. ("RCRA") and regulations promulgated thereunder; provided,
in the event either CERCLA or RCRA is amended so as to broaden the meaning of
any term defined thereby, such broader meaning shall apply as of the effective
date of such amendment and provided further, to the extent that the laws of the
state where the Property is located establish a meaning for "release" or
"disposal" which is broader than specified in either CERCLA or RCRA, such
broader meaning shall apply.
5. MISCELLANEOUS.
<PAGE>
-17-
5.1. Notices. All notices, requests and other communications hereunder
shall be made in writing and shall be given in the manner set forth in the
Credit Agreement.
5.2. Successors and Assigns; Joint and Several Liability; Partial
Invalidity. All the covenants and agreements of Mortgagor herein contained shall
be binding upon Mortgagor and the successors and assigns of Mortgagor. In case
any one or more of the provisions of this Mortgage may be found to be invalid,
or unenforceable for any reason or in any respect, such invalidity or
unenforceability shall not limit or impair enforcement of any other provision
thereof.
5.3. Future Advances; Revolving Credit Advances. This Mortgage shall
secure, and constitute a lien upon the Property for, all future advances and
revolving credit advances or readvances made by Mortgagee or any of the Banks
under the Credit Agreement at any time or times hereafter, whether or not any
reference is made to this Mortgage at the time such advances are made, and all
such sums shall be equally secured with and, to the extent permitted by law,
have the same priority as the Obligations outstanding as of the date hereof. A
portion of the indebtedness evidenced by the Notes is revolving credit
indebtedness. The Credit Agreement provides that the principal sum of
$425,000,000.00 may be advanced, repaid and readvanced from time to time in
accordance with the terms and provisions of the Credit Agreement. Accordingly,
the aggregate principal advances during the term of the Credit Agreement may
exceed $425,000,000.00; provided, however, at no time shall the aggregate
outstanding principal balance exceed $425,000,000.00, except for advances made
to protect the lien of this Mortgage as hereinabove provided. Mortgagor agrees
that if the outstanding balance of the Credit Agreement, principal and interest,
is ever repaid to zero (despite any express prohibition to the contrary
contained in the Credit Agreement), the lien and security interest of this
Mortgage shall not be deemed released or extinguished by operation of law or
implied intent of the parties. This Mortgage shall remain in full force and
effect as to any further advances or readvances under the Credit Agreement made
after any such zero balance until the Obligations are paid in full, all
agreements to make further advances and readvances have been terminated and this
Mortgage has been canceled of record. Mortgagor waives the operation of any
applicable statute, case law or regulation having a contrary effect. The
outstanding principal amount of the indebtedness under the Credit Agreement will
bear interest at a variable rate or rates calculated in accordance with the
terms and conditions of the Credit Agreement. The Credit Agreement is hereby
incorporated into this Mortgage with regard to all references made to it in this
Mortgage.
<PAGE>
-18-
5.4. Modification. No change, amendment, modification, cancellation or
discharge of this Mortgage, or any part hereof, shall be valid unless in writing
and signed by the parties hereto or their respective successors and assigns.
5.5. Captions. Section headings are inserted for convenience of reference
only, do not form part of this Mortgage and shall be disregarded for purposes of
the interpretation of the terms of this Mortgage.
5.6. Governing Law. The Credit Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts, but
this Mortgage and the perfection and enforcement of the lien and security
interest hereunder (and any financing statement filed in connection herewith)
shall be governed by and construed and enforced in accordance with the laws of
the state in which the Property is situated.
<PAGE>
AMENDED AND RESTATED EQUITYHOLDERS AGREEMENT
DATED AS OF AUGUST 13, 1999
AMONG
BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P.,
BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P.,
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P.,
THE VERITAS CAPITAL FUND, L.P.,
VERITAS CAPITAL, L.L.C.,
KDJ, L.L.C.,
BRW STEEL HOLDINGS, L.P.,
BRW STEEL HOLDINGS II, L.P.,
BRW STEEL OFFSHORE HOLDINGS, L.P.,
REPUBLIC TECHNOLOGIES INTERNATIONAL, INC.,
RES HOLDING CORPORATION,
REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC
USX CORPORATION,
USX RTI HOLDINGS, INC.,
KOBE DELAWARE INC.,
KOBE STEEL, LTD.,
KOBE RTI HOLDINGS, INC.,
HVR HOLDINGS, L.L.C.,
SUMITOMO CORPORATION OF AMERICA,
FIRSTENERGY SERVICES CORP.,
TRIUMPH CAPITAL INVESTORS II, L.P.,
TCI-II INVESTORS, L.P.,
FIRST DOMINION CAPITAL L.L.C.,
TCW LEVERAGED INCOME TRUST, L.P.,
TCW LEVERAGED INCOME TRUST II, L.P.,
TCW SHARED OPPORTUNITY FUND II, L.P.
SHARED OPPORTUNITY FUND IIB, L.L.C.,
SHARED OPPORTUNITY FUND III, L.L.C.
AND
THE OTHER EQUITYHOLDERS NAMED HEREIN
<PAGE>
EQUITYHOLDERS AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 1
DEFINITIONS..............................................................................................4
1.1 Defined Terms...............................................................................4
1.2 Other Definitions..........................................................................10
1.3 Other Definitional Provisions; Interpretation..............................................12
SECTION 2
GOVERNANCE..............................................................................................12
2.1 Board of Directors.........................................................................12
2.2 Fundamental Issues.........................................................................15
SECTION 3
TRANSFERS...............................................................................................21
3.1 Limitations on Transfer....................................................................21
3.2 Transfers to Affiliates and Among Equityholders; Termination of Lockup
Period.....................................................................................22
3.3 Effect of Void Transfers...................................................................26
3.4 Legend on Securities.......................................................................26
3.5 Tag-Along Rights...........................................................................26
3.6 Drag-Along Rights..........................................................................29
3.7 Piggyback Rights...........................................................................31
3.8 Demand Registration........................................................................33
3.9 Other Registration-Related Matters.........................................................38
3.10 Indemnification............................................................................43
3.11 Preemptive Rights..........................................................................46
SECTION 4
USX AND KOBE EXCHANGE EVENTS; RTI HOLDINGS UNIT
ADJUSTMENTS.............................................................................................47
4.1 USX Exchange Events and Kobe Exchange Events...............................................47
4.2 RTI Holdings Unit Adjustments Upon Issuances of Common Stock...............................50
SECTION 5
OTHER...................................................................................................51
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
5.1 Additional Securities Subject to Agreement.................................................51
5.2 Termination................................................................................51
5.3 Injunctive Relief..........................................................................52
5.4 Other Equityholders Agreements.............................................................52
5.5 Amendments.................................................................................52
5.6 Successors, Assigns and Transferees........................................................53
5.7 Notices....................................................................................53
5.8 Integration................................................................................57
5.9 Severability...............................................................................57
5.10 Counterparts...............................................................................58
5.11 Governing Law; Submission to Jurisdiction..................................................58
5.12 Miscellaneous..............................................................................58
EXHIBITS
A Certificate of Incorporation
B Exchange Merger Agreement
</TABLE>
ii
<PAGE>
AMENDED AND RESTATED EQUITYHOLDERS AGREEMENT
This Amended and Restated Equityholders Agreement, dated as of August
13, 1999, is by and among Blackstone Capital Partners II Merchant Banking Fund
L.P., a Delaware limited partnership ("BCPII"), Blackstone Offshore Capital
Partners II L.P., a Cayman Islands exempted limited partnership, and Blackstone
Family Investment Partnership II L.P., a Delaware limited partnership
(collectively, together with their Permitted Transferees (as defined below), the
"Blackstone Investors"); BRW Steel Holdings, L.P., a Delaware limited
partnership ("Holdings"), and BRW Steel Offshore Holdings, L.P., a Delaware
limited partnership ("Offshore Holdings"; together with Holdings, the
"Partnerships"); BRW Steel Holdings II, L.P., a Delaware limited liability
Company, Veritas Capital, L.L.C., a Delaware limited liability company, The
Veritas Capital Fund, L.P., a Delaware limited partnership ("Veritas Capital"),
KDJ, L.L.C., a Delaware limited liability company, and HVR Holdings, L.L.C., a
Delaware limited liability company (collectively, together with their Permitted
Transferees, the "Veritas Investors"); USX RTI Holdings, Inc., a Delaware
corporation ("USX RTI Holdings" and, together with its Permitted Transferees,
the "USX Investors"), and USX Corporation, a Delaware corporation ("USX" and,
collectively with the USX Investors, the "USX Parties"); Kobe RTI Holdings,
Inc., a Delaware corporation ("Kobe RTI Holdings" and, together with its
Permitted Transferees, the "Kobe Investors"), Kobe Steel, Ltd., a Japanese
corporation ("Kobe"), Kobe Delaware Inc. ("Kobe Delaware" and, collectively with
Kobe and the Kobe Investors, the "Kobe Parties"); Republic Technologies
International, Inc., a Delaware corporation formerly known as Bar Technologies
Inc. (the "Company"); RES Holding Corporation, a Delaware corporation ("RES
Holding"); Republic Technologies International Holdings, LLC, a Delaware limited
liability company ("RTI Holdings" and, collectively with the Company and RES
Holding, the "Company Parties"), FirstEnergy Services Corp., an Ohio corporation
("FirstEnergy" and, together with its Permitted Transferees, the "FirstEnergy
Investors"), Sumitomo Corporation of America, a New York corporation ("Sumitomo
Corporation" and, together with its Permitted Transferees, the "Sumitomo
Investors"), Triumph Capital Investors II, L.P., a Delaware limited partnership
("Triumph"), TCI-II Investors, L.P., a Delaware limited partnership ("TCI-II"
and, together with Triumph and their respective Permitted Transferees, the
"Triumph Investors"), First Dominion Capital L.L.C., a Delaware limited
liability company ("First Dominion" and, together with its Permitted
Transferees, the "First Dominion Investors"), TCW Leveraged Income Trust, L.P.,
a Delaware limited partnership ("TCWLIT"), TCW Leveraged Income Trust II, L.P.,
a Delaware limited partnership ("TCWLITII"), TCW Shared Opportunity Fund II,
L.P., a Delaware limited partnership ("TCWSOFII"), Shared Opportunity Fund IIB,
L.L.C., a Delaware limited liability company ("SOFIIB"), Shared Opportunity Fund
III, L.P., a Delaware limited liability company ("SOFIII" and, together with
TCWLIT, TCWLITII, TCWSOFII, SOFIIB and their respective Permitted Transferees,
the "TCW Investors"), and the Management Stockholders (as defined below).
<PAGE>
2
BACKGROUND
Immediately prior to consummation of the transactions
contemplated by the Master Restructuring Agreement, dated as of August 13, 1999
among the Company and the other parties named therein (the "Master Restructuring
Agreement"), the Blackstone Investors in the aggregate owned 393,701 shares of
Non-Voting Class C Common Stock, par value $0.001 per share, of the Company (the
"Class C Common Stock"). The Veritas Investors (other than Veritas Capital and
HVR Holdings, L.L.C.) in the aggregate owned 143,164 shares of Class C
Non-Voting Common Stock, and the Partnerships in the aggregate owned (i) 196,410
shares of Class A Common Stock, par value $.001 per share, of the Company (the
"Class A Common Stock") and (ii) 536,829 shares of Special Class B Common Stock,
par value $.001 per share, of the Company (the "Class B Common Stock" and,
together with the Class A Common Stock, Class C Common Stock, Class D Common
Stock (as defined below) and all other classes of common stock of the Company,
the "Common Stock"). Capitalized terms used herein and not otherwise defined
herein will have the meanings given to them in the Master Restructuring
Agreement.
In connection with the transactions contemplated by the Master
Restructuring Agreement, as of the date hereof the Company's Certificate of
Incorporation is being amended and restated, among other purposes, to (i)
increase the number of authorized shares of Class C Common Stock and give such
class voting rights, (ii) create a new Class D Common Stock that is identical to
the other classes of Common Stock of the Company except that it is not subject
to the special preference of the Class B Common Stock, (iii) remove the special
category of Class B Directors and related provisions, (iv) reduce to one the
number of directors elected by the Series B Preferred Stock of the Company (the
"Series B Preferred Stock"), (v) change the Company's name from Bar Technologies
Inc. to Republic Technologies International, Inc., and (vi) create a new Series
C Convertible Preferred Stock. The Company's amended and restated Certificate of
Incorporation as of the Closing Date is attached as Exhibit A hereto.
In accordance with the Master Restructuring Agreement, as of
the date hereof a newly-formed Subsidiary of the Company is merging with and
into RES Holding, with RES Holding being the surviving corporation, as a result
of which the shares in RES Holding held by the Blackstone Investors and the
Veritas Investors are being converted into 1,708,150 shares of Class D Common
Stock (as defined below) in the aggregate.
Also in accordance with the Master Restructuring Agreement, as
of the date hereof Kobe/Lorain, Inc., an Ohio corporation that is an indirect
Subsidiary of Kobe, and USS Lorain Holding Company, Inc., an Ohio corporation
that is a direct wholly owned Subsidiary of USX, which are the general partners
of USS/Kobe Steel Company, an Ohio general partnership ("USS/Kobe"), are merging
with and into RTI Opco, an indirect Subsidiary of the Company, with such
Subsidiary being the survivor, and are making certain capital contributions to
RTI Holdings as provided in the Master Restructuring Agreement, as a result of
which USX RTI Holdings is receiving RTI Holdings Common Units (as defined below)
representing 15.568073% of the RTI Holdings Common Units outstanding on the date
hereof and Kobe RTI Holdings is
<PAGE>
3
receiving RTI Holdings Common Units representing 14.198775% of the RTI Holdings
Common Units outstanding on the date hereof, with the Company and RES Holding
together holding RTI Holdings Common Units representing the remaining 70.233151%
of the RTI Holdings Common Units outstanding on the date hereof. At any time
after the Closing the USX Investors and the Kobe Investors may (and in certain
circumstances will be required to) exchange their respective RTI Holdings Common
Units for (i) that number of shares of Class D Common Stock, par value $.001 per
share, of the Company ("Class D Common Stock") that would represent an interest
in the Company equal to such membership interest in RTI Holdings at the time of
such exchange and (ii) certain Antidilution Warrants on the terms described
herein.
Also in accordance with the Master Restructuring Agreement, as
of the date hereof the Blackstone Investors are purchasing from the Company for
cash an aggregate of 894,745 shares of Class D Common Stock and the Veritas
Investors are purchasing from the Company for cash an aggregate of 322,108
shares of Class D Common Stock.
In accordance with the Subscription Agreement, dated as of
August 10, 1999, among the Company, FirstEnergy, Sumitomo, Triumph, TCI-II,
First Dominion, TCWLIT, TCWLITII, TCWSOFII, SOFIIB and SOFIII, as of the date
hereof FirstEnergy is purchasing from the Company for cash 30,000 shares of
Series C Preferred Stock, Sumitomo is purchasing from the Company for cash
53,684.7 shares of Class D Common Stock, Triumph and TCI-II are purchasing from
the Company for cash an aggregate of 87,685 shares of Class D Common Stock,
First Dominion is purchasing from the Company for cash 35,789.8 shares of Class
D Common Stock and TCWLIT, TCWLITII, TCWSOFII, SOFIIB and SOFIII are purchasing
from the Company for cash an aggregate of 89,474.5 shares of Class D Common
Stock. In accordance with a separate subscription agreement, dated as of August
13, 1999, among BarTech, Chase Securities Inc., Donaldson Lufkin & Jenrette
Securities Corporation and BancBoston Robertson Stephens Inc. as of the date
hereof Chase Securities Inc., Donaldson Lufkin & Jenrette Securities Corporation
and BancBoston Robertson Stephens Inc. are purchasing from the Company for cash
an aggregate of 65,892 BarTech Financing Warrants at a purchase price of
$108.13137 per BarTech Financing Warrant (in addition to the BarTech Financing
Warrants being issued in connection with the RTI High Yield Offering).
It is anticipated that the Management Stockholders will be
granted certain options to acquire Class D Common Stock of the Company following
the consummation of the transactions contemplated by the Master Restructuring
Agreement, and as a condition to such grants will become parties to this
Agreement.
The parties hereto wish to enter into the arrangements
described below regarding the holdings by the Blackstone Investors, the
Partnerships, the Veritas Investors, the Sumitomo Investors, the Triumph
Investors, the First Dominion Investors, the TCW Investors and the Management
Stockholders of Common Stock (and options and warrants to acquire Common Stock),
the holdings by the FirstEnergy Investors of Series C Preferred Stock prior to
the conversion thereof into Common Stock and Common Stock following the
conversion thereof (and options and warrants to acquire Common Stock), the
holdings by the USX Investors of RTI Holdings Common Units prior to a USX
Exchange Event and Common Stock (and options and
<PAGE>
4
warrants to acquire Common Stock) following a USX Exchange Event, and the
holdings by the Kobe Investors of RTI Holdings Common Units prior to a Kobe
Exchange Event and Common Stock (and options and warrants to acquire Common
Stock) following a Kobe Exchange Event.
Each Blackstone Investor, each Veritas Investor, each USX
Investor, each Kobe Investor, each Sumitomo Investor, each FirstEnergy Investor,
each Triumph Investor, each TCW Investor and each First Dominion Investor is
entering into this Agreement on its own account and not as a partner, agent,
trustee or Affiliate of any other investor.
This Agreement amends and restates the existing Stockholders'
Agreement among the Company and various of its stockholders, dated as of April
2, 1996 and as previously amended and restated as of September 9, 1997, and sets
forth certain agreements of the parties hereto with respect to the governance of
the Company, RTI Holdings and RTI Opco and the other matters described in this
Agreement. The parties agree that this Agreement supersedes in all respects the
April 2, 1996 Agreement and the September 9, 1997 Agreement, which shall cease
to have any force and effect.
SECTION 1
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
1.1 Defined Terms. As used in this Agreement:
"Affiliate" - with respect to any Person, (i) any Person that directly
or indirectly controls, is controlled by or is under common control with, such
Person, (ii) any director, officer, partner or employee of such Person or of any
Person specified in clause (i) above or (iii) in the case of any Management
Stockholder, any member of his or her immediate family or his or her lineal
descendants or any trust established for the sole benefit of such Management
Stockholder and/or one or more such family members or lineal descendants or
entity wholly owned by such family members or lineal descendants; provided, that
officers, directors or employees of the Company and its Subsidiaries will not be
deemed to be Affiliates of an Equityholder for purposes hereof solely by reason
of being officers, directors or employees of the Company or any of its
Subsidiaries.
"Agreement" - this Equityholders Agreement and the Exhibits hereto, as
the same may be amended, supplemented or otherwise modified from time to time.
"Antidilution Warrant" - individually, a warrant to purchase a share of
Class D Common Stock, and collectively, 180,000 warrants to purchase 180,000
shares of Class D Common Stock (adjusted for any stock splits, reverse splits or
other events giving rise to antidilution adjustments under the BarTech 1996
Warrants and the BarTech Financing Warrants
<PAGE>
5
occurring after the Closing Date), that will be issued by the Company to the USX
Investors or the Kobe Investors, as applicable, upon a USX Exchange Event or a
Kobe Exchange Event, each of which warrants (i) has an exercise price of $.01
per share of Class D Common Stock (which exercise price is paid automatically
upon exercise through the reduction of the number of shares of Common Stock
received pursuant thereto by operation of a customary "cashless exercise"
provision) and (ii) will be exercised as provided in the following sentence;
provided, however, that (A) if a BarTech 1996 Warrant expires or otherwise
terminates without having been exercised, the aggregate number of outstanding
Antidilution Warrants and Antidilution Warrants which remain unissued out of the
original 180,000 Antidilution Warrants will be reduced by a total of .42857
warrants (with outstanding Antidilution Warrants automatically being canceled
(proportionately among the holders thereof, if more than one), and the number of
remaining unissued Antidilution Warrants automatically being reduced,
proportionally based upon the respective number of outstanding Antidilution
Warrants and unissued Antidilution Warrants at that time), (B) if a BarTech
Financing Warrant expires or otherwise terminates without having been exercised,
the aggregate number of outstanding Antidilution Warrants and Antidilution
Warrants which remain unissued out of the original 180,000 Antidilution Warrants
will be reduced by a total of .14816 (with outstanding Antidilution Warrants
automatically being canceled (proportionately among the holders thereof, if more
than one), and the number of remaining unissued Antidilution Warrants
automatically being reduced, proportionally based upon the respective number of
outstanding Antidilution Warrants and unissued Antidilution Warrants at that
time). Upon the exercise of BarTech 1996 Warrants or BarTech Financing Warrants,
(a) if both a USX Exchange Event and a Kobe Exchange Event previously have
occurred and Antidilution Warrants then remain issued and outstanding, one
outstanding Antidilution Warrant will be exercised (proportionately among the
holders of outstanding Antidilution Warrants) unconditionally and automatically
by its terms (with no action being required on the part of the holder thereof)
with respect to the exercise of 2.333341 BarTech 1996 Warrants or 6.74946
BarTech Financing Warrants, as applicable, (b) if either a USX Exchange Event or
a Kobe Exchange Event, but not both, previously has occurred, (i) if
Antidilution Warrants then remain issued and outstanding, a fraction of one
outstanding Antidilution Warrant will be exercised (proportionately among the
holders of outstanding Antidilution Warrants) unconditionally and automatically
by its terms (with no action being required on the part of the holder thereof)
with respect to the exercise of 2.333341 BarTech 1996 Warrants or 6.74946
BarTech Financing Warrants, as applicable, with the numerator of such fraction
being the number of RTI Holdings Common Units that were owned immediately prior
to such Exchange Event by USX RTI Holdings (if it was a USX Exchange Event) or
Kobe RTI Holdings (if it was a Kobe Exchange Event) and the denominator of which
is the number of RTI Holdings Common Units owned by USX RTI Holdings and Kobe
RTI Holdings in the aggregate immediately prior to such Exchange Event and (ii)
if Antidilution Warrants remain unissued, a fraction of one unissued
Antidilution Warrant automatically will be eliminated, with such fraction being
equal to 1 minus the fraction described in the immediately preceding clause (i),
and (c) if neither a USX Exchange Event nor a Kobe Exchange Event previously
have occurred and Antidilution Warrants remain unissued, one unissued
Antidilution Warrant automatically will be eliminated with respect to the
exercise of 2.333341 BarTech 1996 Warrants or 6.74946 BarTech Financing
Warrants, as applicable.
<PAGE>
6
"BarTech Financing Warrants" - has the meaning given to such term in
the Master Restructuring Agreement.
"BarTech 1996 Warrants" - 91,609 warrants to purchase shares of Class A
Common Stock of the Company issued in connection with a previous financing of
the Company.
"Beneficial Owner" or "beneficial owner" (including, with correlative
meanings, the terms "beneficial ownership" and "beneficially owns") has the
meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act,
whether or not applicable, except that a "person" (as such term is used in
Sections 13(d)(3) of the Exchange Act) shall be deemed to have Beneficial
Ownership of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time or is
exercisable only upon the occurrence of a subsequent condition.
"Board" - the Board of Directors of the Company.
"Business Day" - a day other than a Saturday, Sunday, federal or New
York State holiday or other day on which commercial banks in New York City are
authorized or required by law to close.
"Certificate of Incorporation" - the Amended and Restated Certificate
of Incorporation of the Company as of the Closing Date attached as Exhibit A
hereto, as the same may be amended from time to time.
"Closing" - the closing of the Contemplated Transactions; "Closing
Date" means the date on which the Closing occurs.
"Contemplated Transactions" - has the meaning given to such term in the
Master Restructuring Agreement.
"Demand Registration Group" - (i) in the event that a demand
registration is requested pursuant to Section 3.8 hereof, the Initiating Party
and any other holder or combination of holders of demand registration rights
pursuant to Section 3.8 hereof who also requests a demand registration in
connection therewith (thereby using one of its demand registration rights),
together with each such holder's respective Affiliates, or (ii) in the event
that a demand registration is requested pursuant to any other demand
registration rights granted by the Company, the holders of Common Stock entitled
to include their shares in such demand registration on a priority basis pursuant
to such other demand registration rights.
"Equityholders" - collectively, (i) the Stockholders, (ii) the Company,
(iii) RES Holding, (iv) prior to a USX Exchange Event, the USX Investors and (v)
prior to a Kobe Exchange Event, the Kobe Investors, in each case including any
of their Permitted Transferees hereunder, and "Equityholder" means any one of
the Equityholders.
"Exchange Event" - a USX Exchange Event or Kobe Exchange Event, as
applicable.
<PAGE>
7
"Exchange Merger Agreement" - the agreement to be entered into in
accordance with Section 4.1 among the Company, USX, any Subsidiaries of USX that
are direct or indirect parents of USX RTI Holdings and USX RTI Holdings, in
connection with a USX Exchange Event, or the Company, Kobe Delaware, any
Subsidiaries of Kobe Delaware that are direct or indirect parents of Kobe RTI
Holdings and Kobe RTI Holdings in connection with a Kobe Exchange Event, as
applicable, in the form attached hereto as Exhibit B (or in such other form as
is agreed to by the Company, BCPII and USX or Kobe, as applicable, in accordance
with the express provisions of Section 4.1).
"Former Management Members" - collectively, James Powers and Dennis
Bozic, former members of management of the Company.
"fully diluted basis" - for the purpose of calculating the percentage
of shares of Common Stock owned by any Person on a fully diluted basis, such
calculation will assume that (i) all outstanding interests in the Company
convertible into or exchangeable or exercisable for Common Stock or rights to
acquire or receive Common Stock (including without limitation Antidilution
Warrants and the Series C Preferred Stock) were then converted into, exchanged
or exercised for shares of Common Stock (whether or not then convertible,
exchangeable or exercisable), (ii) all outstanding RTI Holdings Series C
Preferred Units were then converted into RTI Holdings Common Units, and (iii)
all shares of Common Stock and Antidilution Warrants which would be issued
pursuant to this Agreement if a USX Exchange Event and Kobe Exchange Event then
occurred were then issued.
"Initial Public Offering" - the initial primary sale by the Company of
shares of Common Stock to the public pursuant to an effective registration
statement (other than a registration statement on Form S-4 or S-8 or any similar
or successor form) filed under the Securities Act, other than the USWA Offering.
"Kobe Exchange Event" - the closing of an exchange by the Kobe
Investors of their RTI Holdings Common Units for shares of Class D Common Stock
and Antidilution Warrants pursuant to Section 4.1 hereof.
"Management Stockholders" - directors, officers and employees of the
Company and its Subsidiaries who hold Common Stock or options, warrants or other
rights exercisable or exchangeable for or convertible into Common Stock and who
are parties to this Agreement as of the date hereof or become additional parties
to this Agreement in accordance with Section 5.12.
"own" or "ownership" - for the purpose of calculating the number or
percentage of shares of Common Stock owned by any Person while the Blackstone
Investors are partners of the Partnerships, such calculation will include with
respect to the Common Stock owned by the Blackstone Investors, and exclude with
respect to the Common Stock owned by the Partnerships, the shares of Common
Stock (and any options or warrants to obtain Common Stock) held by the
Partnerships which constitute "Class B Assets" under the Partnership Agreements.
<PAGE>
8
"Partnership Agreements" - (i) the Amended and Restated Limited
Partnership Agreement relating to Holdings, dated as of April 2, 1996 and
amended as of the date hereof, among the Class A Partners named therein, BCPII
and Blackstone Family Investment Partnership II L.P., as the Class B Partners
and (ii) the Limited Partnership Agreement relating to Offshore Holdings, dated
as of April 1, 1996 and amended as of the date hereof, among the Class A
Partners named therein, the Class B General Partners named therein and
Blackstone Offshore Capital Partners II L.P., as the Class B Limited Partner.
"Permitted Transferee" - any Person to whom a Blackstone Investor, a
Partnership, a Veritas Investor, a USX Investor, a Kobe Investor, a FirstEnergy
Investor, a Sumitomo Investor, a Triumph Investor, a First Dominion Investor, a
TCW Investor or a Management Stockholder transfers shares of Common Stock,
Series C Preferred Stock, Antidilution Warrants or RTI Holdings Units, as
applicable, in accordance with the terms of this Agreement and who is required
to, and does, become bound by the terms of this Agreement that were applicable
to the transferor, and includes any Person to whom a Permitted Transferee (as
thus defined) of a Blackstone Investor, a Partnership, a Veritas Investor, a USX
Investor, a Kobe Investor, a FirstEnergy Investor, a Sumitomo Investor, a
Triumph Investor, a First Dominion Investor, a TCW Investor or a Management
Stockholder (or a Permitted Transferee of a Permitted Transferee) so further
transfers shares of Common Stock, Series C Preferred Stock, Antidilution
Warrants or RTI Holdings Units and who is required to, and does, become bound by
the terms of this Agreement.
"Person" - any individual, corporation, limited liability company,
partnership, trust, joint stock company, business trust, unincorporated
association, joint venture, governmental authority or other entity of any nature
whatsoever.
"Primary Common Stock" - collectively, as of any time of determination
thereof, (i) all shares of Common Stock issued and outstanding and (ii) an
additional number of shares of Common Stock equal to the product of (A) .259733,
multiplied by (B) the number of BarTech Financing Warrants that remain issued
and outstanding at such time of determination.
"Public Offering" - the sale of shares of Common Stock of the Company
to the public pursuant to an effective registration statement (other than a
registration statement on Form S-4 or S-8 or any similar or successor form)
filed under the Securities Act, other than the USWA Offering.
"Registration Expenses" - any and all out-of-pocket expenses incident
to the performance by the Company Parties of, or compliance by the Company
Parties with, Section 3.7 or 3.8 hereof, including, without limitation, (i) all
SEC, stock exchange, National Association of Securities Dealers, Inc. and other
comparable regulatory agencies, registration and filing fees, (ii) all
out-of-pocket fees and expenses of complying with securities or blue sky laws
(including fees and disbursements of counsel for the underwriters in connection
with blue sky qualifications), (iii) all out-of-pocket printing, third-party
duplicating, messenger and delivery expenses (including expenses of printing
certificates for the shares of Common Stock to be registered in a form eligible
for deposit with The Depository Trust Company and of printing
<PAGE>
9
prospectuses), (iv) the fees and disbursements of counsel for the Company
Parties and of their independent certified public accountants, including the
expenses of any special audits and/or "cold comfort" letters required by or
incident to such performance and compliance, (v) the reasonable fees and
disbursements of one firm of attorneys ("Holders' Counsel") selected by the
Stockholders who own a majority of the shares of Common Stock to be included in
the proposed registration, (vi) any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but excluding underwriting
discounts and commissions applicable to shares owned by Stockholders, (vii)
liability insurance if the Company so desires or if the underwriters so require,
(viii) the reasonable fees and expenses of any special experts retained by the
Company Parties in connection with the requested registration, but excluding
transfer taxes, if any and (ix) all out-of-pocket fees and expenses incurred in
connection with the listing of the shares of Common Stock on any securities
exchange or quotation on any inter-dealer quotation system.
"RTI Holdings LLC Agreement" - the limited liability company agreement
of RTI Holdings.
"RTI Holdings Series A Preferred Units" - Class A Units of RTI Holdings
(as defined in the RTI Holdings LLC Agreement).
"RTI Holdings Series C Preferred Units" - Class C Units of RTI Holdings
(as defined in the RTI Holdings LLC Agreement).
"RTI Holdings Common Units" - Class B Units of RTI Holdings (as defined
in the RTI Holdings LLC Agreement), together with any right hereunder to receive
Antidilution Warrants upon the exchange of such units for Common Stock of the
Company pursuant to a USX Exchange Event or Kobe Exchange Event, as applicable.
"RTI Holdings Units" - collectively, the RTI Holdings Common Units, RTI
Holdings Series A Preferred Units and RTI Holdings Series C Preferred Units.
"SEC" - the United States Securities and Exchange Commission.
"Securities Act" - the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as the same may be amended from
time to time.
"Stockholders" - collectively, (i) the Blackstone Investors, (ii) the
Partnerships, (iii) the Veritas Investors, (iv) the Management Stockholders, (v)
from and after a USX Exchange Event, the USX Investors, (vi) from and after a
Kobe Exchange Event, the Kobe Investors, (vii) the FirstEnergy Investors, (viii)
the Sumitomo Investors, (ix) the Triumph Investors, (x) the First Dominion
Investors and (xi) the TCW Investors, in each case including any of their
Permitted Transferees hereunder, and "Stockholder" means any one of the
Stockholders.
"Transaction Documents" - will have the meaning given to such term in
the Master Restructuring Agreement.
<PAGE>
10
"Transfer" - any transfer, sale, gift, assignment, exchange, mortgage,
pledge, hypothecation, bequest, devise or other disposition of any Common Stock,
options or warrants to acquire Common Stock (including the right to receive
Antidilution Warrants), Series C Preferred Stock or RTI Holdings Units, or any
interest therein.
"USWA Offering" - the sale of Common Stock to employees of the Company
and its Subsidiaries who are members of the USWA pursuant to the Company's
existing commitment to engage in such offering following the Closing Date.
"USX Exchange Event" - the closing of an exchange by the USX Investors
of their RTI Holdings Common Units for shares of Class D Common Stock and
Antidilution Warrants in accordance with Section 4.1 hereof.
1.2 Other Definitions. The following terms are defined in the Sections
indicated:
Term Section
---- -------
BCPII Introduction
Blackstone Directors 2.1(d)
Blackstone Investors Introduction
Capital Expenditure Plan 2.2(f)
Cause 2.1(m)
Class A Common Stock Background
Class B Common Stock Background
Class C Common Stock Background
Class D Common Stock Background
Common Stock Background
Company Introduction
Company Parties Introduction
Demand Notice 3.8(f)
Drag-Along Notice 3.6(b)
Dragging Stockholder 3.6(a)
Exchange Merger 4.1(c)
Exchange Merger Consideration 4.1(c)
Exchange Notice 4.1(b)
First Dominion Introduction
First Dominion Investors
FirstEnergy Introduction
FirstEnergy Investors Introduction
FirstEnergy Request 3.8(e)
First Offer 3.2(b)
Holder 3.10(a)
Holders' Counsel 1.1
Holdings Introduction
Indemnified Parties 3.10(a)
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<PAGE>
11
Term Section
---- -------
Initiating Party 3.7(a)
IPO Basket 2.2(d)
Kobe Introduction
Kobe Directors 2.1(d)
Kobe Exchange Right 4.1(b)
Kobe Investors Introduction
Kobe Parties Introduction
Kobe Request 3.8(d), 3.8(e)
Kobe RTI Holdings Introduction
Losses 3.10(a)
Management Equity Basket 2.2(d)
Master Restructuring Agreement Background
Non-Initiating Parties 3.7(a)
Offshore Holdings Introduction
Partnerships Introduction
Partnerships' Request 3.8(b)
Piggy-Back Shares 3.7(a)
Registrable Securities 3.10(a)
Request 3.8(a)
RES Holding Introduction
RTI Holdings Introduction
RTI Unit Adjustment Event 4.2(a)
Series B Preferred Stock Background
Series C Preferred Stock Background
SOFIIB Introduction
SOFIII Introduction
Sumitomo Introduction
Sumitomo Investors Introduction
Tagging Equityholders 3.5(a)
TCI-II Introduction
Third Party 3.2, 3.6(a)
Transferring Stockholder 3.5(a)
Triumph Introduction
Triumph Investors Introduction
TCWLIT Introduction
TCWLITII Introduction
TCWSOFII Introduction
TCW Investors Introduction
USS/Kobe Background
USX Introduction
USX Directors 2.1(d)
USX Exchange Right 4.1(b)
USX Investors Introduction
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<PAGE>
12
Term Section
---- -------
USX Parties Introduction
USX Request 3.8(c)
USX RTI Holdings Introduction
Valuer 2.2(g)
Veritas Capital Introduction
Veritas Directors 2.1(d)
Veritas Investors Introduction
1.3 Other Definitional Provisions; Interpretation. (a) The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole and not to any particular
provision of this Agreement, and section and subsection references are to this
Agreement unless otherwise specified.
(b) The headings in this Agreement are included for convenience of
reference only and will not limit or otherwise affect the meaning or
interpretation of this Agreement.
(c) The meanings given to terms defined herein will be equally
applicable to both the singular and plural forms of such terms.
SECTION 2
GOVERNANCE
2.1 Board of Directors. (a) The Board shall consist of thirteen (13)
directors.
(b) Each of the Stockholders and the Company agrees to take
all action necessary to cause each of the designees described in Section 2.1(d)
below to be elected or appointed to the Board concurrently with the Closing,
including without limitation, seeking and accepting resignations of incumbent
directors.
(c) Each committee of the Board will include a USX Director, a
Kobe Director and a Veritas Director (provided that at least one such director
position is then filled and unless the Equityholder appointing such director(s)
shall otherwise agree).
(d) Each Stockholder agrees that as long as this Agreement is
in effect it will vote all of the shares of voting capital stock of the Company
owned or held of record by it, or cause all of the shares of voting capital
stock of the Company Beneficially Owned by it to be voted, to elect and, during
such period, to continue in office a Board, in addition to the director elected
by the holder of the Series B Preferred Stock, consisting solely of the
following (subject to the other provisions of this Section 2.1):
<PAGE>
13
(i) six designees of BCPII, subject to Section 2.1(j) below
(the "Blackstone Directors");
(ii) two designees of Veritas Capital (the "Veritas
Directors");
(iii) two designees of USX (the "USX Directors"); and
(iv) two designees of Kobe (the "Kobe Directors");
provided that such designation rights will be transferable (subject to the prior
written consent of BCPII, such consent not to be unreasonably withheld) upon any
Transfer by any of the Equityholders, and will be subject to the following
provisions.
(e) The director designation right of BCPII will reduce (i) to
five if BCPII and the Blackstone Investors that are Affiliates of BCPII,
directly and indirectly, collectively own Common Stock representing less than
25% of the Common Stock on a fully diluted basis, (ii) to four if BCPII and the
Blackstone Investors that are Affiliates of BCPII, directly and indirectly,
collectively own Common Stock representing less than 20% of the Common Stock on
a fully diluted basis, (iii) to three if BCPII and the Blackstone Investors that
are Affiliates of BCPII, directly and indirectly, collectively own Common Stock
representing less than 17.5% of the Common Stock on a fully diluted basis, (iv)
to two if BCPII and the Blackstone Investors that are Affiliates of BCPII,
directly and indirectly, collectively own Common Stock representing less than
15% of the Common Stock on a fully diluted basis, (v) to one if BCPII and the
Blackstone Investors that are Affiliates of BCPII, directly and indirectly,
collectively own Common Stock representing less than 7.5% of the Common Stock on
a fully diluted, and (vi) to zero if BCPII and the Blackstone Investors that are
Affiliates of BCPII, directly and indirectly, collectively own Common Stock
representing less than 5% of the Common Stock on a fully diluted basis.
(f) The director designation right of Veritas Capital will
reduce (i) to one if Veritas Capital and any other Veritas Investors that are
Affiliates of Veritas Capital, directly and indirectly, collectively own Common
Stock representing less than 7.5% of the Common Stock on a fully diluted basis,
and (ii) to zero if Veritas Capital and any other Veritas Investors that are
Affiliates of Veritas Capital, directly and indirectly, collectively own Common
Stock representing less than 5% of the Common Stock on a fully diluted basis.
(g) The director designation right of USX will reduce (i) to
one if USX and any other USX Investors that are Affiliates of USX, directly and
indirectly, collectively own Common Stock representing less than 7.5% of the
Common Stock on a fully diluted basis, and (ii) to zero if USX and any other USX
Investors that are Affiliates of USX, directly and indirectly, collectively own
Common Stock representing less than 5% of the Common Stock on a fully diluted
basis.
(h) The director designation right of Kobe will reduce (i) to
one if Kobe and any other Kobe Investors that are Affiliates of Kobe, directly
and indirectly, collectively own Common Stock representing less than 7.5% of the
Common Stock on a fully diluted basis, and
<PAGE>
14
(ii) to zero if Kobe and any other Kobe Investors that are Affiliates of Kobe,
directly and indirectly, collectively own Common Stock representing less than 5%
of the Common Stock on a fully diluted basis.
(i) At any time at the request of BCPII (provided that BCPII
is then entitled to designate six Blackstone Directors pursuant to this Section
2.1), the number of Blackstone Directors will be increased such that BCPII
thereafter has the right to designate a majority of the entire Board (e.g.,
eight out of fifteen directors), and the size of the Board will be expanded to
the extent necessary to create director vacancies in connection therewith
(subject to subsequent reduction in the number of Blackstone Directors pursuant
to Section 2.1(e) hereof).
(j) If BCPII, Veritas Capital, USX RTI Holdings or Kobe RTI
Holdings notifies the other Equityholders in writing of its desire to remove,
with or without Cause, any director of the Company previously designated by it,
each Stockholder will vote (to the extent eligible to vote) all of the shares of
voting capital stock of the Company Beneficially Owned or held of record by it,
him or her so as to remove such director or, upon request, each Stockholder will
promptly execute and return to the Company any written resolution to such
effect. In the event that any of such persons is no longer entitled pursuant to
this Section 2.1 to designate a director previously designated by such
Equityholder(s), such director promptly will be removed from the Board, and each
Stockholder will vote (to the extent eligible to vote) all of the shares of
voting capital stock of the Company Beneficially Owned or held of record by it
so as to remove such director or, upon request, each Stockholder will promptly
execute and return to the Company any written resolution to such effect. No
removal pursuant to Delaware Law of an individual designated pursuant to this
Section 2.1 will affect any of the rights of the Stockholders to designate a
different individual.
(k) If the Board shall determine in good faith in the exercise
of its fiduciary duties, based on the advice of outside counsel, that nomination
of any person designated by any of the Equityholders for election to the Board
would not be in the best interests of the Company, then the Company shall
promptly notify such Equityholder of such determination in writing and
thereafter the designating party shall have a period of no less than five (5)
Business Days to designate a new person for nomination for election to the Board
as such party's designee as the case may be.
(l) Each of the Stockholders agrees that if, at any time, it
is then entitled to vote for the removal of directors of the Company other than
its own designee(s), it will not take such action by written consent unless such
removal shall be for Cause. Removal for "Cause" shall mean removal of a director
because of such director's (a) willful and continued failure to substantially
perform his or her duties as a director of the Company, (b) willful and
continued conduct inconsistent with the good faith exercise of his or her
fiduciary obligations and which is significantly injurious to the Company,
monetarily or otherwise, or (c) conviction for, or guilty plea to, a felony.
(m) If any director previously designated by BCPII, Veritas
Capital, USX RTI Holdings or Kobe RTI Holdings ceases to serve on the Board
(whether by reason of death,
<PAGE>
15
resignation, removal or otherwise), the person who designated such director will
be entitled to designate a successor director to fill the vacancy created
thereby, and each Stockholder will vote (to the extent eligible to vote) all of
the shares of voting capital stock of the Company Beneficially Owned or held of
record by it or him or her in favor of such designation or, upon request, each
Stockholder will promptly execute and return to the Company any written
resolution to such effect.
(n) In order to effectuate this Section 2.1, each Stockholder
hereby grants to the other Stockholders or any of them an irrevocable proxy to
vote, during the period specified in (a) above, all of the shares of voting
capital stock of the Company owned by the grantor of the proxy for the election
and removal of directors in accordance with this Section 2.1.
(o) Each Stockholder agrees to indemnify and hold harmless the
Company, each other Stockholder and each remaining director from and against any
and all Losses to which the Company and the other Stockholders, as the case may
be, may be subject, insofar as such Losses arise out of or are based upon the
removal, in accordance with the specific provisions of this Section 2.1, of any
director previously designated by it pursuant to this Section 2.1, and will
reimburse the Company and the other Stockholders, as the case may be, in
connection with investigating or defending any such loss, claim, damage,
liability or action.
2.2 Fundamental Issues. Actions by the Stockholders or the
Board will be taken as provided by law or the Certificate of Incorporation,
provided that (A) for so long as USX and other USX Investors that are Affiliates
of USX retain the right under Section 2.1 to designate at least one USX
Director, the Company (including in its capacity as the managing member of RTI
Holdings), RTI Holdings (including in its capacity as the managing member of RTI
Opco) and the Stockholders shall not take and shall cause not to be taken, any
actions involving the following without the affirmative vote or written consent
of at least one USX Director designated by USX (if such action is subject to a
Board vote or consent) or USX (if such action is subject to a Stockholder vote
or consent) in their absolute discretion, and (B) for so long as Kobe and other
Kobe Investors that are Affiliates of Kobe retain the right under Section 2.1 to
designate at least one Kobe Director, the Company (including in its capacity as
the managing member of RTI Holdings), RTI Holdings (including in its capacity as
the managing member of RTI Opco) and the Stockholders shall not take, and shall
cause not to be taken, any actions involving the following without the
affirmative vote or written consent of at least one Kobe Director designated by
Kobe (if such action is subject to a Board vote or consent) or Kobe (if such
action is subject to a Stockholder vote or consent) in their absolute discretion
(and neither a USX Director nor a Kobe Director will be deemed to have voted in
favor of any action subject to a Board vote unless he or she was present at the
meeting where such vote was taken and in fact cast an affirmative vote, nor to
have consented to any action subject to a written Board consent unless he or she
has in fact executed such consent):
(a) The appointment or dismissal of the independent auditors
of the Company or any of its Subsidiaries, provided that the Blackstone
Directors will have the right to nominate new independent auditors
subject to the consent of USX or a USX
<PAGE>
16
Director, and of Kobe or a Kobe Director, as applicable, which consents
shall not be unreasonably withheld;
(b) the execution, modification or termination of any material
contract between the Company or any of its Subsidiaries and any
Affiliate (other than the Company or any of its Subsidiaries) of (i)
BCPII, (ii) any other Blackstone Investor that is an Affiliate of
BCPII, (iii) any Blackstone Investor that is not an Affiliate of BCPII
but has, together with such Blackstone Investor's Affiliates, the right
to designate a majority of the Board, or (iv) Veritas Capital, other
than:
(A) the Transaction Documents or associated
contracts relating to the payment of monitoring fees or
transaction fees in accordance with any of the Transaction
Documents;
(B) contracts relating to the purchase or sale by
the Company or any of its Subsidiaries of products or services
in the ordinary course of business on terms that are no less
favorable than those that could have been obtained in a
comparable transaction on an arm's-length basis from an
unaffiliated Person;
(C) contracts relating to the provision of
financial advisory services on terms that are no less
favorable than those that could have been obtained in a
comparable transaction on an arms-length basis from an
unaffiliated Person (and, in the case of this clause (iii),
subject to prior consultation with USX and Kobe (provided that
such investor at the time has consent rights pursuant to this
Section 2.2)); or
(D) contracts relating to the sale by the Company
or any of its Subsidiaries of the business relating to the
Baltimore Stainless and Specialty Plant, 3501 East Biddle
Street, Baltimore, MD, and the Canton Special Metals Plant,
201 Harrison Avenue, S.W., Canton, OH, provided that the
aggregate purchase price for such plants is at least $35
million;
(c) the payment by the Company or any of its Subsidiaries of
any fees to any Equityholder, other than monitoring fees pursuant to
the terms of any of the Transaction Documents;
(d) except for issuances (i) pursuant to the Contemplated
Transactions, (ii) pursuant to Sections 2.2(g), 3.11, 4.1 and 4.2
hereof, (iii) upon the exercise of options, warrants, convertible
securities and other rights to acquire Common Stock outstanding on the
date hereof (including those being issued in connection with the
consummation of the Contemplated Transactions) or issued or granted
following the date hereof in accordance with the terms of this
Agreement or (iv) by Subsidiaries of RTI Holdings to RTI Holdings or to
other RTI Holdings Subsidiaries, the issuance by the Company or any of
its direct or indirect Subsidiaries of any equity interests therein, or
rights to acquire or receive any equity interests therein, other than:
<PAGE>
17
(i) prior to the issuance of any shares of Common
Stock under the IPO Basket (but in no event thereafter), the
issuance of Common Stock, and the issuance or grant of
options, warrants and other rights to acquire Common Stock, in
each case to directors, officers, employees and consultants of
the Company or any of its Subsidiaries on terms and conditions
approved by a majority of the Board; provided that at no time
shall the aggregate number of shares of Common Stock issued
and outstanding pursuant to this clause (i) (whether issued
directly or as a result of the exercise of options, warrants
or other rights issued pursuant to this clause (i)), together
with the aggregate number of shares of Common Stock issuable
upon the exercise of options, warrants and rights to receive
shares of Common Stock issued and outstanding pursuant to this
clause (i) (whether or not vested), exceed 775,000 shares of
Common Stock (adjusted for any stock splits, reverse splits or
similar events occurring after the Closing Date) (the
"Management Equity Basket"); and provided, further, that the
issuance price (in the case of direct sales of Common Stock)
or the exercise price (in the case of grants of options,
warrants or other rights to acquire shares of Common Stock)
per share of Common Stock shall be payable in cash and at
least equal to the fair market value of a share of Common
Stock at the time of such sale (in the case of direct sales of
Common Stock) or grant (in the case of options, warrants or
other rights to acquire shares of Common Stock), and in no
event less than $55.88 per share of Common Stock (adjusted for
any stock splits, reverse splits or similar events occurring
after the Closing Date); and
(ii) pursuant to an Initial Public Offering, the
issuance of up to that number of shares of Common Stock equal
to the sum of (I) 1,033,000 shares of Common Stock (adjusted
for any stock splits, reverse splits or similar events
occurring after the Closing Date) and (II) up to 259,000
shares of Common Stock (adjusted for any stock splits, reverse
splits or similar events occurring after the Closing Date) to
the extent of remaining issuance capacity in the Management
Equity Basket (subject, solely in the case of this clause
(II), to the consent of USX and Kobe (provided that such
investor at the time has consent rights pursuant to this
paragraph (d)), such consent not to be unreasonably withheld)
(the "IPO Basket"), subject to Section 3.11 hereof;
(e) the incurrence of (i) indebtedness (as determined in
accordance with GAAP, including any leasing arrangements or other
financings treated as indebtedness in accordance with GAAP), or (ii)
off-balance sheet obligations that are economically substantially
equivalent to indebtedness, by the Company or any of its Subsidiaries,
other than:
(A) pursuant to the Contemplated Transactions;
(B) refinancings of indebtedness or such
off-balance sheet obligations of the Company or any of its
Subsidiaries existing at the time of the Closing or
subsequently incurred other than in violation of the terms of
this Agreement;
<PAGE>
18
(C) incurrences of indebtedness pursuant to undrawn
commitments under credit facilities in effect at the Closing;
and
(D) incurrences of other additional incremental
indebtedness and/or such off-balance sheet arrangements in the
aggregate not exceeding $500 million;
(f) the making of capital expenditures by the Company or any
of its Subsidiaries during the five year period commencing on the
Closing Date, other than:
(i) capital expenditures contained in the five year
capital spending plan included in the Company Disclosure
Letter (the "Capital Expenditure Plan"); and
(ii) additions or modifications to the Capital
Expenditure Plan, subject to an aggregate limitation of an
additional $50 million of capital expenditures pursuant to
such additions and modifications; provided that acquisitions
of the businesses of other Persons (whether by acquisition of
equity interests or assets) will not constitute "capital
expenditures" for purposes of this paragraph (f);
(g) the merger of the Company or any of its material
Subsidiaries into any other Person, the merger of any other Person into
the Company or any of its Subsidiaries (other than pursuant to Section
4.1 hereof) or the acquisition by the Company or any of its
Subsidiaries of the capital stock or assets of any other Person, other
than;
(i) the merger of wholly owned Subsidiaries of the
Company into the Company or any other wholly owned Subsidiary
of the Company;
(ii) a merger of the Company or any of its
Subsidiaries into an unaffiliated third party on an
arms-length basis that results in an all-cash payment to the
USX Investors and the Kobe Investors with respect to all of
their shares of Common Stock and/or RTI Holdings Common Units,
as applicable (subject to the second following proviso),
provided that such payment is on the same economic terms as
those received by the majority Stockholders of the Company,
including the same per share economic consideration; provided,
however, that if Stockholders other than the USX Investors and
the Kobe Investors are to receive economic consideration other
than cash for their shares of Common Stock (in whole or in
part), the USX Investors and Kobe Investors shall be entitled
to receive cash consideration (from one or more Persons
designated by the Blackstone Investors) in an amount per share
equal to the fair market value of the non-cash economic
consideration to be received by such other Stockholders, and
in such event USX, Kobe and the Company promptly shall
negotiate in good faith to reach agreement as to the fair
market value of such non-cash economic consideration; and
provided, further, that if USX, Kobe and the Company fail to
reach such agreement within 10 Business Days following notice
to USX and Kobe of the terms of such non-cash economic
consideration, the fair market value of
<PAGE>
19
such non-cash economic consideration shall be determined as
follows: (A) if USX, Kobe and the Company can agree on a
single nationally recognized independent investment banking
firm (a "Valuer") to act as appraiser within five Business
Days after the end of such 10 Business Day period, such Valuer
promptly shall determine the fair market value of such
non-cash economic consideration (and the Company will bear
71.5% of the costs of such Valuer and the USX Investors and
Kobe Investors together will bear 28.5% of the costs of such
Valuer), or (B) if USX, Kobe and the Company cannot agree on a
single Valuer within five Business Days after the end of such
10 Business Day period, within two Business Days thereafter
the Company shall select a Valuer and USX and Kobe together
shall select a second Valuer, each of which promptly shall
determine the fair market value of such non-cash economic
consideration, and (I) if the valuations of such two Valuers
differ by an amount which is twenty percent or less of the
higher valuation, the fair market value of such non-cash
economic consideration shall be calculated by averaging the
valuations of such two Valuers (and the Company will bear the
costs of the Valuer it selects and the USX Investors and Kobe
Investors together will bear the costs of the Valuer they
select), or (II) if the valuations of such two Valuers differ
by an amount which is more than twenty percent of the higher
valuation, within two Business Days thereafter the two Valuers
shall select a third Valuer, which Valuer promptly shall make
its own valuation and shall choose the valuation performed by
the first two Valuers which most closely reflects its own
valuation, and the valuation so selected will be deemed to
constitute the fair market value of such non-cash economic
consideration (and if such third Valuer is used, the Company
will bear 71.5% of the costs of such Valuer and the USX
Investors and Kobe Investors together will bear 28.5% of the
costs of such Valuer);
(iii) a merger of an unaffiliated third party into
the Company or any of its Subsidiaries or the acquisition by
the Company or any of its Subsidiaries of the capital stock or
assets of any other Person, provided that the consideration
paid by the Company and its Subsidiaries in connection
therewith (A) does not cause the Company or any of its
Subsidiaries to issue Common Stock in excess of what is then
available under paragraph (d) above or (B) require the Company
and its Subsidiaries to incur indebtedness in excess of what
is then permitted under paragraph (e) above;
(h) the sale of 67% or more of the consolidated assets of the
Company and its Subsidiaries calculated on the basis of the net book value of
such assets as of the date of the most recent audited financial statements of
the Company and its Subsidiaries prior to the date of such sale other than in a
transaction or series of related transactions that results in the complete
liquidation of the Company with an all-cash payment to the USX Investors and the
Kobe Investors with respect to all of their shares of Common Stock and/or RTI
Holdings Common Units, as applicable; provided, however, that if Stockholders
other than the USX Investors and the Kobe Investors are to receive economic
consideration other than cash for their shares of Common Stock (in whole or in
part), the USX Investors and Kobe Investors shall be entitled to
<PAGE>
20
receive cash consideration (from one or more Persons designated by the
Blackstone Investors) in an amount per share equal to the fair market value of
the non-cash economic consideration to be received by such other Stockholders,
and in such event USX, Kobe and the Company promptly shall negotiate in good
faith to reach agreement as to the fair market value of such non-cash economic
consideration; and provided, further, that if USX, Kobe and the Company fail to
reach such agreement within 10 Business Days following notice to USX and Kobe of
the terms of such non-cash economic consideration, the fair market value of such
non-cash economic consideration shall be determined as follows: (A) if USX, Kobe
and the Company can agree on a single Valuer to act as appraiser within five
Business Days after the end of such 10 Business Day period, such Valuer promptly
shall determine the fair market value of such non-cash economic consideration
(and the Company will bear 71.5% of the costs of such Valuer and the USX
Investors and Kobe Investors together will bear 28.5% of the costs of such
Valuer), or (B) if USX, Kobe and the Company cannot agree on a single Valuer
within five Business Days after the end of such 10 Business Day period, within
two Business Days thereafter the Company shall select a Valuer and USX and Kobe
together shall select a second Valuer, each of which promptly shall determine
the fair market value of such non-cash economic consideration, and (I) if the
valuations of such two Valuers differ by an amount which is twenty percent or
less of the higher valuation, the fair market value of such non-cash economic
consideration shall be calculated by averaging the valuations of such two
Valuers (and the Company will bear the costs of the Valuer it selects and the
USX Investors and Kobe Investors together will bear the costs of the Valuer they
select), or (II) if the valuations of such two Valuers differ by an amount which
is more than twenty percent of the higher valuation, within two Business Days
thereafter the two Valuers shall select a third Valuer, which Valuer promptly
shall make its own valuation and shall choose the valuation performed by the
first two Valuers which most closely reflects its own valuation, and the
valuation so selected will be deemed to constitute the fair market value of such
non-cash economic consideration (and if such third Valuer is used, the Company
will bear 71.5% of the costs of such Valuer and the USX Investors and Kobe
Investors together will bear 28.5% of the costs of such Valuer);
(i) the entry of the Company or any of its Subsidiaries into a
material new line of business, other than steelmaking, steel finishing,
steel processing, steel distributing or transporting of steel products;
(j) (i) the commencing of a voluntary bankruptcy proceeding,
liquidation or dissolution with respect to the Company or any of its
material Subsidiaries, (ii) changes to the structure of RTI Holdings as
a limited liability company or (iii) adverse changes to the terms of
the USX Investors' and Kobe Investors' Common Stock or RTI Holdings
Common Units (provided that issuances of additional Common Stock or RTI
Holdings Common Units or amendments to this Agreement otherwise
expressly permitted pursuant to this Agreement will not be considered
adverse); or
(k) the payment of any distributions in respect of the Common
Stock prior to the consummation of a USX Exchange Event (with respect
to the affirmative vote or written consent of a USX Director) or Kobe
Exchange Event (with respect to the affirmative vote or written consent
of a Kobe Director), other than to the extent of
<PAGE>
21
distributions received by the Company from RTI Holdings that were made
to all members of RTI Holdings on a pro rata basis.
Notwithstanding anything contained herein, the parties will
not, and will cause their respective Affiliates not to, circumvent the
provisions of this Section 2 through any direct or indirect act or omission.
SECTION 3
TRANSFERS
3.1 Limitations on Transfer. (a) Each Equityholder hereby agrees that,
except for Transfers of Common Stock effected by such Equityholder pursuant to
an effective registration statement filed under the Securities Act, no Transfer
shall occur unless the Company has been furnished with an opinion of counsel
customary in transactions of this type to the effect that such Transfer is
exempt from or not subject to the provisions of Section 5 of the Securities Act.
(b) Each Equityholder hereby agrees that, except for (i)
Transfers of Common Stock in connection with a Public Offering, (ii)
Transfers of Common Stock pursuant to Rule 144 under the Securities
Act, (iii) Transfers of Common Stock, Series C Preferred Stock or RTI
Holdings Common Units to the Company in one or more transactions
approved by the Board, (iv) Transfers of RTI Holdings Common Units
pursuant to Section 4.1 and (v) Transfers of Common Stock or Series C
Preferred Stock pursuant to Section 3.6 (drag-along transfers), no
Transfer shall occur unless the transferee shall agree in writing by
delivering a transfer acknowledgment in form and substance reasonably
acceptable to the Company (with copies to USX, Kobe, Veritas,
Blackstone, Sumitomo, FirstEnergy, First Dominion, Triumph, TCI-II,
TCWLIT, TCWLITII, TCWSOFII, SOFIIB and SOFIII) to become a party to,
and be bound to the same extent as its transferor by the terms of, this
Agreement. The Company agrees that the issuance of Common Stock by the
Company in an Initial Public Offering will be made solely in the form
of Class D Common Stock.
(c) Notwithstanding anything contained herein to the contrary,
each Equityholder hereby agrees that, except for (i) Transfers to the
Company in transactions that are approved by the Board, (ii) Transfers
pursuant to Section 3.2(a) (transfers to Affiliates and among
Equityholders), (iii) Transfers pursuant to Section 3.2(b) (transfers
following termination of the lockup period), (iv) Transfers pursuant to
Section 3.5 (tag-along transfers), (v) Transfers pursuant to Section
3.6 (drag-along transfers), (vi) Transfers pursuant to Section 3.7
(piggyback registration transfers), (vii) Transfers pursuant to Section
3.8 (demand registration transfers) or (viii) Transfers of Common Stock
pursuant to Rule 144 under the Securities Act commencing 90 days after
consummation of an Initial Public Offering, and subject to Section 3.9
(lock-up in connection with other registrations), a Transfer of Common
Stock (or any options or warrants to acquire Common Stock) or Series C
Preferred Stock by any such
<PAGE>
22
Equityholder may occur only with BCPII's prior written consent. Each of
the USX Investors, the Kobe Investors, the Company and RES Holding
hereby agrees that, except for (i) Transfers of RTI Holdings Common
Units to the Company in transactions approved by the Board, (ii)
Transfers of RTI Holdings Common Units pursuant to Section 3.2(a) and
(iii) Transfers of RTI Holdings Common Units pursuant to Sections 4.1
and 4.2, it will not Transfer any RTI Holdings Units owned by it to any
Person without the prior written consent of BCPII. The Company hereby
agrees that, except for Transfers of RTI Holdings Units to the Company
or among Subsidiaries of the Company, neither the Company nor any of
its Subsidiaries will Transfer any RTI Holdings Units owned by it to
any Person without the prior written consent of USX (for so long as USX
RTI Holdings owns any RTI Holdings Common Units) and Kobe (for so long
as Kobe RTI Holdings owns any RTI Holdings Common Units).
(d) The parties will not, and will cause their Affiliates not
to, circumvent the provisions of this Section 3 through any direct or
indirect act or omission, including without limitation by causing the
Partnerships to keep in effect partnership arrangements satisfactory to
the Blackstone Investors, the Veritas Investors, USX, Kobe, Sumitomo,
FirstEnergy, First Dominion, Triumph, TCI-II, TCWLIT, TCWLITII,
TCWSOFII, SOFIIB and SOFIII whereby the partners of the Partnerships
will not be permitted to Transfer their partnership interests in a
manner that circumvents the provisions of this Section 3.
(e) Prior to the consummation of a USX Exchange Event, USX
will maintain USX RTI Holdings as a direct or indirect wholly owned
Subsidiary of USX, and will not engage in, directly or indirectly, any
transfer (other than among wholly owned Subsidiaries of USX), sale,
assignment, exchange, mortgage, pledge, hypothecation or other
disposition of the capital stock of USX RTI Holdings or of any entity
directly or indirectly owning any such capital stock (other than USX
itself).
(f) Prior to the consummation of a Kobe Exchange Event, Kobe
will maintain Kobe RTI Holdings as a direct or indirect Subsidiary of
Kobe (i) of which Kobe directly or indirectly owns at least 90% of the
outstanding capital stock (by vote and by value) and (ii) which is
wholly owned by its immediate parent, and will not engage in, directly
or indirectly, any transfer (other than among wholly owned Subsidiaries
of Kobe), sale, assignment, exchange, mortgage, pledge, hypothecation
or other disposition of the capital stock of Kobe RTI Holdings or of
any entity directly or indirectly owning any such capital stock (other
than Kobe itself). Prior to the consummation of a Kobe Exchange Event,
to the extent that any Subsidiary of Kobe directly or indirectly owning
shares of the outstanding capital stock of RTI Holdings is less than
wholly owned by Kobe, Kobe will not grant to any other stockholders
therein the right to participate in the control or management of such
Subsidiary or to designate directors (or the equivalent) of such
Subsidiary.
3.2 Transfers to Affiliates and Among Equityholders; Termination of
Lockup Period.
<PAGE>
23
(a) Notwithstanding anything contained herein to the contrary,
but subject to compliance with applicable securities laws, (i) each of
the Blackstone Investors, the Veritas Investors, the USX Investors, the
Kobe Investors, the Sumitomo Investors, the FirstEnergy Investors, the
Triumph Investors, the First Dominion Investors, the TCW Investors and
the Management Stockholders will be entitled, from time to time, to
Transfer any or all of the shares of Common Stock, Antidilution
Warrants and Series C Preferred Stock owned by him or it to (A) any of
his or its Affiliates who agree by delivery of a transfer
acknowledgment in form and substance reasonably acceptable to the
Company to become a party to, and be bound to the same extent as its
transferor by the terms of, this Agreement or (B) any of the other
Equityholders (provided that no Transfers will be effected by USX RTI
Holdings or any other USX Investors who are Affiliates of USX RTI
Holdings or by Kobe RTI Holdings or any other Kobe Investors who are
Affiliates of Kobe RTI Holdings under this clause (B) for less than the
fair market value of any Common Stock Transferred for so long as USX
RTI Holdings and Kobe RTI Holdings are subject to indemnification
obligations under Section 18.2 or Section 18.5(a) of the Master
Restructuring Agreement unless the Transferee expressly assumes in
writing in a form reasonably acceptable to the Company all of the
indemnification obligations of the transferor relating to the Common
Stock being Transferred), (ii) prior to the consummation of either a
USX Exchange Event or a Kobe Exchange Event, each of USX RTI Holdings
and Kobe RTI Holdings will be entitled, from time to time, to Transfer
any or all of the RTI Holdings Common Units owned by it to each other
(provided that no such Transfer will be effected if it would result in
a termination of RTI Holdings under Section 708 of the Internal Revenue
Code of 1986, as amended, and provided, further, that no Transfers will
be effected by USX RTI Holdings or by Kobe RTI Holdings under this
clause (ii) for less than the Held Unit Value of such RTI Holdings
Common Units for so long as USX RTI Holdings and Kobe RTI Holdings are
subject to indemnification obligations under Section 18.2 or Section
18.5(a) of the Master Restructuring Agreement unless the Transferee
expressly assumes in writing in a form reasonably acceptable to the
Company all of the indemnification obligations of the transferor
relating to the RTI Holdings Common Units being Transferred, and each
of the Company and RES Holding agrees that it will not Transfer any RTI
Holdings Units for less than the Held Unit Value of such RTI Holdings
Units for so long as the Company is subject to indemnification
obligations under Section 18.3 or Section 18.5(b) of the Master
Restructuring Agreement), and (iii) each of Triumph and TCI-II will be
entitled, in connection with its liquidation, to Transfer all of the
shares of Common Stock owned by it to its partners who agree by
delivery of a transfer acknowledgment in form and substance reasonably
acceptable to the Company to become a party to, and be bound to the
same extent as Triumph or TCI-II, as applicable, by the terms of, this
Agreement. Any Transfer by a Blackstone Investor or any of its
Affiliates to any of its stockholders (or other equity owners) of any
or all of the shares of Common Stock beneficially owned by it
(including a distribution of such shares of Common Stock upon a
liquidation of a Blackstone Investor or any of its Affiliates or
otherwise) will be deemed to be a Transfer to an Affiliate of a
Blackstone Investor for purposes of this Section 3.2(a).
<PAGE>
24
(b) If the Company has not consummated an Initial Public
Offering on or prior to the third anniversary of the Closing Date, the
USX Investors, the Kobe Investors, the Veritas Investors (including
with respect to shares of Common Stock held as Class A Assets of the
Partnerships), the Sumitomo Investors, the FirstEnergy Investors, the
Triumph Investors, the First Dominion Investors and the TCW Investors
thereafter will be entitled to Transfer shares of Common Stock and
Series C Preferred Stock and Antidilution Warrants without obtaining
the prior written consent of BCPII (but subject to the other provisions
of this Agreement) pursuant to this Section 3.2(b) as follows. Except
as set forth in Section 3.1(c)(i) through (viii) above, commencing on
the third anniversary of the Closing Date, if at any time prior to the
fifth anniversary of the Closing Date any of the USX Investors, the
Kobe Investors, the Veritas Investors, the Sumitomo Investors, the
FirstEnergy Investors, the Triumph Investors, the First Dominion
Investors or the TCW Investors proposes to Transfer shares of Common
Stock, shares of Series C Preferred Stock and/or Antidilution Warrants
pursuant to this Section 3.2(b), it first shall make an irrevocable
written offer to the Company and the Blackstone Investors to sell to
them the shares of Common Stock, shares of Series C Preferred Stock
and/or Antidilution Warrants that it proposes to Transfer (a "First
Offer"), setting forth the number of shares of Common Stock and
Antidilution Warrants offered to be sold, the cash purchase price per
share for such Common Stock and/or Series C Preferred Stock and per
warrant for such Antidilution Warrants and any other terms and
conditions of such First Offer. Upon written notice to such Stockholder
not more than fifteen (15) Business Days following receipt of the
notice from such Stockholder described in the preceding sentence, the
Blackstone Investors (or their designee, including the Company if it so
agrees) shall have the right (but not the obligation) to irrevocably
elect to purchase all (but not less than all) of the shares of Common
Stock, shares of Series C Preferred Stock and Antidilution Warrants
offered in the First Offer (on the terms and conditions set forth in
the First Offer, and if they so elect, such Transfer to the Blackstone
Investors (or their designee) shall be consummated as promptly as
practicable (but in any event within twenty (20) Business Days
following such election, subject to any delays resulting from
regulatory approvals). If the Blackstone Investors elect not to
purchase (or designate a purchaser for) such offered shares of Common
Stock, shares of Series C Preferred Stock and Antidilution Warrants
(including by failing to provide the irrevocable purchase notice
described in the preceding sentence within the specified time period),
such Stockholder thereafter shall be permitted to sell all (but not
less than all) of the shares of Common Stock, shares of Series C
Preferred Stock and Antidilution Warrants offered in the First Offer to
any Person, provided that a definitive agreement with respect to such
sale shall have been entered into with such Person within 150 days
following the Blackstone Investors' election not to purchase (or
designate a purchaser for) such shares, and provided further that such
sale shall be on terms and conditions no more favorable to such
purchaser than those offered to the Blackstone Investors in the First
Offer (including without limitation at a price per share of Common
Stock, share of Series C Preferred Stock and warrant at least equal to
that offered to the Blackstone Investors in the First Offer); provided,
however, that if the consideration to be paid by such Person includes
non-cash economic consideration, the total price per share and warrant
(including the fair market value of such non-cash economic
consideration) shall be at least equal to the cash
<PAGE>
25
price per share and warrant offered to the Blackstone Investors in the
First Offer, and in such event USX, Kobe, Veritas, Sumitomo,
FirstEnergy, Triumph, TCI-II, First Dominion, TCWLIT, TCWLITII,
TCWSOFII, SOFIIB or SOFIII, as applicable, and BCPII promptly shall
negotiate in good faith to reach agreement as to the fair market value
of such non-cash economic consideration; and provided, further, that if
USX, Kobe, Veritas, Sumitomo, FirstEnergy, Triumph, TCI-II, First
Dominion, TCWLIT, TCWLITII, TCWSOFII, SOFIIB or SOFIII, as applicable,
and BCPII fail to reach such agreement within 10 Business Days
following notice to BCPII of the terms of such non-cash economic
consideration, the fair market value of such non-cash economic
consideration shall be determined as follows: (A) if USX, Kobe,
Veritas, Sumitomo, FirstEnergy, Triumph, TCI-II, First Dominion,
TCWLIT, TCWLITII, TCWSOFII, SOFIIB or SOFIII, as applicable, and BCPII
can agree on a single Valuer within five Business Days after the end of
such 10 Business Day period, such Valuer promptly shall determine the
fair market value of such non-cash economic consideration (and each of
the Transferring USX Investors, Kobe Investors, Veritas Investors,
Sumitomo Investors, FirstEnergy Investors, Triumph Investors, First
Dominion Investors or TCW Investors, as applicable, together will bear
a pro rata portion of the costs of such Valuer and the Company will
bear the remainder of such costs), or (B) if USX, Kobe, Veritas,
Sumitomo, FirstEnergy, Triumph, TCI-II, First Dominion, TCWLIT,
TCWLITII, TCWSOFII, SOFIIB or SOFIII, as applicable, and BCPII cannot
agree on a single Valuer within five Business Days after the end of
such 10 Business Day period, within two Business Days thereafter BCPII
shall select a Valuer and USX, Kobe Veritas, Sumitomo, FirstEnergy,
Triumph, TCI-II, First Dominion, TCWLIT, TCWLITII, TCWSOFII, SOFIIB or
SOFIII, as applicable, shall select a second Valuer, each of which
promptly shall determine the fair market value of such non-cash
economic consideration, and (I) if the valuations of such two Valuers
differ by an amount which is twenty percent or less of the higher
valuation, the fair market value of such non-cash economic
consideration shall be calculated by averaging the valuations of such
two Valuers (and the Company will bear the costs of the Valuer BCPII
selects and the Transferring USX Investors, Kobe Investors, Veritas
Investors, Sumitomo Investors, FirstEnergy Investors, Triumph
Investors, First Dominion Investors or TCW Investors, as applicable,
together will bear the costs of the Valuer they select), or (II) if the
valuations of such two Valuers differ by an amount which is more than
twenty percent of the higher valuation, within two Business Days
thereafter the two Valuers shall select a third Valuer, which Valuer
promptly shall make its own valuation and shall choose the valuation
performed by the first two Valuers which most closely reflects its own
valuation, and the valuation so selected will be deemed to constitute
the fair market value of such non-cash economic consideration (and if
such third Valuer is used, each of the Transferring USX Investors, Kobe
Investors, Veritas Investors, Sumitomo Investors, FirstEnergy
Investors, Triumph Investors, First Dominion Investors or TCW
Investors, as applicable, together will bear a pro rata share of the
costs of such Valuer and the Company will bear the remainder of such
cost). From and after the fifth anniversary of the Closing Date, the
USX Investors, Kobe Investors, Veritas Investors, Sumitomo Investors,
FirstEnergy Investors, Triumph Investors, First Dominion Investors and
TCW Investors may Transfer shares of Common Stock and Antidilution
Warrants pursuant to this Section 3.2(b) without the prior consent of
BCPII and without being required to make
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26
a First Offer to the Company or the Blackstone Investors (but subject
to the other provisions of this Agreement).
3.3 Effect of Void Transfers. In the event of any purported Transfer in
violation of the provisions of this Agreement, such purported Transfer will be
void and of no effect and the Company will not give effect to such Transfer.
3.4 Legend on Securities. RTI Holdings Units will be issued solely in
uncertificated "book-entry" form. Each certificate representing unregistered
shares of Common Stock, options, warrants or securities convertible into Common
Stock issued by the Company will bear the following legend on the face thereof,
in the case of Common Stock, or an equivalent legend in the case of options,
warrants or convertible securities:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO AN EQUITYHOLDERS AGREEMENT AMONG BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND II L.P., BLACKSTONE OFFSHORE CAPITAL PARTNERS II
L.P., BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L. P., BRW STEEL
HOLDINGS, L.P., BRW STEEL OFFSHORE HOLDINGS, L.P. AND EACH OTHER
EQUITYHOLDER PARTY THERETO AND REPUBLIC TECHNOLOGIES INTERNATIONAL,
INC. (THE "COMPANY") DATED AUGUST 13, 1999, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH
THE PROVISIONS OF SUCH EQUITYHOLDERS AGREEMENT. THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY
ALL OF THE PROVISIONS OF SUCH EQUITYHOLDERS AGREEMENT."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAW AND, ACCORDINGLY, MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
(COLLECTIVELY, A TRANSFER) UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO
A REGISTRATION STATEMENT OR POST-EFFECTIVE AMENDMENT THERETO EFFECTIVE
UNDER THE SECURITIES ACT, (B) IN THE OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY, SUCH TRANSFER IS EXEMPT FROM OR NOT SUBJECT TO THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT AND THE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION, OR (C) A NO-ACTION LETTER FROM THE
STAFF OF THE SECURITIES AND EXCHANGE COMMISSION, SATISFACTORY TO
COUNSEL FOR THE COMPANY, SHALL HAVE BEEN OBTAINED WITH RESPECT TO SUCH
TRANSFER."
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27
3.5 Tag-Along Rights. (a) With respect to any proposed Transfer of
Common Stock permitted hereunder (other than Transfers permitted by Section
3.2(a), Transfers in connection with a Public Offering and Transfers pursuant to
Rule 144 under the Securities Act) by (A) Blackstone Investors (including any
Transfer of Common Stock held directly or as a Class B Asset of a Partnership)
or (B) Veritas Investors (including any Transfer of Common Stock held directly
or as a Class A Asset of a Partnership), (in either such case, such Transferring
Stockholder(s), collectively, the "Transferring Stockholder", provided that if
both clause (A) and clause (B) would otherwise initially be applicable to the
same transaction, only clause (A) shall be deemed to apply to such transaction,
and for purposes of the pro ration formula set forth below in this Section
3.5(a) such Transferring Stockholder shall be deemed to have proposed to
Transfer all of the Common Stock initially proposed to be Transferred by the
Blackstone Investors and Veritas Investors in connection with such transaction),
the Transferring Stockholder will not Transfer such Common Stock, and the USX
Investors, Kobe Investors, Sumitomo Investors, FirstEnergy Investors, Triumph
Investors, First Dominion Investors, TCW Investors, Veritas Investors and
Partnerships (with respect to Class A Assets) (if such Transferring Stockholder
is a Blackstone Investor), and Blackstone Investors and Partnerships (with
respect to Class B Assets) (if such Transferring Stockholder is a Veritas
Investor) (collectively, the "Tagging Equityholders") will have the right but
not the obligation to require the Transferring Stockholder not to Transfer such
Common Stock unless the proposed transferee purchases from each such Tagging
Equityholder who so elects a number of shares of Common Stock equal to the
number derived by multiplying (x) the total number of shares of Common Stock
Beneficially Owned by the Tagging Equityholder by (y) a fraction, the numerator
of which is the total number of shares of Common Stock that the Transferring
Stockholder ultimately is permitted to Transfer to such transferee (pursuant to
this Section 3.5(a) and any other tag-along rights to which such Transferring
Stockholder is subject) and the denominator of which is the total number of
shares of Common Stock Beneficially Owned by the Transferring Stockholder prior
to such Transfer, and at the same price per share of Common Stock and upon the
same economic terms and subject to the same conditions (including, without
limitation, time of payment and form of consideration) as to be paid and given
to the Transferring Stockholder; provided, that in order to be entitled to
exercise its right to sell shares of Common Stock to the proposed transferee
pursuant to this Section 3.5, each Tagging Equityholder must agree to make to
the transferee such reasonable representations, warranties, covenants,
indemnities and agreements as the transferee may require in connection with the
proposed Transfer of the shares of Common Stock of the Transferring Stockholder
(provided that they shall be made proportionally, severally and not jointly, and
provided, further, that Tagging Equityholders will not be required to make any
representation, warranty, covenant, indemnity or agreement not also being made
by the Transferring Stockholder); and provided, further, that if the
Transferring Stockholder is other than BCPII and/or other Blackstone Investors
that are Affiliates of BCPII, or Veritas Capital and/or other Veritas Investors
that are Affiliates of BCPII, an Equityholder shall only be entitled to
participate in a Transfer as a Tagging Equityholder pursuant to this Section 3.5
if such Equityholder and its Affiliates collectively owned, directly and
indirectly on a fully diluted basis, fewer shares of Common Stock than the
Transferring Stockholder and its Affiliates collectively owned, directly and
indirectly on a fully diluted basis, at the time such Transferring Stockholder
became a Stockholder of the Company; and provided, further, that, following
consummation of an Initial Public Offering, an Equityholder shall only be
entitled to participate
<PAGE>
28
in a Transfer as a Tagging Equityholder pursuant to this Section 3.5 if such
Equityholder and its Affiliates collectively own, directly and indirectly on a
fully diluted basis, fewer shares of Common Stock than the Transferring
Stockholder and its Affiliates collectively own, directly and indirectly on a
fully diluted basis, immediately prior to such proposed Transfer.
(b) The Transferring Stockholder will give, or cause to be
given, written notice to each Tagging Equityholder of each proposed
Transfer giving rise to the rights of such Tagging Equityholder set
forth in the first sentence of Section 3.5(a) promptly after reaching
agreement regarding a Transfer with the Transferee, but in no event
less than fifteen (15) Business Days prior to the proposed consummation
of such Transfer, setting forth the number of shares of Common Stock
proposed to be so Transferred by the Transferring Stockholder, the name
and address of the proposed transferee, the proposed amount and form of
consideration (and if such consideration is in part or in whole other
than cash, the Transferring Stockholder will provide such information,
to the extent reasonably available to the Transferring Stockholder,
relating to such consideration as the Tagging Equityholder may
reasonably request in order to evaluate such non-cash consideration)
and other terms and conditions of the Transfer, including payment
offered by the proposed transferee, and a representation that the
proposed transferee has been informed of the tag-along rights provided
for in this Section 3.5 and has agreed to purchase all the shares of
Common Stock which the Tagging Equityholder is entitled to Transfer in
accordance with the terms hereof. The Transferring Stockholder will
deliver or cause to be delivered to each Tagging Equityholder copies of
all transaction documents relating to the proposed Transfer which shall
include provisions relating to the Transfer by the Tagging Equityholder
(including draft and final versions of such documents) promptly as the
same become available. The tag-along rights provided by this Section
3.5 must be irrevocably exercised by each Tagging Equityholder within
ten (10) Business Days following receipt of the notice required by the
first sentence of this Section 3.5(b) (or will be deemed not to be
exercised for purposes of such Transfer by the Transferring
Stockholder), by delivery of a written notice to the Transferring
Stockholder indicating the desire of such Tagging Equityholder to
exercise its rights and specifying the number of shares of Common Stock
it desires to sell. The Transferring Stockholder will be entitled under
this Section 3.5 to Transfer to the proposed transferee the number of
shares of Common Stock calculated in accordance with Section 3.5(a).
(c) If any Tagging Equityholder exercises its rights under
Section 3.5(a), the closing of the purchase of the Common Stock with
respect to which such rights have been exercised will take place
concurrently with the closing of the sale of the Transferring
Stockholder's Common Stock; provided, however, that the sale of the
Transferring Stockholder's Common Stock and each Tagging Equityholder's
Common Stock will be delayed to the extent necessary (up to a maximum
of 60 days (provided, however, that, in the event of any request for
additional information from a regulatory authority, such 60 day period
shall be extended for an additional 30 days), after which such sale may
be consummated by the remaining Equityholders without further regard to
the requirements of this Section 3.5) for each such Equityholder to
obtain any necessary regulatory approvals in connection with such
Transfers (including without limitation regulatory
<PAGE>
29
approvals relating to the consummation of a USX Exchange Event and/or
Kobe Exchange Event, as applicable), and each such Equityholder and the
Company agrees to use its reasonable best efforts to obtain any
regulatory approvals necessary for its Transfer as promptly as possible
and to assist such other Equityholders in all reasonable respects in
obtaining any regulatory approvals necessary for their Transfers.
3.6 Drag-Along Rights. (a) So long as this Agreement remains in effect
and the Blackstone Investors and their Affiliates collectively own, directly and
indirectly on a fully diluted basis, at least 31% of the Common Stock, if any of
the Blackstone Investors receives a bona fide offer from a Person other than a
Blackstone Investor or any of its Affiliates (a "Third Party") to purchase in an
arms'-length transaction all, but not less than all, of the outstanding shares
of Common Stock owned by the Equityholders (including for such purpose all
shares of Common Stock obtainable upon (i) the exercise of then-exercisable
options, warrants or other rights to acquire Common Stock (which will be
exercised in connection therewith), (ii) the conversion of other
then-convertible securities of the Company (including without limitation shares
of Series C Preferred Stock) which are convertible into Common Stock (which will
be converted in connection therewith, provided that such securities will not be
required to be converted into Common Stock (and this Section 3.6 nevertheless
will apply with respect to all other Common Stock owned by the holder of such
convertible securities and all Common Stock owned by the other Equityholders) if
the price per share of Common Stock to be paid by the Third Party is less than
the price per share of Common Stock at which such convertible securities are
then convertible into Common Stock), and (iii) the occurrence of a USX Exchange
Event and Kobe Exchange Event (and a USX Exchange Event and Kobe Exchange Event
will be effected in connection therewith if not previously effected), and such
offer is accepted by such Blackstone Investor (in such capacity, a "Dragging
Stockholder"), then each Equityholder hereby agrees that it will Transfer upon
written request by the Blackstone Investors all shares of Common Stock
Beneficially Owned by it to such Third Party on the economic terms of the offer
so accepted by such Blackstone Investor, including the same economic
consideration per share of Common Stock (subject to the following proviso with
respect to the form of such consideration) (and each Equityholder will exercise
any then-exercisable options, warrants or other rights to acquire or obtain
Common Stock and convert any then-convertible securities of the Company into
shares of Common Stock as described above in this sentence, and the USX
Investors and Kobe Investors will exchange any RTI Holdings Common Units then
held by them for shares of Common Stock pursuant to Section 4.1 hereof, in each
case upon such written request by the Blackstone Investors); provided, however,
that, unless they may otherwise agree, subject to the following two provisos,
none of the USX Investors, Kobe Investors, Veritas Investors, Sumitomo
Investors, FirstEnergy Investors, Triumph Investors, First Union Investors or
TCW Investors will be required to Transfer any shares of Common Stock pursuant
to this Section 3.6(a) unless such Transfer results in an all-cash payment to
such investor with respect to all of its shares of Common Stock (with such cash
payment in each case to be made by the Third Party or, if the consideration
offered by the Third Party does not consist entirely of cash, by one or more
other Persons designated by the Blackstone Investors), provided that such
payment is on the same economic terms offered to the majority Stockholders of
the Company, including the same price per share of Common Stock; and provided,
further, that if the Dragging Stockholder is to receive economic consideration
other than cash for its shares of Common Stock (in whole or in part), the
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30
USX Investors, Kobe Investors, Veritas Investors, Sumitomo Investors,
FirstEnergy Investors, Triumph Investors, First Union Investors and TCW
Investors shall be entitled to receive cash consideration in an amount per share
of Common Stock equal to the fair market value of the non-cash economic
consideration to be received by the Dragging Stockholder per share of Common
Stock, and in such event USX, Kobe, Veritas Capital, Sumitomo, FirstEnergy,
Triumph, TCI-II, First Union, TCWLIT, TCWLITII, TCWSOFII, SOFIIB, SOFIII and the
Dragging Stockholder promptly shall negotiate in good faith to reach agreement
as to the fair market value of such non-cash economic consideration; and
provided, further, that if USX, Kobe, Veritas, Sumitomo, FirstEnergy, Triumph,
TCI-II, First Union, TCWLIT, TCWLITII, TCWSOFII, SOFIIB, SOFIII and the Dragging
Stockholder fail to reach such agreement within ten (10) Business Days following
notice to USX, Kobe, Veritas, Sumitomo, FirstEnergy, Triumph, TCI-II, First
Union, TCWLIT, TCWLITII, TCWSOFII, SOFIIB and SOFIII of the terms of such
non-cash economic consideration, the fair market value of such non-cash economic
consideration shall be determined as follows: (A) if USX, Kobe, Veritas,
Sumitomo, FirstEnergy, Triumph, TCI-II, First Union, TCWLIT, TCWLITII, TCWSOFII,
SOFIIB, SOFIII and the Dragging Stockholder can agree on a single Valuer to act
as appraiser within five (5) Business Days after the end of such ten (10)
Business Day period, such Valuer promptly shall determine the fair market value
of such non-cash economic consideration (and the Dragging Stockholder, USX
Investors, Kobe Investors, Veritas Investors, Sumitomo Investors, FirstEnergy
Investors, Triumph Investors, First Union Investors and TCW Investors together
will equally bear the costs of such Valuer), or (B) if USX, Kobe, Veritas,
Sumitomo, FirstEnergy, Triumph, TCI-II, First Union, TCWLIT, TCWLITII, TCWSOFII,
SOFIIB, SOFIII and the Dragging Stockholder cannot agree on a single Valuer
within five (5) Business Days after the end of such ten (10) Business Day
period, within two (2) Business Days thereafter the Dragging Stockholder shall
select a Valuer and USX, Kobe, Veritas, Sumitomo, FirstEnergy, Triumph, TCI-II,
First Union, TCWLIT, TCWLITII, TCWSOFII, SOFIIB and SOFIII together shall select
a second Valuer, each of which promptly shall determine the fair market value of
such non-cash economic consideration, and (I) if the valuations of such two
Valuers differ by an amount which is twenty percent or less of the higher
valuation, the fair market value of such non-cash economic consideration shall
be calculated by averaging the valuations of such two Valuers (and the Dragging
Stockholder will bear the costs of the Valuer it selects and the USX Investors,
Kobe Investors, Veritas Investors, Sumitomo Investors, FirstEnergy Investors,
Triumph Investors, First Union Investors and TCW Investors together will bear
the costs of the Valuer they select), or (II) if the valuations of such two
Valuers differ by an amount which is more than twenty percent of the higher
valuation, within two (2) Business Days thereafter the two Valuers shall select
a third Valuer, which Valuer promptly shall make its own valuation and shall
choose the valuation performed by the first two Valuers which most closely
reflects its own valuation, and the valuation so selected will be deemed to
constitute the fair market value of such non-cash economic consideration (and if
such third Valuer is used, the Dragging Stockholder, USX Investors, Kobe
Investors, Veritas Investors, Sumitomo Investors, FirstEnergy Investors, Triumph
Investors, First Union Investors and TCW Investors together will equally bear
the costs of such Valuer).
(b) The Dragging Stockholder will give written notice (the
"Drag-Along Notice") to each of the other Equityholders of any proposed
Transfer giving rise to the rights of such Dragging Stockholder set
forth in Section 3.6(a) as soon as practicable
<PAGE>
31
following the acceptance of the offer referred to in Section 3.6(a).
The Drag-Along Notice will set forth the total number of shares of
Common Stock owned by the Blackstone Investors and proposed to be so
Transferred, the name of the proposed transferee, the proposed amount
and form of consideration (and if such consideration consists in part
or in whole of property other than cash, the Dragging Stockholder will
provide such information, to the extent reasonably available to the
Dragging Stockholder, relating to such consideration as the
Equityholder may reasonably request in order to evaluate such non-cash
consideration) and the other terms and conditions of the offer. The
Dragging Stockholder will notify USX, Kobe, Veritas, Sumitomo,
FirstEnergy, Triumph, TCI-II, First Union, TCWLIT, TCWLITII, TCWSOFII,
SOFIIB and SOFIII at least fifteen (15) Business Days in advance of
entering into a definitive agreement in connection with such offer if
any of such Equityholders will be required to sign any agreement
containing representations, warranties and indemnities and will provide
in advance to each of the other Equityholders subject to the Drag-Along
Notice a copy of all agreements or drafts thereof relating to the offer
including the representations, warranties and indemnities proposed to
be made by such Equityholders. In any such agreement such Equityholders
will be required to make to the transferee such reasonable
representations, warranties and indemnities as the Dragging Stockholder
so long as they are made severally and not jointly and in proportion to
the number of shares of Common Stock being Transferred by each
Equityholder, and provided that each such Equityholder's liability
therefore is limited to the proceeds it receives from such sale. The
Company will pay the reasonable fees and expenses of one counsel for
the other Equityholders as well as counsel for the Blackstone Investors
in connection with any transaction referred to in this Section 3.6. If
the Transfer referred to in the Drag-Along Notice is not consummated
within 120 days from the date of the Drag-Along Notice, the Dragging
Stockholder will deliver another Drag-Along Notice and comply with all
its other obligations under this Section 3.6 in order to exercise its
rights hereunder with respect to such Transfer or any other Transfer.
The sale of each Equityholder's Common Stock pursuant to this Section
3.6 will be delayed to the extent necessary for each Equityholder to
obtain any necessary regulatory approvals in connection with such
Transfers (including without limitation regulatory approvals relating
to the consummation of a USX Exchange Event and/or Kobe Exchange Event,
as applicable), and each Equityholder and the Company agrees to use its
reasonable best efforts to obtain any regulatory approvals necessary
for its Transfer as promptly as possible and to assist the other
Equityholders in all reasonable respects in obtaining any regulatory
approvals necessary for their Transfers.
3.7 Piggyback Rights. (a) Each time the Company is planning to file a
registration statement under the Securities Act (other than (i) a registration
statement on Form S-4 or S-8 or any similar or successor form, (ii) in
connection with the USWA Offering or (iii) in connection with an Initial Public
Offering consisting solely of shares registered for the account of the Company)
in connection with the proposed offer and sale of Common Stock (or other equity
securities) for the account of the Company or any securityholder of the Company
(in either such case, the "Initiating Party"), the Company will give prompt
written notice thereof to each of the Blackstone Investors, the Partnerships,
the Veritas Investors, the USX Investors, the Kobe Investors, the Sumitomo
Investors, the FirstEnergy Investors, the Triumph Investors, the First
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32
Dominion Investors, the TCW Investors and the Management Stockholders regarding
the rights of such parties (collectively, the "Non-Initiating Parties") under
this Section 3.7, at least twenty (20) Business Days prior to the anticipated
filing date of such registration statement. Upon the written request of any
member of the Non-Initiating Parties made within ten (10) Business Days after
the receipt of any such notice from the Company, which request will specify the
shares of Common Stock (the "Piggy-Back Shares") intended to be disposed of by
such member in such offering, the Company will use its reasonable best efforts
to effect the registration under the Securities Act of all Piggy-Back Shares
which the Company has been so requested to register by such Persons to the
extent required to permit the disposition of the Piggy-Back Shares to be
registered; provided, that (i) if, at any time after giving written notice of
its intention to register any Common Stock and prior to the effective date of
the registration statement filed in connection with such registration, the
Initiating Party will determine for any reason not to proceed with the proposed
registration, the Company may at its election give written notice of such
determination to each holder of Piggy-Back Shares and thereupon will be relieved
of its obligation to register any Piggy-Back Shares in connection with such
registration (but not from its obligation to pay the Registration Expenses
incurred in connection therewith), without prejudice, however, to the rights of
any holders of Piggy-Back Shares entitled to request that such registration be
effected as a demand registration under Section 3.8, (ii) if such registration
involves an underwritten offering, each holder of Piggy-Back Shares requesting
to be included in the Company's registration must sell its shares to the
underwriters on the same terms and conditions as reasonably apply to the
Initiating Parties and (iii) each holder of Piggy-Back Shares shall be permitted
to withdraw all or part of such holder's Piggy-Back Shares from a piggy-back
registration at any time prior to the effective date thereof; provided, that the
Company shall be entitled to reimbursement from the holder of such withdrawn
Piggy-Back Shares for any Registration Expenses incurred by the Company solely
as a result of the registration of such Piggy-Back Shares.
(b) If a registration pursuant to this Section 3.7 involves an
underwritten offering and the managing underwriter or underwriters in
good faith advise the Company in writing that, in their opinion, the
number of shares of Common Stock which the Initiating Party, the
holders of Piggy-Back Shares and any other Persons intend to include in
such registration exceeds the largest number of shares of Common Stock
which can be sold in such offering without having an adverse effect on
such offering (including, but not limited to, the price at which the
shares of Common Stock can be sold), then the Company will include the
number of shares of Common Stock in such registration based on the
following order of priority: (A) in the event that the Company or a
Person other than a Stockholder exercising demand registration rights
is the Initiating Party, (i) first, the shares of Common Stock which
such Initiating Party proposes to sell, (ii) second, the Piggy-Back
Shares and any other shares of Common Stock requested to be registered
pursuant to piggy-back registration rights granted by the Company,
allocated pro rata among holders of Piggy-Back Shares and such other
shares of Common Stock based on the number of shares requested to be
registered and (iii) third, any other shares of Common Stock eligible
for such registration, if any, (B) in the event that a Stockholder is
the Initiating Party, (i) first, the shares of Common Stock that each
holder that is a member of a Demand Registration Group has requested to
be included in such
<PAGE>
33
registration pursuant to Section 3.8(a) or pursuant to other demand
registration rights granted by the Company, allocated pro rata among
the members of such Demand Registration Group based on their respective
Beneficial Ownership on a fully diluted basis, (ii) second, the shares
of Common Stock that holders of Common Stock have requested be included
in such registration pursuant to Section 3.7(a) or pursuant to other
piggy-back registration rights granted by the Company, allocated pro
rata among such holders based on the number of shares requested to be
registered, (iii) third, the shares of Common Stock which the Company
proposes to sell on its own account, if any, and (iv) fourth, any other
shares of Common Stock that are eligible for such registration, if any.
(c) No registration of Piggy-Back Shares effected pursuant to
a request under this Section 3.7 shall be deemed to have been effected
pursuant to Section 3.8 hereof or shall relieve the Company of its
obligations under Section 3.8 hereof.
3.8 Demand Registrations. (a) Provided the Blackstone Investors
collectively own, directly or indirectly through the Partnerships as Class B
Assets, at least 5% of the Common Stock on a fully diluted basis, upon the
written request from time to time (a "Request") of any Blackstone Investor or
any Affiliate of a Blackstone Investor that holds Common Stock that the Company
effect the registration under the Securities Act of all or part (constituting
not less than 5% of outstanding shares) of the shares of Common Stock owned by
such Blackstone Investors and Affiliates, directly or indirectly through the
Partnerships as Class B Assets, the Company will as expeditiously as practicable
file a registration statement and use its reasonable best efforts to effect the
registration under the Securities Act and the "Blue Sky" laws of such
jurisdictions as any holder of shares of Common Stock being registered under
such registration or any underwriter, if any, reasonably requests of such shares
and cause such registration statement to remain effective for a period of not
less than 180 days; provided, however, that the Company shall not be required to
effect more than three effective registrations pursuant to this Section 3.8(a);
and provided, further, that the Company shall not be required to effect a
registration pursuant to this Section 3.8(a) during the 180 days following
consummation of an Initial Public Offering; and provided, further, that neither
of the two 5% requirements set forth in this sentence will be applicable to a
Request to the extent that the Blackstone Investors were subject to cutbacks
pursuant to Section 3.7(b) or Section 3.8(h) in their immediately preceding
Transfer of Common Stock that resulted in them owning in the aggregate less than
5% of the Common Stock on a fully diluted basis (and therefore being unable to
meet such requirements).
(b) If (i) the Blackstone Investors shall have previously
realized at least $45 million of net cash proceeds from the sale of
Common Stock in one or more transactions yielding at least a 20%
compounded annualized internal rate of return on the entire initial
investment by them (without ascribing any value to any remaining shares
of Common Stock held by the Blackstone Investors), (ii) the Blackstone
Investors have not sold any shares of Common Stock, either directly or
through the Partnerships, within the preceding 180-day period and (iii)
the Partnerships (as Class A Assets) and the Veritas Investors own at
least 5% of the outstanding Common Stock on a fully diluted basis, then
the Veritas Investors and the Partnerships (acting pursuant to a
determination by the Veritas Investors) shall have the right to make
one written request to the Company (a
<PAGE>
34
"Partnerships' Request") that the Company effect the registration under
the Securities Act of all or part (constituting not less than 5% of
outstanding shares) of the shares of Common Stock owned by the
Partnerships and the Veritas Investors, whereupon the Company will as
expeditiously as practicable file a registration statement and use its
reasonable best efforts to effect the registration under the Securities
Act and the "Blue Sky" laws of such jurisdictions as any holder of
shares of Common Stock being registered under such registration or any
underwriter, if any, reasonably requests of such shares and cause such
registration statement to remain effective for a period of not less
than 180 days; provided that neither of the two 5% requirements set
forth in this sentence will be applicable to a Request to the extent
that the Veritas Investors and/or the Partnerships (with respect to
Class A Assets) were subject to cutbacks pursuant to Section 3.7(b) or
Section 3.8(h) in their immediately preceding Transfer of Common Stock
that resulted in them owning in the aggregate less than 5% of the
Common Stock on a fully diluted basis (and therefore being unable to
meet such requirements). In addition, commencing 180 days after
consummation of an Initial Public Offering, if the Veritas Investors
and the Partnerships own in the aggregate at least 5% of the
outstanding Common Stock on a fully diluted basis, then the Veritas
Investors and the Partnerships (acting pursuant to a determination of
the Veritas Investors) shall have the right to make one additional
Partnerships' Request to the Company that the Company effect the
registration under the Securities Act of all or part (constituting not
less than 5% of outstanding shares) of the shares of Common Stock owned
by the Veritas Investors and the Partnerships, whereupon the Company
will as expeditiously as practicable use its reasonable best efforts to
effect the registration under the Securities Act of such shares and
cause such registration statement to remain effective for a period of
not less than 180 days; provided that neither of the two 5%
requirements set forth in this sentence will be applicable to a Request
to the extent that the Veritas Investors and/or the Partnerships (with
respect to Class A Assets) were subject to cutbacks pursuant to Section
3.7(b) or Section 3.8(h) in their immediately preceding Transfer of
Common Stock that resulted in them owning in the aggregate less than 5%
of the Common Stock on a fully diluted basis (and therefore being
unable to meet such requirements); and provided, further, that if an
Equityholder other than a Partnership or a Veritas Investor is an
Initiating Party, the Partnerships and the Veritas Investors may make a
Partnerships' Request in connection with such registration
notwithstanding the 180 day requirement set forth in this sentence, and
thereafter such 180 day requirement will no longer apply to
Partnerships' Requests. In addition, if the Blackstone Investors no
longer have any right to make a Request pursuant to Section 3.8(a),
then the Veritas Investors and the Partnerships (with respect to Class
A Assets) shall have the right to make one additional Partnerships'
Request pursuant to this Section 3.8(b) (without regard to clauses (i),
(ii) and (iii) of the first sentence hereof). Notwithstanding the
foregoing, the Company shall not be required to commence a registration
pursuant to this paragraph (b) within 180 days following the
effectiveness of a registration by the Company (A) pursuant to this
paragraph (b) or (B) which entitled the Veritas Investors to
"piggy-back" rights pursuant to Section 3.7 hereof (provided that the
Veritas Investors were permitted to sell all of the shares they
requested pursuant to such piggy-back rights).
<PAGE>
35
(c) Commencing 180 days after consummation of an Initial
Public Offering of the Company's Common Stock, if the USX Investors own
at least 5% of the outstanding Common Stock on a fully diluted basis at
the time of each such request, then the USX Investors shall have the
right to make three written requests (each a "USX Request") to the
Company that the Company effect the registration under the Securities
Act and the "Blue Sky" laws of such jurisdictions as any holder of
shares of Common Stock being registered under such registration or any
underwriter, if any, reasonably requests of all or part (constituting
not less than 5% of outstanding shares) of the shares of Common Stock
owned by the USX Investors, whereupon the Company will as expeditiously
as practicable file a registration statement and use its reasonable
best efforts to effect the registration under the Securities Act of
such shares and cause such registration statement to remain effective
for a period of not less than 180 days or longer if so required
pursuant to Section 3.8(h) hereof; provided that the Company shall not
be required to commence a registration pursuant to this paragraph (c)
within 180 days following the effectiveness of a registration by the
Company (A) pursuant to this paragraph (c) or (B) which entitled the
USX Investors to "piggy-back" rights pursuant to Section 3.7 hereof
(provided that the USX Investors were permitted to sell all of the
shares they requested pursuant to such piggy-back rights); and
provided, further, that neither of the two 5% requirements set forth in
this sentence will be applicable to a USX Request to the extent that
the USX Investors were subject to cutbacks pursuant to Section 3.7(b)
or Section 3.8(h) in their immediately preceding Transfer of Common
Stock that resulted in them owning in the aggregate less than 5% of the
Common Stock on a fully diluted basis (and therefore being unable to
meet such requirements); and provided, further, that if an Equityholder
other than a USX Investor is an Initiating Party, the USX Investors may
make a USX Request in connection with such registration notwithstanding
the 180 day requirement set forth in the first clause of this sentence,
and thereafter such 180 day requirement will no longer apply to USX
Requests.
(d) Commencing 180 days after consummation of an Initial
Public Offering of the Company's Common Stock, if the Kobe Investors
own at least 5% of the outstanding Common Stock on a fully diluted
basis at the time of each such request, then the Kobe Investors will
have the right to make three written requests (each a "Kobe Request")
to the Company that the Company effect the registration under the
Securities Act and the "Blue Sky" laws of such jurisdictions as any
holder of shares of Common Stock being registered under such
registration or any underwriter, if any, reasonably requests of all or
part (constituting not less than 5% of outstanding shares) of the
shares of Common Stock owned by the Kobe Investors, whereupon the
Company will as expeditiously as practicable file a registration
statement and use its reasonable best efforts to effect the
registration under the Securities Act of such shares and cause such
registration statement to remain effective for a period of not less
than 180 days; provided that the Company will not be required to
commence a registration pursuant to this paragraph (d) within 180 days
following the effectiveness of a registration by the Company (A)
pursuant to this paragraph (d) or (B) which entitled the Kobe Investors
to "piggy-back" rights pursuant to Section 3.7 hereof (provided that
the Kobe Investors were permitted to sell all of the shares they
requested pursuant to such piggy-back rights); and
<PAGE>
36
provided, further, that neither of the two 5% requirements set forth in
this sentence will be applicable to a Kobe Request to the extent that
the Kobe Investors were subject to cutbacks pursuant to Section 3.7(b)
or Section 3.8(h) in their immediately preceding Transfer of Common
Stock that resulted in them owning in the aggregate less than 5% of the
Common Stock on a fully diluted basis (and therefore being unable to
meet such requirements); and provided, further, that if an Equityholder
other than a Kobe Investor is an Initiating Party, the Kobe Investors
may make a Kobe Request in connection with such registration
notwithstanding the 180 day requirement set forth in the first clause
of this sentence, and thereafter such 180 day requirement will no
longer apply to Kobe Requests.
(e) Commencing 180 days after consummation of an Initial
Public Offering of the Company's Common Stock, if the FirstEnergy
Investors own at least 5% of the outstanding Common Stock on a fully
diluted basis at the time of each such request, then the FirstEnergy
Investors will have the right to make one written request (a
"FirstEnergy Request") to the Company that the Company effect the
registration under the Securities Act and the "Blue Sky" laws of such
jurisdictions as any holder of shares of Common Stock being registered
under such registration or any underwriter, if any, reasonably requests
of all or part (constituting not less than 5% of outstanding shares) of
the shares of Common Stock owned by the FirstEnergy Investors,
whereupon the Company will as expeditiously as practicable file a
registration statement and use its reasonable best efforts to effect
the registration under the Securities Act of such shares and cause such
registration statement to remain effective for a period of not less
than 180 days; provided that the Company will not be required to
commence a registration pursuant to this paragraph (d) within 180 days
following the effectiveness of a registration by the Company (A)
pursuant to this paragraph (e) or (B) which entitled the FirstEnergy
Investors to "piggy-back" rights pursuant to Section 3.7 hereof
(provided that the FirstEnergy Investors were permitted to sell all of
the shares they requested pursuant to such piggy-back rights); and
provided, further, that neither of the two 5% requirements set forth in
this sentence will be applicable to a Kobe Request to the extent that
the FirstEnergy Investors were subject to cutbacks pursuant to Section
3.7(b) or Section 3.8(h) in their immediately preceding Transfer of
Common Stock that resulted in them owning in the aggregate less than 5%
of the Common Stock on a fully diluted basis (and therefore being
unable to meet such requirements); and provided, further, that if an
Equityholder other than a FirstEnergy Investor is an Initiating Party,
the FirstEnergy Investors may make a FirstEnergy Request in connection
with such registration notwithstanding the 180 day requirement set
forth in the first clause of this sentence, and thereafter such 180 day
requirement will no longer apply to FirstEnergy Requests.
(f) Promptly upon receipt of any request for a demand
registration pursuant to paragraphs (a), (b), (c), (d) or (e) of this
Section 3.8 (but in no event more than five (5) Business Days
thereafter), the Company shall serve written notice (a "Demand Notice")
of any such registration request to all holders of shares of Common
Stock eligible for registration pursuant to Section 3.7, and the
Company shall include (subject to provisions of subsection (k) hereof)
in such registration shares of Common Stock eligible for registration
pursuant to Section 3.7 with respect to which the Company has received
<PAGE>
37
written requests for inclusion therein within ten (10) Business Days
after the Demand Notice has been given to it (subject to the other
provisions of this Section 3.8). Thereafter, the Company may elect to
include in such registration additional shares of Common Stock to be
issued by the Company. All requests made pursuant to this Section
3.8(f) shall specify the aggregate amount of shares of Common Stock to
be registered and the intended method of distribution of such shares.
(g) If the Initiating Party so elects, the offering of shares
of Common Stock pursuant to such demand registration shall be in the
form of an underwritten offering. If any offering pursuant to a demand
registration involves an underwritten offering, the Initiating Party
shall have the right to select the managing underwriter or underwriters
to administer the offering: provided that such managing underwriter
shall be reasonably acceptable to the Company; and provided, further
that the Company shall have the right to select one co-managing
underwriter reasonably acceptable to such Initiating Party for any such
underwritten offering.
(h) If a registration pursuant to this Section 3.8 involves an
underwritten offering and the managing underwriter or underwriters in
good faith advise the Company in writing that, in their opinion, the
number of shares of Common Stock requested to be included in such
registration exceeds the largest number of shares of Common Stock which
can be sold in such offering without having an adverse effect on such
offering (including, but not limited to, the price at which the shares
of Common Stock can be sold), then the Company will include in such
registration the shares of Common Stock sought to be registered therein
according to the following order of priority: (i) first, the shares of
Common Stock that each holder that is a member of a Demand Registration
Group has requested to be included in such registration pursuant to
this Section 3.8 or pursuant to other demand registration rights
granted by the Company, allocated pro rata among such members of the
Demand Registration Group based on their respective Beneficial
Ownership on a fully diluted basis, (ii) second, the shares of Common
Stock that holders of Common Stock have requested be included in such
registration pursuant to Section 3.7(a) or pursuant to other piggy-back
registration rights granted by the Company, allocated pro rata among
such holders based on the number of shares requested to be registered,
(iii) third, the shares of Common Stock which the Company proposes to
sell on its own account, if any, and (iv) fourth, any other shares of
Common Stock that are eligible for such registration, if any.
(i) Registrations under this Section 3.8 shall be on such
appropriate registration form of the SEC (i) as shall be selected by
the Company and as shall be reasonably acceptable to the Initiating
Party and (ii) as shall permit the disposition of such shares in
accordance with the intended method or methods of disposition specified
in such holders' requests for such registration.
<PAGE>
38
3.9 Other Registration-Related Matters.
(a) Each Equityholder agrees that it will not effect any sales
of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock during the 14 days prior to and up to a
180 day (or such shorter period as may be permitted by the
underwriters) period beginning on the effective date of a registration
statement relating to an underwritten public offering of Common Stock
(whether pursuant to Section 3.7 or 3.8 or otherwise, except as part of
such registration) if and to the extent reasonably requested in writing
(with reasonable prior written notice) by the managing underwriter of
the underwritten public offering or by the Company on their behalf.
(b) The Company agrees not to effect any sales of Common Stock
or securities convertible into or exercisable or exchangeable for
Common Stock during the 14 days prior to and the 180 day period (or
such lesser period as may be permitted by the underwriters) beginning
on the effective date of any registration statement in which any
Equityholder is participating in connection with an underwritten public
offering of Common Stock, if and to the extent reasonably requested in
writing (with reasonable prior written notice) by the managing
underwriter of the underwritten public offering except in connection
with the conversion or exercise of previously outstanding options,
warrants or other rights (except, in each case, as part of such
underwritten offering, if permitted, or pursuant to registrations on
Forms S-4 or S-8 or any successor form to such forms or as part of any
registration of securities for offering and sale to management of the
Company pursuant to any employee stock plan or other employee benefit
plan arrangement or registration of securities issued solely in an
acquisition or business combination). The Company agrees to use
reasonable best efforts to obtain from each holder of restricted
securities of the Company the same as or similar to those being
registered by the Company, or any restricted securities convertible
into or exchangeable or exercisable for any of its securities, an
agreement not to effect any public sale or distribution of such
securities (other than securities purchased in a public offering)
during any such period referred to in this paragraph, except as part of
any such registration if permitted.
(c) The Company may require any Person that is selling shares
of Common Stock in a Public Offering pursuant to Section 3.7 or 3.8 to
furnish to the Company in writing such information regarding such
Person and the distribution of the shares of Common Stock which are
included in a Public Offering as may from time to time reasonably be
requested in writing in order to comply with the Securities Act.
(d) The Company will pay all Registration Expenses in
connection with each registration or proposed registration of Common
Stock pursuant to Section 3.7 or 3.8.
(e) Before filing a registration statement or prospectus, or
any amendments or supplements thereto, in connection with any
registration or proposed registration of Common Stock pursuant to
Section 3.7 or 3.8, the Company will furnish to Holders and Holders'
Counsel copies of all documents proposed to be filed, which documents
will be
<PAGE>
39
subject to the review of the underwriters and such Holders and their
respective counsel and, except in the case of a registration under
Section 3.7, not file any registration statement or prospectus or
amendments or supplements thereto to which the Initiating Party or the
underwriters, if any, shall reasonably object.
(f) The Company will furnish, without charge, to each seller
of Common Stock such number of copies of the applicable registration
statement and of each amendment or supplement thereto (in each case
including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus and summary prospectus), in conformity with the requirements
of the Securities Act, and such other documents as such seller may
reasonably request in order to facilitate the disposition of Common
Stock by such seller (it being understood that the Company consents to
the use of the prospectus or any amendment or supplement thereto by
each of the selling holders of shares of Common Stock and the
underwriters, if any, in connection with the offering and sale of the
shares of Common Stock covered by the prospectus or any amendment or
supplement thereto).
(g) The Company will use its reasonable best efforts to
register or qualify Common Stock covered by a registration statement
under such other securities or blue sky laws of such jurisdictions as
each seller shall reasonably request, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the
Common Stock owned by such seller, except that the Company will not for
any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction where, but for the requirements
of this paragraph (g), it would not be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction.
(h) The Company will use its reasonable best efforts to cause
the Common Stock covered by a registration statement to be registered
with or approved by such other governmental agencies or authorities as
may be necessary to enable the seller thereof to consummate the
disposition thereof.
(i) The Company will notify each seller of Common Stock
covered by a registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
within the appropriate period of the Company's becoming aware that the
registration statement or the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of the
prospectus and any preliminary prospectus, in light of the
circumstances under which they were made) not misleading or, if for any
other reason it shall be necessary during such time period to amend or
supplement the registration statement or the prospectus in order to
comply with the Securities Act and, in either case, as promptly as
practicable thereafter, prepare and furnish, without charge, to
<PAGE>
40
such seller a reasonable number of copies of an amended or supplemental
prospectus which will correct such statement or omission or effect such
compliance.
(j) The Company will enter into such customary agreements
(including an underwriting and indemnification agreement in customary
form) and take such other actions as sellers of such Common Stock or
the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Common Stock.
(k) The Company will make available, upon reasonable notice at
reasonable times and for reasonable periods, for inspection by any
seller of Common Stock covered by a registration statement, by any
underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other
agent retained by any such seller or any such underwriter, all
pertinent financial and other records, pertinent corporate documents
and properties of the Company, and cause all of the Company's officers,
directors and employees to supply all information reasonably requested
by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement (subject to each party
referred to in this clause (k) entering into customary confidentiality
agreements in a form reasonably acceptable to the Company).
(l) The Company will obtain a "cold comfort" letter or letters
from the Company's independent public accountants in customary form and
covering matters of the type customarily covered by "cold comfort"
letters as the sellers of a majority of the outstanding shares of
Common Stock covered by the registration statement shall reasonably
request.
(m) Each Stockholder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
paragraph (i) such Stockholder will forthwith discontinue disposition
of Common Stock pursuant to the registration statement covering such
Common Stock until such Stockholder's receipt of the copies of the
amended or supplemented prospectus contemplated by paragraph (i) and,
if so directed by the Company, such Stockholder will deliver to the
Company (at the Company's expense) all copies, other than permanent
file copies then in such Stockholder's possession, of the prospectus
covering such Common Stock current at the time of receipt of such
notice. In the event the Company will give any such notice, the period
for which the Company will be required to keep the registration
statement effective will be extended by the number of days during the
period from and including the date of the giving of such notice
pursuant to paragraph (i) to and including the date when each seller of
Common Stock covered by such registration statement has received the
copies of the supplemented or amended prospectus contemplated by
paragraph (i).
(n) The Company will prepare and, in the case of a demand
registration, no later than 60 days after a request for a demand
registration, file with the SEC a registration statement relating to
the shares of Common Stock to be registered including all exhibits and
financial statements required by the SEC to be filed therewith, and use
its
<PAGE>
41
reasonable best efforts to cause such registration statement to become
effective under the Securities Act; provided, however, that the Company
may discontinue any registration of its securities that are not the
securities that are eligible for such registration pursuant to Article
3 hereto.
(o) The Company will prepare and file with the SEC such
amendments and post-effective amendments to such registration statement
and supplements to the prospectus as may be (x) reasonably requested by
any participating Holder (to the extent such request relates to
information relating to such Holder), or (y) necessary to keep such
registration effective for the Demand Period (in the case of a demand
registration).
(p) The Company will notify the Holders of shares of Common
Stock and the managing underwriter or underwriters, if any, and (if
requested) confirm such advice in writing, as soon as reasonably
practicable after notice thereof is received by the Company (i) when
the registration statement or any amendment thereto has been filed or
becomes effective, when the prospectus or any amendment or supplement
to the prospectus has been filed, and, to furnish such Holders and
managing underwriter or underwriters, if any, with copies thereof, (ii)
of any written comments by the SEC or any request by the SEC or any
other federal or state governmental authority for amendments or
supplements to the registration statement or the prospectus or for
additional information, (iii) of the issuance by the SEC of any stop
order suspending the effectiveness of the registration statement or any
order preventing or suspending the use of any preliminary or final
prospectus or the initiation or threatening of any proceedings for such
purposes, (iv) if, at any time, the representations and warranties of
the Company contemplated by paragraph (t) below cease to be true and
correct in all material respects and (v) of the receipt by the Company
of any notification with respect to the suspension of the qualification
of the shares of Common Stock for offering or sale in any jurisdiction
or the initiation or threatening of any proceedings for such purpose.
(q) The Company will use reasonable best efforts to prevent or
obtain the withdrawal of any stop order or other order suspending the
use of any preliminary or final prospectus or suspending any
qualification of the shares of Common Stock at the earliest possible
time.
(r) The Company will, if reasonably requested by the managing
underwriter or underwriters or a Holder of shares of Common Stock being
sold in connection with an underwritten offering, promptly incorporate
in a prospectus supplement or post-effective amendment such information
as the managing underwriter or underwriters and the Holders of a
majority of the shares of Common Stock being sold agree should be
included therein relating to the plan of distribution with respect to
such shares of Common Stock, including, without limitation, information
with respect to the number of shares of Common Stock being sold to, and
the purchase price being paid therefor by, such underwriter or
underwriters and with respect to any other terms of the underwritten
(or best efforts underwritten) offering of the shares of Common Stock
to be sold in such offering; and make all required filings of such
prospectus supplement or post-effective
<PAGE>
42
amendment as soon as reasonably practicable after being notified of the
matters to be incorporated in such prospectus supplement or
post-effective amendment.
(s) The Company will cooperate with the Holders of shares of
Common Stock and the managing underwriter, underwriters or agent, if
any, to facilitate the timely preparation and delivery of certificates
representing shares of Common Stock to be sold and not bearing any
restrictive legends; and enable such shares of Common Stock to be in
such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale
of shares of Common Stock to the underwriters.
(t) The Company will make such representations and warranties
to the Holders of shares of Common Stock being registered, and the
underwriters or agents, if any, in form, substance and scope as are
customarily made by issuers in secondary underwritten public offerings.
(u) The Company will obtain for delivery to the Holders of
shares of Common Stock being registered and to the underwriter,
underwriters or agent, if any, an opinion or opinions from counsel for
the Company dated the effective date of the registration statement and,
in the event of an underwritten offering, brought down to the date of
execution of the underwriting agreement (if different from such
effective date) and to the closing under the underwriting agreement, in
customary form, scope and substance, which counsel and opinions shall
be reasonably satisfactory to such Holders, underwriters or agents and
their respective counsel.
(v) The Company will cooperate with each seller of shares of
Common Stock and each underwriter or agent, if any, participating in
the disposition of such shares of Common Stock and their respective
counsel in connection with any filings required to be made with the
NASD.
(w) The Company will use its reasonable best efforts to comply
with all applicable rules and regulations of the SEC and make generally
available to its security holders, as soon as reasonably practicable
(but not more than fifteen months) after the effective date of the
registration statement, an earnings statement satisfying the provisions
of Section 11(a) of the Securities Act and the rules and regulations
promulgated thereunder.
(x) The Company will provide and cause to be maintained a
transfer agent and registrar for all shares of Common Stock covered by
such registration statement from and after a date not later than the
effective date of such registration statement.
(y) The Company will cause all shares of Common Stock covered
by the registration statement to be listed on each securities exchange
on which any of the Company's securities are then listed or quoted and
on each inter-dealer quotation system on which any of the Company's
securities are then quoted.
<PAGE>
43
(z) The Company will cause the senior executive officers of
the Company to participate in the customary "road show" presentations
that may be reasonably requested by the Holders or the managing
underwriter in any underwritten offering and otherwise to facilitate,
cooperate with, and participate in each proposed offering contemplated
herein and customary selling efforts related thereto.
(aa) Holders may seek to register different classes of Common
Stock simultaneously and the Company shall use its reasonable best
efforts to effect such registration and sale in accordance with the
intended method or methods of disposition specified by such Holders.
3.10 Indemnification. (a) Indemnification by the Company. In the event
of any registration of any securities of the Company under the Securities Act
pursuant to Section 3.7 or 3.8, the Company hereby indemnifies and agrees to
hold harmless, to the full extent permitted by law, each party hereto who is a
holder ("Holder") of securities ("Registrable Securities") covered by such
registration statement, each Affiliate of such Holder and their respective
directors, officers, employees, advisors and agents or general and limited
partners (and the directors, officers, affiliates and controlling Persons
thereof), each other Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who controls such
Holder or any such underwriter within the meaning of the Securities Act
(collectively, the "Indemnified Parties"), against any and all losses, claims,
damages or liabilities (or actions or proceedings in respect thereof, whether or
not such Indemnified Party is a party thereto) (each a "Loss" and collectively
"Losses"), joint or several, and expenses to which such Indemnified Party may
become subject under the Securities Act, common law or otherwise, insofar as
such losses, claims, damages or liabilities that arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto or any
document incorporated by reference thereto, or (ii) any omission or alleged
omission to state therein (in the case of a prospectus or preliminary
prospectus, in light of the circumstances under which they were made) a material
fact required to be stated therein or necessary to make the statements therein
(in the case of a prospectus or preliminary prospectus, in light of the
circumstances under which they were made) not misleading and the Company will
reimburse such Indemnified Party for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such Loss;
provided, that the Company will not be liable to any Indemnified Party in any
such case to the extent that any such Loss arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, in any such preliminary, final or summary
prospectus, or any amendment or supplement thereto in reliance upon and in
conformity with written information with respect to such Indemnified Party
furnished to the Company by such Indemnified Party for use in the preparation
thereof; and provided, further, that the Company will not be liable to any
Person who participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter within the
meaning of the Securities Act, under the indemnity agreement in this Section
3.10(a) with respect to any preliminary prospectus or the final prospectus or
the final prospectus as amended or supplemented, as the case may be,
<PAGE>
44
to the extent that any such loss, claim, damage or liability of such underwriter
or controlling Person results from the fact that such underwriter sold
Registrable Securities to a person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
or of the final prospectus as then amended or supplemented, whichever is most
recent, if the Company has previously furnished copies thereof to such
underwriter. Such indemnity will remain in full force and effect regardless of
any investigation made by or on behalf of such Holder or any Indemnified Party
and will survive the transfer of such securities by such Holder.
(b) Indemnification by the Holders and Underwriters. In the
event of registration of any securities of the Company under the
Securities Act pursuant to Sections 3.7 or 3.8 hereof, the Company may
require that each selling Holder of Registrable Securities agrees
(severally and not jointly) to indemnify and hold harmless, to the full
extent permitted by law, the Company, its directors and officers and
each Person who controls the Company (within the meaning of the
Securities Act and the Exchange Act) from and against any Losses
resulting from any untrue statement of a material fact or any omission
of a material fact required to be stated in the registration statement
under which such Registrable Securities were registered under the
Securities Act (including any final, preliminary or summary prospectus
contained therein or any amendment thereof or supplement thereto or any
documents incorporated by reference therein), or necessary to make the
statements therein (in the case of a prospectus or preliminary
prospectus, in light of the circumstances under which they were made)
not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information furnished in
writing by such selling Holder to the Company specifically for
inclusion in such registration statement and has not been corrected in
a subsequent writing prior to or concurrently with the sale of the
Registrable Securities to the Person asserting such Loss. In no event
shall the liability of any selling Holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the proceeds
received by such Holder under the sale of the Registrable Securities
giving rise to such indemnification obligation. Such indemnity will
remain in full force and effect regardless of any investigation made by
or on behalf of the Company or any of the Holders, or any of their
respective affiliates, directors, officers or controlling Persons and
will survive the transfer of such securities by such Holder.
(c) Notices of Claims, Etc. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of
any action or proceeding with respect to which a claim for
indemnification may be made pursuant to this Section 3.10, such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, that the failure of the
indemnified party to give notice as provided herein will not relieve
the indemnifying party of its obligations under Sections 3.10(a) or
3.10(b), except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such
claim, the
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45
indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other
than reasonable costs of investigation. If, in such indemnified party's
reasonable judgment, (i) having common counsel would result in a
conflict of interest between the interests of such indemnified and
indemnifying parties, (ii) the indemnifying party shall have failed to
assume the defense of such claim within a reasonable time after receipt
of notice of such claim from the indemnified party, or (iii) the
indemnified party has reasonably concluded (based on advice of counsel)
that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to
the indemnifying party, then such indemnified party may employ separate
counsel reasonably acceptable to the indemnifying party to represent or
defend such indemnified party in such action, it being understood,
however, that the indemnifying party will not be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys at any time for all such indemnified parties (and not more
than one separate firm of local counsel at any time for all such
indemnified parties) in such action. No indemnifying party will consent
to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect of such claim or litigation.
(d) Other Indemnification. Indemnification similar to that
specified in this Section 3.10 (with appropriate modifications) will be
given by the Company and each Holder of Registrable Securities with
respect to any required registration or other qualification of
securities under any federal or state law or regulation or governmental
authority other than the Securities Act.
(e) The indemnification required by this Section 3.10 shall be
made by periodic payments of the amount thereof during the course of
the investigation or defense, promptly as and when bills are received
or Losses are incurred.
(f) Contribution. If recovery is not available under the
foregoing indemnification provisions of this Section 3.10 for any
reason other than as expressly specified therein, the parties entitled
to indemnification by the terms thereof will be entitled to
contribution to liabilities and expenses except to the extent that
contribution is not permitted under Section 11(f) of the Securities
Act. In determining the amount of contribution to which the respective
parties are entitled, there will be considered the relative benefits
received by each party from the offering of the Registrable Securities
(taking into account the portion of the proceeds realized by each), the
parties' relative knowledge and access to information concerning the
matter with respect to which the claim was asserted, the opportunity to
correct and prevent any misstatement or omission and any other
equitable considerations appropriate under the circumstances.
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46
Notwithstanding anything in this Section 3.10(f) to the contrary, no
indemnifying party (other than the Company) shall be required pursuant
to this Section 3.l0(f) to contribute any amount in excess of the
amount by which the net proceeds received by such indemnifying party
from the sale of Registrable Securities in the offering to which the
Losses of the indemnified parties relate exceeds the amount of any
damages which such indemnifying party has otherwise been required to
pay by reason of such untrue statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant
to this Section 3.10(f) were determined by pro rata allocation or by
any other method of allocation that does not take account of the
equitable considerations previously referred.
(g) Non-Exclusivity. The obligations of the parties under this
Section 3.10 will be in addition to any liability which any party may
otherwise have to any other party.
3.11 Preemptive Rights. In the event that the Company engages in an
Initial Public Offering pursuant to which it issues Common Stock to the public
from the IPO Equity Basket, (a) the USX Investors will have the right, upon
irrevocable written notice to the Company not less than ten (10) Business Days
after receipt of written notice from the Company of its intention to file the
initial registration statement in connection with such Initial Public Offering,
to purchase in the aggregate in such Initial Public Offering (on the same terms
and conditions applicable to public investors purchasing a like number of shares
in such offering, and subject to the consummation of such offering) that number
of shares of Common Stock equal to the product of (i) the total number of shares
of Common Stock issued by the Company in such Initial Public Offering,
multiplied by (ii) a fraction the numerator of which is the number of shares of
Common Stock owned by the USX Investors in the aggregate on a fully diluted
basis immediately prior to the Company's receipt of such written notice and the
denominator of which is the total number of shares of Common Stock outstanding
on a fully diluted basis immediately prior to the Company's receipt of such
written notice, and (b) the Kobe Investors will have the right, upon irrevocable
written notice to the Company not less than ten (10) Business Days after receipt
of written notice from the Company of its intention to file the initial
registration statement filed by the Company in connection with such Initial
Public Offering, to purchase in the aggregate in such Initial Public Offering
(on the same terms and conditions applicable to public investors purchasing a
like number of shares in such offering, and subject to the consummation of such
offering) that number of shares of Common Stock equal to the product of (i) the
total number of shares of Common Stock issued by the Company in such Initial
Public Offering, multiplied by (ii) a fraction the numerator of which is the
number of shares of Common Stock owned by the Kobe Investors in the aggregate on
a fully diluted basis immediately prior to the Company's receipt of such written
notice and the denominator of which is the total number of shares of Common
Stock outstanding on a fully diluted basis immediately prior to the Company's
receipt of such written notice. Any shares of Common Stock to be purchased by
the USX Investors or the Kobe Investors in an Initial Public Offering pursuant
to their rights under this Section 3.11 will not count against the IPO Equity
Basket (and the number of shares of Common Stock that the Company may issue in
such Initial Public Offering without the favorable vote of a USX Director
designated by USX RTI Holdings and a Kobe Director designated by Kobe RTI
Holdings therefore will be increased by such number of shares of Common Stock).
<PAGE>
47
SECTION 4
USX AND KOBE EXCHANGE EVENTS; RTI HOLDINGS UNIT ADJUSTMENTS
4.1 USX Exchange Events and Kobe Exchange Events. (a) USX agrees that,
from the date of its formation through the consummation of a USX Exchange Event,
USX RTI Holdings will remain in existence and be in good standing and will
engage in no activities and contain no assets or liabilities, other than the
holding of RTI Holdings Common Units, Transfers of RTI Holdings Common Units
expressly permitted hereby and the incurrence of indebtedness owed to USX or its
Affiliates; provided, however, that USX agrees that, prior to the consummation
of a USX Exchange Event, USX RTI Holdings will repay in full (or otherwise be
relieved of) all indebtedness, and at the time of the consummation of such USX
Exchange Event will have no liabilities or obligations relating thereto. Kobe
agrees that, from the date of its formation through the consummation of a Kobe
Exchange Event, Kobe RTI Holdings will remain in existence and be in good
standing and will engage in no activities and contain no assets or liabilities,
other than the holding of RTI Holdings Common Units, Transfers of RTI Holdings
Common Units expressly permitted hereby and the incurrence of indebtedness owed
to Kobe Delaware or its Affiliates; provided, however, that Kobe agrees that,
prior to the consummation of a Kobe Exchange Event, Kobe RTI Holdings will repay
in full (or otherwise be relieved of) all indebtedness, and at the time of the
consummation of such Kobe Exchange Event will have no liabilities or obligations
relating thereto. The Company agrees that, through the consummation of a USX
Exchange Event, it will keep available a sufficient amount of authorized Class D
Common Stock to effect a USX Exchange Event (including the issuance of
Antidilution Warrants in connection therewith and the exercise thereof), and
through the consummation of a Kobe Exchange Event, it will keep available a
sufficient amount of authorized Class D Common Stock to effect a Kobe Exchange
Event (including the issuance of Antidilution Warrants in connection therewith
and the exercise thereof).
(b) At any time after the date hereof:
(i) USX RTI Holdings will have the unconditional
and absolute right to exchange (pursuant to an Exchange Merger
as described in paragraph (c) below, subject to the
establishment of another exchange mechanism pursuant to
Section 4.1(e) below) all, but not less than all, of the RTI
Holdings Common Units then owned by it for shares of Class D
Common Stock of the Company and Antidilution Warrants (if
applicable) (the "USX Exchange Right"); and
(ii) Kobe RTI Holdings will have the unconditional
and absolute right to exchange (pursuant to an Exchange Merger
as described in paragraph (c) below, subject to the
establishment of another exchange mechanism pursuant to
Section 4.1(e) below) all, but not less than all, of the RTI
Holdings Common Units then owned by it for shares of Class D
Common Stock of the Company and Antidilution Warrants (if
applicable) (the "Kobe Exchange Right").
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48
The USX Exchange Right or Kobe Exchange Right shall be exercised by USX
or Kobe, as applicable, by giving irrevocable written notice thereof of
its election to make such exchange to the Company and to BCPII (the
"Exchange Notice") setting forth the percentage of outstanding RTI
Holdings Common Units then owned by USX RTI Holdings or Kobe RTI
Holdings, as applicable.
(c) Within five (5) Business Days following the Company's
receipt of an Exchange Notice (or within ten (10) Business Days, if
such Exchange Notice includes a proposed alternate exchange mechanism
as described in paragraph (e) below) from:
(i) USX RTI Holdings, the Company, USX, each
Subsidiary of USX that is a direct or indirect parent of USX
RTI Holdings (if any) and USX RTI Holdings will enter into an
Exchange Merger Agreement pursuant to which, in accordance
with the terms thereof and subject to the conditions contained
therein, USX RTI Holdings will be merged with and into the
Company with the Company surviving (subject to the
establishment of a different exchange mechanism pursuant to
Section 4.1(e) below) and USX (or its applicable Subsidiary)
receiving in consideration thereof (A) that number of shares
of Class D Common Stock of the Company equal to the product of
(I) the number of shares of Primary Common Stock issued and
outstanding immediately prior to the consummation of such
merger, multiplied by (II) a fraction the numerator of which
is 1 and the denominator of which is the percentage (expressed
as a decimal) of the total outstanding RTI Holdings Common
Units owned by the Company and its Subsidiaries immediately
prior to the consummation of such merger, multiplied by (III)
the percentage (expressed as a decimal) of the total issued
and outstanding RTI Holdings Common Units owned by USX RTI
Holdings immediately prior to the consummation of such merger,
and (B) that number of Antidilution Warrants equal to the
product of (I) the total number of then-unissued Antidilution
Warrants (as provided for in the definition thereof),
multiplied by (II) a fraction the numerator of which is the
number of RTI Holdings Common Units owned by USX RTI Holdings
immediately prior to the consummation of such merger and the
denominator of which is the number of RTI Holdings Common
Units owned by USX RTI Holdings and Kobe RTI Holdings in the
aggregate immediately prior to the consummation of such
merger; or
(ii) Kobe RTI Holdings, the Company, Kobe Delaware,
each Subsidiary of Kobe Delaware that is a direct or indirect
parent of Kobe RTI Holdings (if any) and Kobe RTI Holdings
will enter into an Exchange Merger Agreement pursuant to
which, in accordance with the terms thereof and subject to the
conditions contained therein, Kobe RTI Holdings will be merged
with and into the Company with the Company surviving (subject
to the establishment of a different exchange mechanism
pursuant to Section 4.1(e) below) and Kobe Delaware (or its
applicable Subsidiary) receiving in consideration thereof (A)
that number of shares of Class D Common Stock of the Company
equal to the product of (I) the number of shares of Primary
Common Stock issued and outstanding immediately
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49
prior to the consummation of such merger, multiplied by (II) a
fraction the numerator of which is 1 and the denominator of
which is the percentage (expressed as a decimal) of the total
issued and outstanding RTI Holdings Common Units owned by the
Company and its Subsidiaries immediately prior to the
consummation of such merger, multiplied by (III) the
percentage (expressed as a decimal) of the total issued and
outstanding RTI Holdings Common Units owned by Kobe RTI
Holdings immediately prior to the consummation of such merger,
and (B) that number of Antidilution Warrants equal to the
product of (I) the total number of then-unissued Antidilution
Warrants (as provided for in the definition thereof),
multiplied by (II) a fraction the numerator of which is the
number of RTI Holdings Common Units owned by Kobe RTI Holdings
immediately prior to the consummation of such merger and the
denominator of which is the number of RTI Holdings Common
Units owned by USX RTI Holdings and Kobe RTI Holdings in the
aggregate immediately prior to the consummation of such merger
(either such merger (or other exchange mechanism established pursuant
to Section 4.1(e) below), an "Exchange Merger", and the consideration
to be received by USX or Kobe Delaware (or its applicable Subsidiary),
as applicable, in connection therewith in accordance with this
paragraph (c), the "Exchange Merger Consideration").
(d) Upon written notice to USX and Kobe Delaware not less than
twenty (20) Business Days prior to consummation of an Initial Public
Offering, the Blackstone Investors will have the right to require:
(i) USX RTI Holdings to exercise, and upon receipt
of such notice USX RTI Holdings automatically will be deemed
to have exercised, the USX Exchange Right (if not previously
exercised) pursuant to an Exchange Merger (or such other
exchange mechanism established pursuant to Section 4.1(e)
below); and
(ii) Kobe RTI Holdings to exercise, and upon
receipt of such notice Kobe RTI Holdings automatically will be
deemed to have exercised, the Kobe Exchange Right (if not
previously exercised) pursuant to an Exchange Merger (or such
other exchange mechanism established pursuant to Section
4.1(e) below),
in each case in connection with (and subject to the consummation of)
such Initial Public Offering with the Exchange Merger (or such other
exchange mechanism established pursuant to Section 4.1(e) below)
resulting from each such exercise to be consummated simultaneously with
the consummation of such Initial Public Offering.
(e) In the event that USX RTI Holdings exercises the USX
Exchange Right or Kobe RTI Holdings exercises the Kobe Exchange Right,
and in connection with such exercise USX RTI Holdings or Kobe RTI
Holdings, as applicable, irrevocably offers in its Exchange Notice to
effect such exchange pursuant to a proposed exchange mechanism other
than that described in Section 4.1(c) hereof (including in such
Exchange Notice all
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50
of the terms of such mechanism), then such exchange will be effected
pursuant to such proposed mechanism (in lieu of the merger mechanism
described in Section 4.1(c) hereof) if the Company and BCPII consent in
writing thereto within five (5) Business Days following their receipt
of such Exchange Notice, which consent shall not be unreasonably
withheld (subject to the following proviso); provided that, if the USX
Exchange Right or Kobe Exchange Rights, as applicable, has been
exercised in connection with (i) an Initial Public Offering, (ii) a
Transfer to the Blackstone Investors (or their designee) pursuant to a
First Offer, (iii) a Transfer as a Tagging Equityholder or (iv) a
Transfer pursuant to Section 3.6 hereof, the consent of the Company and
BCPII to any proposed alternative exchange mechanism included in such
Exchange Notice may be withheld in their sole discretion; and provided,
further, that if the Company and BCPII do not consent to a proposed
alternative exchange mechanism included in an Exchange Notice, the
Exchange Merger resulting from such exercise of the USX Exchange Right
or Kobe Exchange Right, as applicable, shall be effected pursuant to
the merger mechanism described in Section 4.1(c) hereof (and the
parties described in Section 4.1(c) hereof shall enter into an Exchange
Merger Agreement within ten (10) Business Days following the Company's
receipt of such Exchange Notice).
4.2 RTI Holdings Unit Adjustments Upon Issuances of Common Stock. (a)
Following consummation of the Contemplated Transactions (and excluding issuances
of Common Stock in connection with such consummation), for so long as any RTI
Holdings Common Units are owned by USX RTI Holdings or Kobe RTI Holdings, (i)
all options, warrants, convertible securities and other rights to acquire Common
Stock (other than the BarTech 1996 Warrants) will be deemed jointly issued by
(and will be deemed joint and several obligations of) the Company and RTI
Holdings and (ii) each time shares of Common Stock are issued by the Company
(whether pursuant to the exercise of options warrants or other rights, the
conversion of convertible securities or otherwise, but excluding issuances
pursuant to the exercise of BarTech 1996 Warrants) (A) all of such shares of
Common Stock first will be contributed (or, solely in the case of shares to be
issued by the Company upon the exercise of BarTech Financing Warrants, 65.4279%
of such shares will be contributed, and only such contributed shares will be
deemed shares being issued for purposes of the adjustments described in this
Section 4.2) by the Company to the capital of RTI Holdings (resulting in an
increase to the RTI Holdings capital account of the Company equal to the fair
market value of such stock pursuant to Section 5.1 of the RTI Holdings LLC
Agreement) and then promptly will be delivered by RTI Holdings to the acquiror
of such shares of Common Stock (with RTI Holdings receiving any consideration
paid by such acquiror in connection with the acquisition of such contributed
shares of Common Stock) and (B) simultaneously with the contribution of such
shares of Common Stock to the capital of RTI Holdings, the percentage of the
total outstanding RTI Holdings Common Units owned by the Company immediately
prior to such contribution of shares of Common Stock to the capital of RTI
Holdings will be increased as described in paragraph (b) below to reflect the
effect of such issuance of Common Stock of the Company on the Equityholders'
respective equity interests in RTI Holdings (any such issuance of Common Stock,
a "RTI Holdings Unit Adjustment Event").
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51
(b) Upon the occurrence of a RTI Holdings Unit Adjustment
Event, the percentage of the total outstanding RTI Holdings Common
Units owned by the Company immediately prior to such RTI Holdings Unit
Adjustment Event will be increased (through automatic issuance of new
RTI Holdings Common Units by RTI Holdings without any action being
required on the part of any Equityholder) such that, immediately
following such increase of the Company's ownership of RTI Holdings
Common Units, USX RTI Holdings and Kobe RTI Holdings in the aggregate
own that percentage of the total outstanding RTI Holdings Common Units
equal to the product of (i) the percentage (expressed as a decimal) of
the total outstanding RTI Holdings Common Units owned by USX RTI
Holdings and Kobe RTI Holdings in the aggregate immediately prior to
such RTI Holdings Unit Adjustment Event, multiplied by (ii) 1 minus a
fraction the numerator of which is the number of shares of Common Stock
issued by the Company (through contribution to RTI Holdings) in
connection with such RTI Holdings Unit Adjustment Event and the
denominator of which is the total number of shares of Common Stock of
the Company outstanding on a fully diluted basis immediately following
such issuance (including any shares issued by the Company directly
without first being contributed to RTI Holdings, in the case of an
issuance resulting from the exercise of BarTech Financing Warrants).
SECTION 5
OTHER
5.1 Additional Securities Subject to Agreement. Each Equityholder
agrees that any other shares of Common Stock, and any options, warrants or other
rights to obtain Common Stock or other securities convertible into Common Stock,
which it hereafter acquires by means of a stock split, stock dividend,
distribution, exercise of options or warrants or otherwise will be subject to
the provisions of this Agreement to the same extent as if held on the date
hereof.
5.2 Termination. This Agreement will terminate upon the written
agreement of all of the parties hereto, and otherwise (i) will terminate with
respect to a particular Equityholder (except as provided in the following
proviso) on the date that such Equityholder no longer owns any shares of Common
Stock, options, warrants or other rights to obtain Common Stock, other
securities convertible into Common Stock or RTI Holdings Units and (ii) will
terminate in its entirety with respect to all of the parties hereto (except as
provided in the following proviso) upon the consummation of an Initial Public
Offering; provided, that (a) the provisions of Section 2.1 will survive with
respect to a particular Equityholder for so long as such Equityholder has
director designation rights pursuant to the terms thereof, (b) the provisions of
Section 2.2 will survive with respect to the consent rights of USX and a USX
Director designated by USX RTI Holdings (provided that USX RTI Holdings
continues to be entitled to designate at least one USX Director pursuant to
Section 2.1) and with respect to the consent rights of Kobe and a Kobe Director
designated by Kobe RTI Holdings (provided that Kobe RTI Holdings continues to be
entitled to appoint at least one Kobe Director pursuant to Section 2.1) until
the third anniversary of an Initial Public Offering, (c) the provisions of
Sections 3.1, 3.2, 3.4 and 3.6 will survive with
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52
respect to all Equityholders until such time as the Blackstone Investors do not
collectively own in the aggregate at least 15% of the Common Stock then
outstanding on a fully diluted basis, (d) the provisions of Section 3.5 will
survive with respect to all Equityholders until such time as the Blackstone
Investors or the Veritas Investors, as applicable, do not collectively own in
the aggregate a greater number of shares of Common Stock outstanding on a fully
diluted basis than are owned by whichever of the following groups then owns the
fewest number of shares of Common Stock in the aggregate on a fully diluted
basis: (i) the USX Investors, (ii) the Kobe Investors, (iii) the Veritas
Investors (solely with respect to the obligations of the Blackstone Investors
thereunder), (iv) the Blackstone Investors (solely with respect to the
obligations of the Veritas Investors thereunder), (v) the Sumitomo Investors,
(vi) the FirstEnergy Investors, (vii) the Triumph Investors, (viii) the First
Dominion Investors or (ix) the TCW Investors, (e) the provisions of Sections
3.7, 3.8, 3.9, 5.1, 5.2, 5.3, 5.5, 5.6, 5.7, 5.8, 5.9, 5.10, 5.11 and 5.12 will
survive with respect to the Company and a particular Equityholder until such
time as such Equityholder no longer owns any shares of Common Stock, options
warrants or other rights to obtain Common Stock, other securities convertible
into Common Stock or RTI Holdings Units, (f) the provisions of Sections 3.3 and
3.10 will not terminate and (g) the provisions of Sections 4.1 and 4.2 will
survive with respect to all Equityholders until such time as both a USX Exchange
Event and a Kobe Exchange Event have been consummated.
5.3 Injunctive Relief. The Equityholders acknowledge and agree that a
violation of any of the terms of this Agreement will cause the Equityholders
irreparable injury for which adequate remedy at law is not available.
Accordingly, it is agreed that each Equityholder will be entitled to an
injunction, restraining order or other equitable relief to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction, in addition to any
other remedy to which they may be entitled at law or equity.
5.4 Other Equityholders Agreements. None of the Equityholders (other
than the Company and its Subsidiaries) will enter into any other equityholders
agreement or other arrangement of any kind with any Person with respect to
shares of Common Stock, securities convertible into or exercisable or
exchangeable for Common Stock or RTI Holdings Units including any registration
rights related thereto (other than the Common Stock Registration Rights
Agreement, dated as of September 9, 1997, with Chase Securities Inc. and other
than the other Transaction Documents), and none of the Equityholders has
previously entered into such an agreement that remains in full force and effect
as of the date hereof and which is inconsistent with the provisions of this
Agreement or which may impair its ability to comply with this Agreement (other
than to the extent disclosed in the Master Restructuring Agreement, if any).
5.5 Amendments. This Agreement may be amended only by a written
instrument signed by (i) each of the Blackstone Investors, so long as such
Blackstone Investor (or any Affiliate of such Blackstone Investor) beneficially
owns, directly or through the Partnerships, Common Stock, and (ii) each of the
Company, Veritas Capital, USX RTI Holdings and Kobe RTI Holdings; provided that
each of the Company, Veritas Capital, USX RTI Holdings and Kobe RTI Holdings
shall be required to sign any amendment to this Agreement proposed by a
Blackstone Investor (and thereby consent thereto) unless such amendment
materially adversely
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53
affects the Company, the Veritas Investors, the USX Investors or the Kobe
Investors, respectively, or imposes an additional material obligation on the
Company, the Veritas Investors, the USX Investors or the Kobe Investors,
respectively (it being understood by the parties that the expansion of the Board
to create additional director positions and the granting of additional director
designation rights hereunder will not be considered materially adverse to any
party for purposes of this Section 5.5); and provided, further, that each of the
Company, Veritas Capital, USX RTI Holdings and Kobe RTI Holdings shall be
provided with a copy of any amendment to this Agreement proposed by a Blackstone
Investor at least fifteen (15) Business Days prior to its execution so that it
may provide its written consent thereto in accordance with this Section 5.5 (and
shall be required to provide such written consent within such fifteen (15)
Business Day period except to the extent otherwise set forth in the preceding
proviso); and provided, further, that each of the Company, Veritas Capital, USX
RTI Holdings and Kobe RTI Holdings shall be deemed to have provided its written
consent to any amendment to this Agreement proposed by a Blackstone Investor on
the sixteenth day following it having been provided with a copy thereof pursuant
to the preceding proviso unless it shall have delivered its written objection to
such amendment to the Blackstone Investors prior to such sixteenth day
describing in reasonable detail the basis for its conclusion that such amendment
materially adversely affects it or its Affiliates or imposes an additional
material burden on it or its Affiliates; and provided, further, that, in the
event an amendment to this Agreement materially adversely affects a Sumitomo
Investor, FirstEnergy Investor, Triumph Investor, First Dominion Investor, TCW
Investor or Management Stockholder, such investor's consent to such amendment
shall be required.
5.6 Successors, Assigns and Transferees. The provisions of this
Agreement will be binding upon and will inure to the benefit of the parties
hereto and their respective successors and transferees permitted hereunder
(except for transferees that are transferred Common Stock pursuant to a Public
Offering or a transaction pursuant to Rule 144 under the Securities Act, or
pursuant to Section 3.6), each of which will agree in a writing reasonably
satisfactory in form and substance to the Company to become a party hereto and
be bound to the same extent hereby as the transferor that has transferred the
Common Stock or RTI Holdings Units to such transferees; provided, that if an
Equityholder transfers a portion of its or his Common Stock, options, warrants
or other rights to obtain Common Stock, other securities convertible into Common
Stock or RTI Holdings Units to a transferee which is entitled to rights of the
transferor hereunder, then such transferee(s) of such transferor will exercise
such rights as a single group with that transferor and its Affiliates.
5.7 Notices. Any notices or other communications required or permitted
hereunder will be sufficiently given if delivered personally or sent by
telecopier, Federal Express or other overnight courier, addressed as follows or
to such other address of which the parties may have given notice:
<PAGE>
54
To any of the Blackstone Investors:
c/o The Blackstone Group
345 Park Avenue
New York, New York 10017
Attention: Robert L. Friedman
Telecopy: (212) 935-2626
Telephone: (212) 754-8712
E-mail: [email protected]
With copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Wilson S. Neely
Telecopy: (212) 455-2502
Telephone: (212) 455-2000
E-mail: [email protected]
To the Partnerships or any of the Veritas Investors:
The Veritas Capital Fund, L.P.
660 Madison Avenue
New York, New York 10021
Attention: Robert B. McKeon
Telecopy: (212) 688-9411
Telephone: (212) 688-0020
With copies to:
Whitman, Breed, Abbott & Morgan
200 Park Avenue
New York, New York 10166
Attention: Benjamin Polk
Telecopy: (212) 351-3131
Telephone: (212) 351-3000
E-mail: [email protected]
<PAGE>
55
To the USX Investors:
USX Corporation
600 Grant Street
Pittsburgh, PA 15219-4776
Attention: A.E. Ferrara, Jr.
Telecopy: (412) 433-1176
Telephone: (412) 433-1178
E-mail: [email protected]
To the Kobe Investors:
Kobe Steel, Ltd.
10-26 Wakinohamach 2-Chome
Chuo-ku, Kobe, Hyugo 651-0072
Attention: Shinsuke Asai
Telecopy: 011-81-78-261-5444
Telephone: 011-81-78-261-5605
E-mail: [email protected]
With copies to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: Jeffrey Lewis
Telecopy: (212) 225-3999
Telephone: (212) 225-2000
E-mail: [email protected]
To Management Stockholders:
(name of Management Stockholder)
c/o Republic Technologies International, Inc.
3770 Embassy Parkway
Akron, Ohio 44333-8367
Attention: Thomas Tyrrell
Telecopy: (330) 670-3000
Telephone: (330) 670-7000
E-mail: [email protected]
<PAGE>
56
To the Company:
Republic Technologies International, Inc.
3770 Embassy Parkway
Akron, Ohio 44333-8367
Attention: Thomas Tyrrell
Telecopy: (330) 670-3000
Telephone: (330) 670-7000
E-mail: [email protected]
To the FirstEnergy Investors:
First Energy Services Corp.
16th Floor
76 South Main Street
Akron, Ohio 44308
Attention: Mark Clark
Telecopy: (330) 384-4988
Telephone: (330) 384-5817
E-mail: [email protected]
and
First Energy Services Corp.
18th Floor
76 South Main Street
Akron, Ohio 44308
Attention: David L. Feltner, Esq.
Telecopy: (330) 384-53875
Telephone: (330) 384-5778
E-mail: [email protected]
To the Sumitomo Investors:
Sumitomo Corporation of America
600 Third Avenue
New York, NY 10016-2001
Attention: Kotaro Nakata
Telecopy: (212) 207-0621
Telephone: (212) 207-0570
E-mail: [email protected]
To the Triumph Investors:
Triumph Capital Investors II, L.P.
<PAGE>
57
TCI-II Investors, L.P.
50 California Street, Suite 3330
San Francisco, CA 95111
Telecopy:
Telephone:
E-mail:
To the First Dominion Investors:
First Dominion Capital L.L.C.
1330 Avenue of the Americas
New York, New York 10019
Telecopy:
Telephone:
E-mail:
To the TCW Investors:
TCW Leveraged Income Trust, L.P.
TCW Leveraged Income Trust II, L.P.
TCW Shared Opportunity Fund II, L.P.
Shared Opportunity Fund IIB, L.L.C.
Shared Opportunity Fund III, L.P.
11100 Santa Monica Boulevard
Suite 2000
Los Angeles, CA 90002
Attention: Alena Tabora
Telecopy: (310) 235-5966
Telephone: (310) 235-5956
Unless otherwise specified herein, such notices or other communications will be
deemed received (i) on the date delivered, if delivered personally or sent by
telecopier, and (ii) one business day after being sent by Federal Express or
other overnight courier.
5.8 Integration. This Agreement, the other Transaction Documents and
the documents referred to herein or therein, or delivered pursuant hereto or
thereto, contain the entire understanding of the parties with respect to the
subject matter hereof and thereof. There are no agreements, representations,
warranties, covenants or undertakings with respect to the subject matter hereof
and thereof other than those expressly set forth herein and therein. This
Agreement supersedes all other prior agreements and understandings between the
parties with respect to such subject matter.
5.9 Severability. If one or more of the provisions, paragraphs, words,
clauses, phrases or sentences contained herein, or the application thereof in
any circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and
<PAGE>
58
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof will not be in any way impaired, it
being intended that all rights, powers and privileges of the parties hereto will
be enforceable to the fullest extent permitted by law.
5.10 Counterparts. This Agreement may be executed in two or more
counterparts, and by different parties on separate counterparts each of which
will be deemed an original, but all of which will constitute one and the same
instrument.
5.11 Governing Law; Submission to Jurisdiction. This Agreement will be
construed in accordance with, and the rights of the parties will be governed by,
the laws of the State of New York. Each of the parties by its execution hereof
hereby (i) irrevocably submits to the jurisdiction of the federal and state
courts located in the Southern District of New York for the purpose of any suit,
action or other proceeding arising out of or based upon this Agreement or any
other agreement contemplated hereby or relating to the subject matter hereof or
thereof and (ii) waives to the extent not prohibited by applicable law, and
agrees not to assert by way of motion, as a defense or otherwise, that its
property is exempt or immune from attachment or execution, that any such
proceeding brought in one of the above-named courts is improper, or that any
right or remedy relating to this Agreement or any other agreement contemplated
hereby, or the subject matter hereof or thereof, may not be enforced in or by
such court. Each of the parties hereby consents to service of process in any
such proceeding in any manner permitted by the laws of the State of New York,
and agrees that service of process by registered or certified mail, return
receipt requested, at its address specified pursuant to Section 5.7 hereof is
reasonably calculated to give actual notice.
5.12 Miscellaneous. (a) The parties hereto will sign such further
documents, cause such meetings to be held, resolutions passed and bylaws
enacted, exercise their votes and do and perform and cause to be done such
further acts and things as may be necessary or desirable in order to give full
effect to this Agreement and every part thereof.
(b) Each director, officer, employee and consultant of the
Company and its Subsidiaries who now or in the future while this
Agreement remains in effect is granted or otherwise acquires Common
Stock or options, warrants or other rights to acquire Common Stock will
become an additional signatory hereto and a Management Stockholder
hereunder as a condition to such grant or acquisition (if from the
Company) or as soon as practicable thereafter (if otherwise acquired)
by signing a counterpart of this Agreement and delivering same to the
Company; provided, however, that the Former Management Members will not
be required to become parties to this Agreement unless the Company
otherwise determines (and in such event they agree to become parties
hereto).
<PAGE>
59
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
REPUBLIC TECHNOLOGIES INTERNATIONAL,
INC.
By: /s/ John B. George
-----------------------------------------
Name: John B. George
Title: Vice President of Finance,
Treasurer & Secretary
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
By: Blackstone Management Associates II
L.L.C., as General Partner
By: /s/ David A. Stockman
-----------------------------------------
Name: David A. Stockman
Title: Member
BLACKSTONE OFFSHORE CAPITAL
PARTNERS II L.P.
By: Blackstone Management Associates II
L.L.C., as General Partner
By: /s/ David A. Stockman
-----------------------------------------
Name: David A. Stockman
Title: Member
<PAGE>
60
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: Blackstone Management Associates II
L.L.C., as General Partner
By: /s/ David A. Stockman
-----------------------------------------
Name: David A. Stockman
Title: Member
BRW STEEL HOLDINGS, L.P.
By: BRW Partners, Inc., general partner
By: /s/ Robert B. McKeon
-----------------------------------------
Name: Robert B. McKeon
Title: President
By: Blackstone Capital Partners II Merchant
Banking Fund L.P., general partner
By: Blackstone Management
Associates II L.L.C., general
partner
By: /s/ David A. Stockman
------------------------------------
Name: David A. Stockman
Title: Member
<PAGE>
61
BRW STEEL OFFSHORE HOLDINGS, L.P.
By: BRW Partners, Inc., general partner
By: /s/ Robert B. McKeon
-----------------------------------------
Name: Robert B. McKeon
Title: President
By: Blackstone Management Associates II
L.L.C., a general partner
By: /s/ David A. Stockman
------------------------------------
Name: David A. Stockman
Title: Member
BRW STEEL HOLDINGS II, L.P.
By: BRW Partners L.L.C., its general
partner
By: /s/ Robert B. McKeon
------------------------------------
Name: Robert B. McKeon
Title: Member
VERITAS CAPITAL, L.L.C.
By: /s/ Robert B. McKeon
------------------------------------
Name: Robert B. McKeon
Title: Member
<PAGE>
62
THE VERITAS CAPITAL FUND, L.P.
By: Veritas Capital Management, L.L.C.,
general partner
By: /s/ Robert B. McKeon
------------------------------------
Name: Robert B. McKeon
Title: Member
KDJ, L.L.C.
By: /s/ Thomas J. Campbell
-----------------------------------------
Name: Thomas J. Campbell
Title: Member
RES HOLDING CORPORATION
By: /s/ David S. Blitzer
-----------------------------------------
Name: David S. Blitzer
Title: Secretary
REPUBLIC TECHNOLOGIES INTERNATIONAL
HOLDINGS, LLC
By: /s/ John B. George
-----------------------------------------
Name: John B. George
Title: Vice President of Finance,
Treasurer and Secretary
USX CORPORATION
By: /s/ A.E. Ferrara, Jr.
-----------------------------------------
Name: A.E. Ferrara, Jr.
Title: Vice President - Strategic Planning
<PAGE>
63
USX RTI HOLDINGS, INC.
By: /s/ R. M. Stanton
-----------------------------------------
Name: R. M. Stanton
Title: Vice President
KOBE STEEL, LTD.
By: /s/ Susumu Okushima
-----------------------------------------
Name: Susumu Okushima
Title:
KOBE DELAWARE INC.
By: /s/ Nobuyuki Kurosu
-----------------------------------------
Name: Nobuki Kurosu
Title: Secretary
KOBE RTI HOLDINGS, INC.
By: /s/ Susumu Okushima
-----------------------------------------
Name: Susumu Okushima
Title:
HVR HOLDINGS, L.L.C.
By: /s/ Andrew H. McQuarrie
-----------------------------------------
Name: Andrew H. McQuarrie
Title: Vice President
FIRSTENERGY SERVICES CORP.
By: /s/ Anthony J. Alexander
-----------------------------------------
Name: Anthony J. Alexander
Title: Exec. Vice Pres. & Gen. Counsel
<PAGE>
64
SUMITOMO CORPORATION OF AMERICA
By: /s/ Kotaro Nakata
--------------------------------------------
Name: Kotaro Nakata
Title: Vice President, Investment Management
FIRST DOMINION CAPITAL L.L.C.
By: /s/ Michael A. Monteleone
--------------------------------------------
Name: Michael A. Monteleone
Title: Managing Director
TRIUMPH CAPITAL INVESTORS II, L.P.
By: TCI-II Advisers, L.P., as general partner
By: TCI-II Advisers, Inc., as general partner
By: /s/ John M. Chapman
-----------------------------------------
Name: John M. Chapman
Title: Managing Director
TCI-II INVESTORS, L.P.
By: TCI-II Investors, Inc., as general partner
By: /s/ John M. Chapman
-----------------------------------------
Name: John M. Chapman
Title: Managing Director
<PAGE>
65
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Investment Management Company
as Investment Advisor
By: /s/ Melissa V. Weiler
-----------------------------------------
Name: Melissa V. Weiler
Title: Managing Director
By: TCW Advisors (Bermuda), Ltd., as
general partner
By: /s/ Mark D. Senkpiel
-----------------------------------------
Name: Mark D. Senkpiel
Title: Senior Vice President
TCW LEVERAGED INCOME TRUST II, L.P.
By: TCW Investment Management Company,
as Investment Advisor
By: /s/ Melissa V. Weiler
-----------------------------------------
Name: Melissa V. Weiler
Title: Managing Director
By: TCW (LINC II), L.P., as general partner
By: TCW Advisors (Bermuda), Ltd.,
as its general partner
By: /s/ Mark D. Senkpiel
-------------------------------------
Name: Mark D. Senkpiel
Title: Senior Vice President
<PAGE>
66
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW Investment Management Company,
as Investment Advisor
By: /s/ Melissa V. Weiler
-----------------------------------------
Name: Melissa V. Weiler
Title: Managing Director
By: /s/ Mark D. Senkpiel
-----------------------------------------
Name: Mark D. Senkpiel
Title: Senior Vice President
SHARED OPPORTUNITY FUND IIB, L.L.C.
By: TCW Asset Management Company, its
Investment Advisor
By: /s/ Melissa V. Weiler
-----------------------------------------
Name: Melissa V. Weiler
Title: Managing Director
By: /s/ Mark D. Senkpiel
-----------------------------------------
Name: Mark D. Senkpiel
Title: Senior Vice President
SHARED OPPORTUNITY FUND III, L.L.C.
By: TCW Asset Management Company, its
Investment Advisor
By: /s/ Melissa V. Weiler
-----------------------------------------
Name: Melissa V. Weiler
Title: Managing Director
By: /s/ Mark D. Senkpiel
-----------------------------------------
Name: Mark D. Senkpiel
Title: Senior Vice President
<PAGE>
MASTER ENERGY SERVICES AND SUPPLY AGREEMENT
(Republic Technologies International, LLC)
THIS MASTER ENERGY SERVICES AND SUPPLY AGREEMENT ("Agreement") is entered
into this day 13th of August, 1999, by and between FirstEnergy Services Corp.,
an Ohio corporation ("FirstEnergy"), and Republic Technologies International,
LLC, a Delaware limited liability company (the "Company").
RECITALS:
A. FirstEnergy (directly or though its affiliates) is an energy services
provider with extensive expertise in the provision of a broad range of energy
services and supply to a variety of users.
B. Company (directly or through its subsidiaries) is a producer of special
bar quality steel products with facilities in a variety of locations in the
United States (the "Company Facilities")
C. Company and FirstEnergy by this Agreement desire to enter into a long
term, mutually beneficial energy and energy services relationship, whereby
FirstEnergy will manage all of Company's supply and delivery of energy and
energy service requirements as described in Attachment A (the "Energy Supply and
Services").
D. In addition to this umbrella agreement, the parties contemplate a
series of subordinate agreements, which address individual opportunities/needs
on a site-by-site, project-by-project basis.
IN CONSIDERATION OF THE FOREGOING, and for other good and valuable
consideration in hand received, intending to be legally bound, the parties
hereto do hereby agree as follows:
1. Overview. The purpose of this Agreement is to form a business
relationship seeking competitive advantage through continuous improvement, to
enable the design and supply of Energy Supply and Services that offer
opportunities to significantly enhance financial and operating performance,
helping both parties achieve premier supplier status in their respective
markets. To the extent feasible, the parties shall seek to mutually align
incentives to optimize their efforts and returns. In advance of the rendering of
any Energy Supply and Services for which separate charges apply, the parties
shall execute written agreements.
1
<PAGE>
2. Term. This Agreement shall be effective for a period of five (5) years
from the date hereof. Thereafter, this Agreement shall renew automatically for
successive one (1)-year periods, unless either party gives written notice of
cancellation at least thirty (30) days before such renewal date.
a) Notwithstanding anything to the contrary contained herein, this
Agreement shall terminate:
i) At the option of the non-defaulting party, upon the material breach
of the terms of this Agreement followed by the failure of the
defaulting party to cure such breach within thirty (30) days
following written notice from the non-defaulting party. A breach of
a subordinate agreement between the parties of the type contemplated
hereby shall not constitute a breach of this Agreement. The
foregoing right of termination shall be in addition to such other
rights or remedies as may exist at law or in equity, all of which
are hereby reserved.
ii) The mutual written agreement of Company and FirstEnergy to terminate
this Agreement.
b) Upon termination of this Agreement pursuant to this section, the
obligations of each of the parties hereunder shall expire as of the effective
date of such termination.
3. Compensation. Where separate charges apply (as provided in Section 5
below and in Attachment A), prices and terms shall be agreed upon in advance of
any service (including through definitive subordinate agreement(s)). FirstEnergy
shall provide periodic reports to the Company setting forth the detail of
activity for the prior period to permit the Company to evaluate the
effectiveness of FirstEnergy's performance. FirstEnergy shall meet with the
Company to present the report and discuss its contents. In evaluating
FirstEnergy's performance, price competitiveness shall be determined by, among
other factors: a) comparing historical pricing, b) comparing to published
competitive price lists and/or independent cost guides, or c) developed by
independent, agreed-upon sources. FirstEnergy shall be required to demonstrate
only that the prices for the Energy Supply and Services are reasonable
(including prices where FirstEnergy is the provider), not that the prices are
the "lowest and best" prices, and shall be entitled to have its effectiveness on
behalf of the Company considered in the whole based on the entirety of its
performance hereunder.
4. Energy and Operational Efficiencies Projects and Shared Savings.
FirstEnergy and Company shall develop mutually acceptable project goals and
criteria for demand side management projects such as project cost constraints,
shared savings requirements, simple payback period goals, financing
requirements, forms of agreement, etc. FirstEnergy shall present
performance-based energy and operational efficiency projects, as appropriate, to
2
<PAGE>
Company. Each project shall be individually evaluated by Company, and as
appropriate, individually negotiated under the spirit of this Agreement.
5. Dedicated Resources. FirstEnergy shall provide customary and
traditional support for the Energy Supply and Services without separate charge,
unless otherwise noted in Attachment A. To the extent that services are required
beyond customary support, charges shall be negotiated based on the services
requested and the fees charged to third parties for comparable services.
6. Appointment. In furtherance of Company=s commitment to FirstEnergy,
Company hereby appoints FirstEnergy as the exclusive representative for the
procurement for Company Facilities of the Energy Supply and Services for the
term of this Agreement. FirstEnergy hereby accepts said appointment on the terms
and conditions set forth in this Agreement. This appointment shall constitute a
grant of exclusive representation of Company for the procurement of the Energy
Supply and Services, and Company shall not permit the Energy Supply and Services
to be procured, in whole or in part, by itself or any other entity other than
through FirstEnergy during the term of this Agreement, subject to applicable
utilities laws and existing contractual obligations. The terms of this
engagement shall apply to Company Facilities now owned or hereafter acquired by
Company, subject to applicable utilities laws and existing contractual
obligations. Upon a sale of a Company Facility, this Agreement shall apply to
the sold Company Facility for the remainder of the term, but shall not apply to
other facilities of the buyer.
7. Duties of FirstEnergy.
a) FirstEnergy shall use reasonable commercial efforts to serve
Company in the procurement of the Energy Supply and Services. FirstEnergy shall
keep accurate account of its activities undertaken by FirstEnergy in connection
with Company. Nothing hereunder obligates FirstEnergy to be the provider of the
Energy Supply and Services, subject to applicable utilities laws and existing
contractual obligations.
b) FirstEnergy shall not be restricted in any manner from dealing
with others (including competitors of Company) in the provision of services and
products similar to those encompassed in the Energy Supply and Services.
8. Authority of FirstEnergy. Inquiries for quotations for purchase made by
FirstEnergy to vendors or prospective vendors must be made expressly subject to
the approval and confirmation by Company and are not final until such written
approval is given by Company. Except as may be expressly provided in a separate
written agreement between the parties, FirstEnergy understands and agrees that
it is not authorized to accept, to enter into, or execute, and shall not
represent to any vendor or other person or firm that it has authority to accept
an offer, to enter into, or execute, on behalf of Company or as the agent for
Company, any agreement, contract or contractual commitment.
3
<PAGE>
9. Preferred Vendor Status.
a) FirstEnergy shall make recommendations concerning the procurement
of the Energy Supply and Services and recommendations for the provider of such
services, which, Company acknowledges, shall in most cases be FirstEnergy,
either directly or as broker. FirstEnergy shall not be required to obtain
competitive bids to support its recommendations.
b) FirstEnergy shall be entitled to a first look at providing all
Energy Supply and Services to Company. Company acknowledges FirstEnergy as the
preferred provider of such services, with a right to provide, at FirstEnergy's
option, the Energy Supply and Services, so long as the proposal from FirstEnergy
is competitive, as determined under Section 3 above. In any circumstances where
the Company rejects FirstEnergy as the provider, FirstEnergy at its option shall
be entitled to a right of first refusal on any third party vendor proposal.
10. Duties of Company.
a) Company reasonably shall cooperate with FirstEnergy in the
performance of the transactions contemplated by this Agreement.
b) Company shall provide FirstEnergy with access to Company
Facilities, personnel and information (subject to applicable confidentiality
agreements), including its historical energy consumption and expense data (such
as prior utility bills), existing energy related agreements (commodity,
transportation, storage, services, etc.) and shall allow FirstEnergy to install
meters and other control technology to evaluate Company=s energy consumption so
long as same does not interfere with Company=s operations.
c) Company shall pay FirstEnergy invoices on time and in accordance
with their terms.
11. Non-Disclosure of Information. The parties will negotiate in good
faith a confidentiality agreement for the protection of their respective
proprietary information. The Company acknowledges that FirstEnergy shall be
entitled to energy supply and services data and information for use in its
business, subject to the confidential treatment of the identity of the Company.
12. Independent Contractor. Both FirstEnergy and Company agree that the
relationship created by this Agreement is that of independent contractor and not
that of agency or venture partners.
13. Assignment. This Agreement shall bind the parties and their respective
representatives, successors, and assigns. Neither party shall be entitled to
assign its rights and responsibilities hereunder without the consent of the
other party; provided, that, FirstEnergy shall be permitted to
4
<PAGE>
assign its performance obligations to its affiliates.
14. Arbitration.
a) Dispute Resolution. The parties shall attempt in good faith to
resolve any dispute or claim arising out of or relating to this Agreement or the
transactions contemplated hereby ("Dispute") promptly by negotiations between
FirstEnergy and Company, including through mediation if agreeable to both
parties. If the parties are unable to resolve the Dispute, it shall be referred
to arbitration in accordance with the American Arbitration Association
Arbitration Rules then in effect, as modified by this Section (the "Rules"). The
number and identity of the arbitrators shall be determined by the parties within
thirty (30) days following respondent's receipt of claimant's notice of
arbitration. If the arbitrators have not been appointed within such thirty (30)
day period, the number and identity shall be determined at the request of a
party in accordance with the rules of the American Arbitration Association. The
place of arbitration shall be at Akron, Ohio, or at such other place as the
Parties may agree. The arbitrator(s) shall be empowered to order specific
performance of this Agreement but shall not be entitled to award punitive
damages. No arbitration board shall have the power to change, add to, or
subtract from any provisions of this Agreement. The arbitration board's function
shall be limited to the interpretation and application of existing clauses. The
Parties to the arbitration may by mutual agreement elect Abaseball" or Afinal
position" arbitration, in which event, the arbitrators' decision may only
consist of the final position of one of the parties and may not vary therefrom.
b) Exclusive Procedures. The procedures specified in this Section
shall be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement and the
transactions contemplated hereunder. The parties hereto submit themselves to the
jurisdiction of the state and federal courts located in Akron, Ohio with respect
to enforcement of any arbitration award. Each of the parties hereby consents to
the service of process by registered mail at its address set forth in this
Agreement and agrees that its submission to jurisdiction and its consent to
service of process by mail are made for the express benefit of the other Party.
The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C.,
Sections 1-16, 201-208.
c) Parties to Continue Performance. While the procedures set forth
above are being followed, the Parties shall continue to perform their respective
obligations under this Agreement.
5
<PAGE>
15. Miscellaneous.
a) Entire Agreement. This Agreement sets forth the entire agreement
of the parties concerning the subject matter hereof. No other agreements or
understandings, whether written or oral, whether express or implied, shall be
binding on the parties.
b) Limitation of Liability. Neither party shall be liable to the
other for incidental, consequential, exemplary or punitive damages for claims
arising out of the transactions contemplated by this Agreement.
c) Amendments. No amendment, change, or modification to this
Agreement shall be enforceable unless the same is in writing and signed by the
parties.
d) No Waiver. The waiver by either party of any term of this
Agreement shall not constitute a waiver as to future breaches of the same term
or of any other part of this Agreement.
e) Notices. Any notices under this Agreement shall be delivered by
hand, courier, overnight delivery service, or U.S. mail (return receipt
requested) to the parties at the following addresses:
If to Company: Republic Technologies International, LLC
3770 Embassy Parkway
Akron, Ohio 44333-8367
Attn: Thomas N. Tyrrell
If to FirstEnergy: FirstEnergy Services Corp.
76 S. Main St.
Akron, Ohio 44308-1890
Attn: President
f) Governing Law. This Agreement shall be construed under and
governed by the laws of the State of Ohio.
g) Ambiguity. In the event of any ambiguity, conflict or
inconsistency between this Agreement and any other subsequent agreement between
the parties, the terms of this Agreement shall control, unless such agreement is
identified by its express terms as an amendment to this Agreement.
h) Collateral. In the event of a future refinancing of the Company's
secured debt, the Company will use reasonable efforts to cause the commercial
transactions contemplated hereunder with FirstEnergy to be secured behind any
bank debt or subordinated debt, but ahead
6
<PAGE>
of any trade payables, to the extent possible.
IN WITNESS WHEREOF, the parties by their representatives duly authorized
have caused this Agreement to be duly executed as of the day and year above
first written.
REPUBLIC TECHNOLOGIES FIRSTENERGY SERVICES CORP.
INTERNATIONAL, LLC
By: /s/ John B. George By: /s/ Anthony J. Alexander
Its: Vice President of Finance, Its: Exec. Vice Pres. & Gen. Counsel
Treasurer and Secretary ----------------------------------
-------------------------------
7
<PAGE>
ATTACHMENT A
(Capitalized terms are as defined in the accompanying
Master Energy Services and Supply Agreement)
I. Services Included in Master Energy Services and Supply Agreement
1.1. Electric Will manage the procurement of 100% of the electric energy
Energy- requirements for all the Company Facilities. Prior to the
Supply delivery of any electricity supply, FirstEnergy and Company
will assess the individual needs of each property and
develop, with appropriate local and/or corporate management,
a supply arrangement that fits the quantity, delivery point,
term, risk tolerance, regulatory requirements, etc. most
appropriate for that property.
For determination of quantity, facilities with a common
delivery point may be grouped (e.g., all facilities within a
single control area).
Established baseload requirements will be at a fixed price to
be set at a discount to market prices for baseload energy (7x
24 product) for similar terms.
Non-baseload requirements will be mutually established based
on analysis of consumption profiles. The price for
non-baseload requirements will be market-based to be set at
time quantity is determined. May reflect fixed price, indexed
price and/or combination of fixed and floating.
Electric To the extent requested, required or beneficial to the
Energy- Electric property, will provide additional services such as
General contract Energy-General negotiation, etc. All charges, terms
Services: and conditions for any Services: services will be mutually
agreed upon in advance of the service.
2. Natural Gas - Will manage the procurement of 100% of the natural gas
Supply requirements for the all the Company Facilities. Prior to the
delivery of any natural gas supply, FirstEnergy and Company
will assess the individual needs of each Company Facility and
develop, with appropriate local and/or corporate management, a
supply arrangement that fits the quantity, transportation,
storage, delivery point, term, risk tolerance, regulatory
requirements, etc. most appropriate for that Company Facility.
FE will manage all aspects of interstate and/or intrastate
transportation to the various Company Facilities, including
physical supply, transportation and price risk portfolios.
Natural Gas - To the extent requested, required, or beneficial to the
General Services: property, will provide additional services such as those
listed. All charges, terms and conditions for any services
will be mutually agreed upon in advance of the service.
Full service fuel manager for any or all facilities.
Manage all aspects of LDC negotiations for effective rate and
service level management. Company has the right to request 3rd
party review of LDC negotiation where FirstEnergy LDC
affiliate is incumbent.
Assumption of fuel management roles immediately while working
with existing providers to honor remaining terms and
conditions of existing agreements.
Coordinate natural gas requirements during transfer of work
load from Indiana to Ohio facility; work with current supplier
to facilitate transfer; establish new agreement for
incremental requirements for Ohio facility.
Convert existing month to month arrangement for Northeast Ohio
Natural Gas Corp deliveries to effective term arrangements.
Manage any transportation and storage agreements.
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3. Consolidated Will process and pay in a timely manner (with Company funds)
Billing and all utility bills (electric, gas, water, etc.) designated by
Analysis Company for designated Company Facilities. FirstEnergy will be
Services: responsible for providing a cost analysis of the development
and on-going costs associated with this service. The parties
Consolidated will mutually agree as to the cost recovery
mechanism if the Billing and decision is made to proceed, but
FirstEnergy will guarantee Analysis Services: that Company
will incur no up-front costs.
4. Facilities Will manage the energy related project requirements of
Services Company. Those services would include but not be limited to,
the following:
HVAC
All charges, terms and conditions for any service will be
mutually agreed upon in advance of the service. The parties
will mutually align incentives through shared savings.
5. Products & Company will provide FirstEnergy with the opportunity to work
Services with Company on related services to include, but not be
limited to, the following:
Cogeneration Projects: Site specific disposal/re-cycle
contracts:
o Steam Projects o Iron oxide fines
o Pulverized Coal o Arc furnace dust
o Site specific disposal/recycle o Scrubber sludge and Water
contracts treatment sludge
Carbon Plus(TM): Compressed Air:
o Carbon supply o Air compressor
installation and retrofit
o Dolomite supply o Re-piping
All charges, terms and conditions for any service will be
mutually agreed upon in advance of the service. The parties
will mutually align incentives through shared savings.
6. Other Company will provide FirstEnergy with the opportunity to
Miscellaneous work with Company on related services to include, but not be
Services: limited to, the following:
Laboratory Services
Electrical Contracting Services
Metering Services
Roofing
Metal Fabrication
Substation Services
All charges, terms and conditions for any service will be
Miscellaneous mutually agreed upon in advance of the service.
The parties Services: will mutually align incentives through
shared savings.
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EXECUTION COPY
TRANSITION, ADMINISTRATIVE AND UTILITIES SERVICES AGREEMENT
THIS TRANSITION, ADMINISTRATIVE AND UTILITIES SERVICES AGREEMENT, dated
August 13, 1999, by and between Lorain Tubular Company, LLC, a Delaware limited
liability company (hereinafter called "NEWTUBE"), and Republic Technologies
International, LLC, a Delaware limited liability company (hereinafter called
"RTI").
W I T N E S S E T H
WHEREAS, pursuant to a Master Restructuring Agreement of even date
herewith (the "Master Agreement"), RTI was created and succeeded to the
steelmaking and bar operations previously owned and operated by USS/KOBE Steel
Company ("USS/KOBE") in Lorain, Ohio including certain administrative functions
of USS/KOBE;
WHEREAS, pursuant to the Master Agreement, NEWTUBE was created and
succeeded to the tubular operations previously owned and operated by USS/KOBE;
WHEREAS, in order to allow for the continued operation of their respective
operations at the Lorain, Ohio facility, NEWTUBE and RTI wish to evidence their
intent and agreement to provide those administrative and other services for the
other as are necessary for each party to continue its operations at the Lorain,
Ohio facility during the identified periods;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and intending to be legally bound, the parties hereto do agree
as follows:
ARTICLE I
Definitions
Section 1.1 Unless otherwise defined herein, all capitalized terms used
herein shall have the definitions given to them in the Master Agreement.
ARTICLE II
Transition Term
Section 2.l Transition Term.
Except as set forth in Article VIII with respect to the Utility Services
(as defined therein), the term of this Agreement shall commence on the Closing
Date and continue until July 31, 2000, except to the extent (a) this Agreement
is terminated in whole or in part (with respect to one or more services)
pursuant to Section 2.2, or (b) the term hereof is extended (with respect to one
or more services) pursuant to a mutual written agreement between the parties
(the "Transition Term").
<PAGE>
Section 2.2 Termination.
In order to facilitate the parties' transition to independent operations
to the full extent that is commercially practicable, each party shall have the
right, at any time during the term of this Agreement, to cancel or reduce the
scope of any services it is receiving from the other party by providing not less
than thirty (30) days' written notice of its intent to do so. The party
providing services hereunder shall not have the right to terminate any such
services during the term of this Agreement without the written consent of the
other party hereto.
ARTICLE III
Services Provided by RTI
RTI agrees to provide to NEWTUBE the services described in this Article
III (the "RTI Services") upon the terms and conditions set forth below.
Section 3.1 RTI Computer Services and Systems.
(a) RTI agrees to provide RTI Services with respect to the computer
systems (the "Systems") within the scope generally described in
Attachment A and Attachment B. Without limiting the generality of
the foregoing, RTI Services with respect to the Systems will include
using commercially reasonable efforts to provide NEWTUBE with the
benefits of the agreements referenced in items 11, 15, 16, 18 and 25
of Attachment C to the extent agreed upon herein.
(b) Service will be maintained for all Systems and services for all
output production on a daily, weekly, monthly, quarterly or annual
basis as currently produced. RTI computer operations personnel will
use substantially similar or equivalent operating procedures as
USS/KOBE's existing procedures, including, but not limited to, job
schedules, back-ups, recovery, records retention and software and
hardware maintenance, and will take all reasonable precautions to
assure data integrity is maintained, to prevent access by NEWTUBE to
data related to RTI's operations and to prevent access by RTI to
data related to NEWTUBE's operations, except to the extent necessary
to perform RTI's obligations hereunder. All existing interfaces and
outputs for the Systems will continue to be produced and distributed
substantially as they are currently with respect to priority,
frequency, detail, scheduling, content and distribution.
(c) At NEWTUBE's expense (included in the compensation set forth on
Attachment C), RTI personnel will provide commercially reasonable
Systems support (either directly or through subcontractors)
necessary for the transition of ownership of the tubular operations
to NEWTUBE, including, but not limited to, computer-generated forms
changes and distribution of outputs.
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(d) If in connection with NEWTUBE's transition to independent
operations, NEWTUBE desires RTI to undertake any systems
modifications as may be necessary to convert or adapt the Systems to
a basis consistent with NEWTUBE's contemplated computer systems
(including any necessary Systems support, such as data conversion
support (producing tapes, etc.), for the conversion from the Systems
to new systems acquired by NEWTUBE), RTI agrees to negotiate in good
faith with NEWTUBE to reach agreement on such modifications and the
charges therefor, and such modifications shall be undertaken only on
the mutual agreement of the parties at NEWTUBE's expense. This
service will be limited to modification of existing programs and
will not involve the design of permanent new systems. RTI shall have
no obligation to process or supply output from new systems acquired
by NEWTUBE.
Section 3.2 Other RTI Services.
RTI shall also provide to NEWTUBE those RTI Services described in items 2,
3, 4, 7, 8, 9, 10.a, 12, 14, 22, 26, 27, 28, 30, 32, 38, 40, 41, 42, 43, 44, 46,
and 51 of Attachment C hereto. RTI shall use its reasonable commercial efforts
to accommodate the orderly division between RTI and NEWTUBE of the services
described in items 1, 5, 6, 10.b, 17, 19, 20, 21, 29, 34, 35, 47, 48 and 49 of
Attachment C. It is the parties' intention that there be no interruption of the
services and goods to be provided hereunder, that the same shall be provided
with substantially the same priority, frequency, detail, scheduling, content and
distribution in accordance with historical practice at USS/KOBE, and each party
shall make all commercially reasonable efforts to avoid any material hindrance
or delay of the other party's operations (including, without limitation, either
party's efforts to achieve "Y2K Compliance") as a result of the subject matter
of this Agreement.
Section 3.3 General Provisions as to Services.
(a) RTI HEREBY EXPRESSLY DISCLAIMS (i) ANY AND ALL WARRANTIES WITH
RESPECT TO ANY RTI SERVICES OR UTILITY SERVICES PROVIDED BY RTI
PURSUANT HERETO, INCLUDING WITHOUT LIMITATION, ANY WARRANTY THAT THE
RTI SERVICES OR UTILITY SERVICES WILL BE FIT FOR ANY PARTICULAR
PURPOSE, AND (ii) ALL LIABILITY TO NEWTUBE, INCLUDING THAT ARISING
FROM THE ORDINARY NEGLIGENCE OF RTI OR ANY OF RTI'S AFFILIATES AND
THEIR RESPECTIVE PARTNERS, MEMBERS, DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, CONTRACTORS OR SUPPLIERS FOR ANY SERVICES PROVIDED UNDER
THIS AGREEMENT, EXCEPT AS PROVIDED IN SECTION 9.13 AND SECTION 3.4
BELOW.
(b) Notwithstanding anything else in this Agreement, in the event RTI's
performance of the RTI Services hereunder is delayed or made
impossible or commercially impracticable due to war, flood, civil
commotion, fire, explosion, strike, lockout or other difference with
workers, shortage of energy sources, material or labor, delay
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in or lack of transportation, breakdown or accident, so called "Y2K"
defects or malfunctions, compliance with or other action taken to
carry out the intent or purpose of any law, regulation or other
requirement of any governmental authority, Acts of God, or any cause
beyond RTI's reasonable control, RTI shall have additional time
within which to perform this Agreement as may be reasonably
necessary under the circumstances. Nothing contained in this
paragraph shall be interpreted to extend the Transition Term of this
Agreement or to require RTI to provide RTI Services for longer than
the periods specified herein.
(c) RTI may decline to provide any RTI Service provided for herein if
providing such service would result in a violation of any applicable
law, regulation or ordinance. In any such event, RTI shall provide
prompt and reasonable prior written notice to NEWTUBE, specifying
the basis therefor, and RTI agrees to provide commercially
reasonable assistance to NEWTUBE in obtaining substitute services.
(d) NEWTUBE agrees that during the term of this Agreement, it will use
commercially reasonable efforts to find alternative sources or
methods of obtaining the RTI Services and, upon arranging for such
alternative sources or methods, NEWTUBE shall provide RTI with at
least thirty (30) days' prior written notice of the alternative
arrangements (or such longer times as may be practical), and NEWTUBE
shall promptly substitute such alternative source or method for the
services provided hereunder. RTI shall cooperate with NEWTUBE in
reasonable respects in implementing such change.
(e) RTI shall not have authority by virtue of this Agreement to
represent or commit NEWTUBE in connection with the sale of NEWTUBE's
goods or services or purchase or acquisition of goods and/or
services by NEWTUBE (except to the extent otherwise expressly
provided in Section 8.6(d) or elsewhere herein).
Section 3.4 Warranty.
RTI warrants that the machine and electric shop work performed by it
hereunder (item 26 on Attachment C) shall be performed in a workmanlike manner
consistent with industry practice. This warranty will remain effective for a
reasonable period after the applicable piece is placed into service, but in no
event longer than twelve (12) months after completion of the applicable RTI
Services. Except as set forth in Section 9.13(a) with respect to gross
negligence or intentional misconduct, NEWTUBE's sole remedy for a breach by RTI
of the foregoing warranty shall be the prompt repair or replacement of the
applicable work or goods, at RTI's election. In addition, RTI will use
reasonable commercial efforts to enforce on behalf of NEWTUBE any warranty
rights or other remedies that RTI may have against a third party with respect to
the RTI Services provided to NEWTUBE.
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<PAGE>
ARTICLE IV
Services Provided by NEWTUBE
NEWTUBE agrees to provide to RTI the services described in this Article IV
(the "NEWTUBE Services") upon the terms and conditions described below.
Section 4.1 NEWTUBE Computer Services and Systems
(a) NEWTUBE agrees to provide NEWTUBE Services with respect to the
Systems within the scope generally described in Attachment D.
Without limiting the generality of the foregoing, NEWTUBE Services
with respect to the Systems will include using commercially
reasonable efforts to provide RTI with the benefits of the
agreements referenced in items13, 23 and 24 of Attachment C to the
extent agreed upon herein.
(b) Service will be maintained for all Systems and services for all
output production on a daily, weekly, monthly, quarterly or annual
basis as currently produced. NEWTUBE computer operations personnel
will use substantially similar or equivalent operating procedures as
USS/KOBE's existing procedures, including, but not limited to, job
schedules, back-ups, recovery, records retention and software and
hardware maintenance, and will take all reasonable precautions to
assure data integrity is maintained, to prevent access by RTI to
data related to NEWTUBE's operations and to prevent access by
NEWTUBE to data related to RTI's operations, except to the extent
necessary to perform NEWTUBE's obligations hereunder. All existing
interfaces and outputs for the Systems will continue to be produced
and distributed substantially as they are currently with respect to
priority, frequency, detail, scheduling, content and distribution.
(c) At RTI's expense (included in the compensation set forth on
Attachment C), NEWTUBE personnel will provide commercially
reasonable Systems support (either directly or through
subcontractors) necessary for the transition of ownership of the bar
operations to RTI, including, but not limited to, computer-generated
forms changes and distribution of outputs.
(d) If in connection with RTI's transition to independent operations,
RTI desires NEWTUBE to undertake any systems modifications as may be
necessary to convert or adapt the Systems to a basis consistent with
RTI's contemplated computer systems (including any necessary Systems
support, such as data conversion support (producing tapes, etc.),
for the conversion from the Systems to new systems acquired by RTI),
NEWTUBE agrees to negotiate in good faith with RTI to reach
agreement on such modifications and the charges therefor, and such
modifications shall be undertaken only on the mutual agreement of
the parties at RTI's expense. This
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service will be limited to modification of existing programs and
will not involve the design of permanent new systems. NEWTUBE
shall have no obligation to process or supply output from new
systems acquired by RTI.
Section 4.2 Other NEWTUBE Services.
NEWTUBE shall provide to RTI those NEWTUBE services described in items 30,
33, 39 and 45 of Attachment C hereto. NEWTUBE will use its reasonable commercial
efforts to accommodate the orderly division between NEWTUBE and RTI of the
services described in items 1, 5, 6, 10.b, 17, 19, 20, 21, 29, 34, 35, 47, 48
and 49 of Attachment C. It is the parties' intention that there be no
interruption of the services and goods to be provided hereunder, that the same
shall be provided with substantially the same priority, frequency, detail,
scheduling, content and distribution in accordance with historical practice at
USS/KOBE, and each party shall make all commercially reasonable efforts to avoid
any material hindrance or delay of the other party's operations (including,
without limitation, either party's efforts to achieve "Y2K Compliance") as a
result of the subject matter of this Agreement.
Section 4.3 General Provisions as to Services.
(a) NEWTUBE HEREBY EXPRESSLY DISCLAIMS (i) ANY AND ALL WARRANTIES WITH
RESPECT TO ANY NEWTUBE SERVICES OR UTILITY SERVICES PROVIDED BY
NEWTUBE PURSUANT HERETO, INCLUDING WITHOUT LIMITATION, ANY WARRANTY
THAT THE NEWTUBE SERVICES OR UTILITY SERVICES WILL BE FIT FOR ANY
PARTICULAR PURPOSE, AND (ii) ALL LIABILITY TO RTI, INCLUDING THAT
ARISING FROM THE ORDINARY NEGLIGENCE OF NEWTUBE OR ANY OF NEWTUBE'S
AFFILIATES OR THEIR RESPECTIVE PARTNERS, MEMBERS, DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, CONTRACTORS OR SUPPLIERS FOR ANY
SERVICES PROVIDED UNDER THIS AGREEMENT, EXCEPT AS PROVIDED IN
SECTION 4.4 AND SECTION 9.13 BELOW.
(b) Notwithstanding anything else in this Agreement, in the event
NEWTUBE's performance of NEWTUBE Services hereunder is delayed or
made impossible or commercially impracticable due to war, flood,
civil commotion, fire, explosion, strike, lockout or other
difference with workers, shortage of energy sources, material or
labor, delay in or lack of transportation, breakdown or accident, so
called "Y2K" defects or malfunctions, compliance with or other
action taken to carry out the intent or purpose of any law,
regulation or other requirement of any governmental authority, Acts
of God, or any cause beyond NEWTUBE's reasonable control, NEWTUBE
shall have additional time within which to perform this Agreement as
may be reasonably necessary under the circumstances. Nothing
contained in this paragraph shall be interpreted to extend the
Transition Term of this Agreement or to
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require NEWTUBE to provide NEWTUBE Services for longer than the
periods specified herein.
(c) NEWTUBE may decline to provide any NEWTUBE Service provided for
herein if providing such service would result in a violation of any
applicable law, regulation or ordinance. In any such event, NEWTUBE
shall provide prompt and reasonable prior written notice to RTI,
specifying the basis therefor, and NEWTUBE agrees to provide
commercially reasonable assistance to RTI in obtaining substitute
services.
(d) RTI agrees that during the term of this Agreement, it will use
commercially reasonable efforts to find alternative sources or
methods of obtaining the NEWTUBE Services and, upon arranging for
such alternative sources or methods, RTI shall provide NEWTUBE with
at least thirty (30) days' prior written notice of the alternative
arrangements (or such longer times as may be practical), and RTI
shall promptly substitute such alternative source or method for the
services provided hereunder. NEWTUBE shall cooperate with RTI in
reasonable respects in implementing such change.
(e) NEWTUBE shall not have authority by virtue of this Agreement to
represent or commit RTI in connection with the sale of RTI's goods
or services or purchase or acquisition of goods and/or services by
RTI (except to the extent otherwise expressly provided elsewhere
herein).
Section 4.4 Warranty.
NEWTUBE will use reasonable commercial efforts to enforce on behalf of RTI
any warranty rights or other remedies that NEWTUBE may have against a third
party with respect to the NEWTUBE Services provided to RTI.
ARTICLE V
Compensation; Expenses
Section 5.1 Services Generally.
(a) For all RTI Services which RTI supplies hereunder, NEWTUBE shall pay
to RTI the cost allocation, rate or price which is set forth in
Attachment C, subject to adjustment as provided in Section 5.3(f).
(b) For all NEWTUBE Services which NEWTUBE supplies hereunder, RTI shall
pay to NEWTUBE the cost allocation, rate or price which is set forth
in Attachment C, subject to adjustment as provided in Section
5.3(f).
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(c) Third party charges billed to the receiving party hereunder shall be
based on the allocable portions (as determined pursuant to the
methodology set forth on Attachment C) of the supplying party's
out-of-pocket costs payable to the third party. Internal costs
chargeable to the receiving party shall be based on the provider's
actual out-of-pocket costs (including salary or wage plus benefits
of personnel performing the reimbursable services, pro rated for the
time of service hereunder) without mark-up for general overhead or
profit.
(d) The "19% Rule" referred to on Attachment C shall be deemed to mean
that 19% of the applicable costs shall be allocated to NEWTUBE and
81% of the applicable costs shall be allocated to RTI.
(e) Any prices for services to be negotiated between RTI and NEWTUBE as
contemplated by Attachment C shall be negotiated in good faith by
the parties to approximate normal market pricing therefor.
Section 5.2 Reimbursement of Expenses.
In addition to the payments set forth above, NEWTUBE shall reimburse RTI
and RTI shall reimburse NEWTUBE, as the case may be, for all reasonable
out-of-pocket expenses, such as pre-approved travel, consumable materials and
the like, incurred by RTI or NEWTUBE in connection with the services provided
under this Agreement to the other party.
Section 5.3 Billing and Payment.
(a) On or before the twentieth day of each month, each party shall
invoice the other for all services provided or expenses incurred,
including third party invoices received, in the preceding calendar
month.
(b) Within thirty (30) days of the date of each invoice relating to
services provided hereunder, the receiving party shall pay the
provider the amount due by check mailed to its address specified in
the Master Agreement. All amounts not paid within thirty (30) days
shall bear interest at the rate of interest announced from time to
time by BankBoston, N.A. as its prime rate (the "Prime Rate").
(c) If either RTI or NEWTUBE believes that there has been an error in an
amount invoiced or paid or the timing of any payment hereunder, then
such party shall notify the other party of such alleged error and
shall provide such written evidence of the error as is available at
the time of such notice. Each party shall provide the other with
sufficient records relating to the matter so as to permit the
parties to attempt to resolve the inconsistency. Following the
determination of whether an error occurred, any improper charge or
invoice, overpayment or underpayment found shall be
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remedied, with interest at the Prime Rate in case of an overpayment
or underpayment, by the party that benefitted from such error.
Notwithstanding the foregoing, neither party may question the
accuracy, correctness, timing or amount of any payment under this
Agreement unless it notifies the other party of its disagreement
within the ninety (90) days immediately following the date such
payment was due.
(d) Interest shall be due on any amount which the receiving party is
otherwise disputing if such charge is ultimately determined to be
applicable, but no interest shall apply as to any disputed amounts
ultimately determined in the receiving party's favor.
(e) Upon request of NEWTUBE, RTI shall supply to NEWTUBE reasonable
support for all charges and expenses invoiced. Upon request of RTI,
NEWTUBE shall supply to RTI reasonable support for all charges and
expenses invoiced.
(f) RTI shall promptly notify NEWTUBE of any changes in the cost
allocations, rates and prices set forth or referenced on Attachment
C. NEWTUBE shall promptly notify RTI of any changes in the cost
allocations, rates and prices set forth or referenced on Attachment
C. All changes must be justified on the bases stated in Section 5.1
for the initial rates and prices set forth in Exhibit C.
(g) The obligation of the parties under this Article 5 shall survive the
expiration of the Transition Term and, with respect to Utility
Services, the term set forth in Article VIII, and nothing herein
shall limit the ability of either party to bill for or collect any
payments or reimbursements to which it would otherwise be entitled
for services or costs accruing during such term.
ARTICLE VI
Cooperation Regarding Access, Maintenance and Buildings
Section 6.1 General Agreement.
In addition to providing to each other the RTI Services and the NEWTUBE
Services, respectively, the parties agree that they shall (a) cooperate with
each other in all reasonable respects during the term of this Agreement with
respect to certain rights of access and usage of roads, rail trackage, rail
interchanges, rail switching services, gates and the facilities and
accommodations needed for the continued operation of their respective operations
as historically conducted and (b) negotiate in good faith to enter into a
commercially reasonable agreement or agreements addressing such matters
(including the allocation of maintenance and other costs relating thereto).
Without limiting the generality of the foregoing, the parties agree that during
the Transition Term:
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(a) RTI and NEWTUBE each will allow the other reasonable access at no
charge , via roads, railtracks, rail interchanges, bridges, gates,
tunnels and walkways, to areas of the other's property at the
Lorain, Ohio facility to the extent necessary to the continued
operations of each as historically conducted, including, without
limitation, providing ingress and egress to each party's facility,
central spares locations, central shops locations, utility meters
and connections and other commonly utilized areas. Attached hereto
as Attachment E is a listing and a map showing certain of those
easement agreements which are presently anticipated by the parties
to be included within the definitive agreements to be executed and
delivered pursuant to Section 6.2 hereof (including the location and
agreed upon allocation of third party easements and rights-of-way
currently benefitting USS/KOBE's premises and commonly used rail
tracks); provided, however, it is understood and agreed that the
listing of such easements is not intended to be an exclusive or
exhaustive list of those easements which may be necessary;
(b) RTI will provide reasonable maintenance and dust suppression
substantially in accordance with past USS/KOBE practice and
standards for all roads within NEWTUBE's boundaries that are used
primarily by RTI pursuant to this Agreement;
(c) NEWTUBE will allow RTI to use at no charge (other than the payment
of utilities and real property taxes allocable thereto), on a
non-exclusive basis, the transept bay, polymer building, electronics
shop, electric motor repair shop, motor storage building, motor
repair shop, bar coil storage/shipping area (i.e., former ERW and CW
buildings) and central spares storage areas (4 buildings) for their
current purposes ancillary to RTI's operations so long as RTI
reasonably maintains the buildings, fixtures and utilities contained
within or appurtenant to such buildings, performs structural
inspections per industry standards and pays the utilities associated
with such buildings in accordance with Section 8.6(g) hereof. The
facilities listed above are those that are presently anticipated by
the parties to be included within the definitive agreements to be
executed and delivered pursuant to Section 6.2 hereof; provided,
however, that it is understood and agreed that this listing of
leases are those identified by the parties as of the date hereof and
is not intended to be an exclusive or exhaustive list of those lease
agreements which may be necessary;
(d) RTI will allow NEWTUBE to use at no charge (other than the payment
of utilities and real property taxes allocable thereto), on a
non-exclusive basis, such space as is reasonably necessary in the
Central Data office building (with access to the CPU room), the PBX
building, central spares storage areas, "P-Field" area and offices
for human resources administration. The facilities that are listed
above are those that are presently anticipated by the parties to be
included within the definitive agreements to be executed and
delivered pursuant to Section 6.2 hereof; provided, however, that it
is understood and agreed that this listing of leases are those
identified by the parties
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as of the date hereof and is not intended to be an exclusive or
exhaustive list of those lease agreements which may be necessary;
(e) [DELETED]
Section 6.2 Definitive Agreement(s).
RTI and NEWTUBE agree to negotiate in good faith and use their reasonable
best efforts to cause the preparation, negotiation and execution of one or more
definitive agreements that will document and define the rights of the parties on
a long-term basis with respect to the matters described above in this Article VI
and with respect to the allocation and/or assignment of RTI/NEWTUBE and third
party easements, rights-of-way, licenses and similar rights, as well as any
other material existing agreements, affecting the parties' premises and
operations. It is the intent of the parties that such agreements shall allow
each party the continued use of areas and facilities as presently used by their
respective operations (except for such changes as the parties reasonably deem to
be advisable and commercially practical) and that any rights granted by third
parties be allocated and assigned accordingly. It is the parties' further intent
that such agreements be executed no later than 90 days after the Closing Date.
Upon execution of each such agreement, this Agreement shall terminate with
respect to the subject matter of such agreement.
Section 6.3 Safety Rules.
Each party's right to exercise the foregoing rights and benefits shall be
expressly subject to that party's compliance with the other's safety rules and
procedures and with all applicable laws, rules and regulations.
ARTICLE VII
Cooperation Regarding Miscellaneous Real Property Matters
Section 7.1 Division and Allocation of Tax Abatement Benefits.
NEWTUBE and RTI agree that, with respect to any real or personal property
being divided and allocated to NEWTUBE and RTI, respectively, pursuant to the
Master Agreement which is
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presently receiving any real or personal property tax abatement incentives or
benefits under any similar program, each of RTI and NEWTUBE will cooperate in
all reasonable respects in obtaining all necessary written consents and
approvals to the transfer of tax abatement rights and benefits with respect to
those assets being received by such party and the other party. Each party
further agrees that all of its respective financial and tax records and
reporting will reflect the benefit of any such tax abatement consistent with the
agreement herein contained. Each of RTI and NEWTUBE agree to execute and deliver
any and all documents reasonably requested by the other, or any governmental
agency or regulatory body administering any such tax abatement agreements, to
amend or modify such tax abatement agreement so that the benefits thereunder are
allocated, assigned, or transferred to the appropriate party.
Section 7.2 Environmental Licenses and Permits.
Each of the parties agree to take any and all necessary steps and to
cooperate with the other in all reasonable respects in connection with the
transfer of any necessary environmental license or permit which have customarily
been required for such party's business operations at USS/KOBE's facility, and
each party shall execute or enter into any necessary applications, amendments,
petitions, or other documents necessary to preserve the benefit of any and all
such licenses or permits and to cause their effective beneficial transfer to the
other in accordance herewith.
Section 7.3 Real Property Taxes.
The parties acknowledge that in conjunction with the transactions
contemplated by the Master Agreement, it was necessary to obtain tax map split
approval from the County of Lorain, Ohio. Although such approval has been
obtained, the Lorain County Auditor will continue to process the split of the
various assets and properties transferred so that proper real property tax
billings can be rendered to the parties. Until such time as the Lorain County
Auditor has properly completed the tax split for billing purposes, such that
each of RTI and NEWTUBE is being billed for the real property and improvements
which it received pursuant to the Master Agreement, RTI and NEWTUBE agree to
allocate and be responsible for payment of their respective real property taxes.
Each party agrees to share or provide information to the other relating to any
property tax billings received. This provision shall survive the expiration of
the Transition Term, in the same manner contemplated by Section 5.3(g) hereof.
ARTICLE VIII
Utility Services
Section 8.1 Utility Service to be Provided.
(a) During the Utilities Term, RTI will provide NEWTUBE with access
through existing connections to RTI's supply of the following
utilities on the terms and subject to the conditions set forth
herein:
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Electricity Supply
Natural Gas Supply
Treated/Process Water Supply
Potable Water Supply
Sewage Disposal
Industrial Waste Water & Storm Water Treatment & Disposal
Telephone Interconnection
Compressed Air
Pipeline Industrial Gases Supply
Fire Suppression Water
(b) During the Utilities Term, NEWTUBE will provide RTI with access
through existing connections to NEWTUBE's supply of the following
utilities on the terms and subject to the conditions set forth
herein:
Electricity Supply
Natural Gas Supply (for facilities leased to RTI per Article VI)
Potable Water Supply (for facilities leased to RTI per Article VI)
Sewage Disposal (for facilities leased to RTI per Article VI)
Compressed Air (for facilities leased to RTI per Article VI)
Pipeline Industrial Gases Supply (for facilities leased to RTI per
Article VI) Fire Suppression Water (for facilities leased to RTI per
Article VI)
(c) The parties acknowledge and agree that the utility and similar
services referenced above (the "Utility Services") are in certain
cases supplied by third party public utility and similar companies,
and although reference is made herein to the party providing access
to such services as the provider of "utility" services, the parties
have agreed that the supplier of these services will not have the
obligations of a public utility company or any obligations other
than as expressly set forth herein.
(d) In cases where the Utility Service is being provided by a third
party utility or other provider, the sole obligation of the party
deemed the provider of such Utility Service hereunder shall be to
provide access to the Utility Services, as delivered to it by the
third party, to the recipient hereunder as described in Sections 8.1
and 8.5 hereof, and neither party shall otherwise be liable to the
other in any way with respect to Utility Services provided by a
third party, except for matters covered under Section 9.13.
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Section 8.2. Term.
All Utility Services provided pursuant to this Article VIII shall be
provided from the date hereof through August 31, 2014 except to the extent (a)
this Article VIII is terminated in whole or in part (with respect to one or more
Utility Services) pursuant to Section 8.3 or Section 8.4, or (b) the term of
this Article VIII is extended (with respect to one or more Utility Services)
pursuant to a mutual written agreement between the parties.
Section 8.3 Termination.
Each party receiving Utility Services shall have the right, at any time
during the term of this Article VIII, to cancel or reduce the scope of any
Utility Services it is receiving from the other party by providing not less than
ninety (90) days' written notice of its intent to do so except where a longer
notification period is required for termination (either absolutely or to avoid
material changes in base load and corresponding rates) of any currently existing
third party Utility Services supply agreement or any such third party supply
agreement subsequently entered into by the provider party hereunder with the
consent of the recipient party hereunder. In the event that RTI or NEWTUBE
determines, in its sole discretion, that it will terminate its own receipt and
usage of a Utility Service provided to the other party hereunder or its ability
to provide such Utility Service to the other as contemplated herein, the party
electing such termination shall take all such actions, at its own cost, as are
reasonably necessary to secure a substitute source or access to such Utility
Service for the other party including, without limitation, the construction of
facilities or acquisition of equipment necessary to provide such substitute
source or access. In the event that either party providing Utility Services
hereunder determines that a material capital expenditure relating to the
construction or repair of facilities used to supply Utility Services hereunder,
or a long term commitment to certain sources of supply, is necessary or
desirable, the provider party shall provide the receiving party with as much
advance notice of the need or desirability for such capital expenditures and/or
long term commitment as is practicable, and the receiving party shall be
permitted to decline to participate in such capital expenditures or long term
commitment by ceasing receipt of the affected Utility Service by no later than
the date on which the new capital improvements become operational or, as the
case may be, the new contract comes into effect. Except as set forth in this
Section 8.3 or in Section 8.4 below, the party providing Utility Services
hereunder shall not have the right to terminate any such Utility Services during
the term of this Agreement without the written consent of the other party
hereto.
Section 8.4. Regulatory Termination.
If any governmental, administrative or regulatory entity seeks to impose
upon the providing party the obligations of a public utility pursuant to Public
Utility Commission Regulations or to impose regulations relative to sewer or
water facilities pursuant to United States Environmental Protection Agency or
Ohio Environmental Protection Agency regulations by reason of any Utility
Services supplied hereunder, the affected provider party may elect to terminate
or reduce any or all of the affected Utility Services provided under this
Agreement at any time by giving the other party 30 days' prior written notice of
its intention to do so, but such cancellation may only be effected to
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the extent necessary to avoid such public utility obligations or the application
of such environmental regulations. In addition, if any future change in any law,
rule or regulation is issued which makes it illegal for one party to continue to
provide any of the Utility Services hereunder, the affected providing party may
elect to terminate or reduce the Utility Services to the extent so effected at
any time by giving the other party 30 days' prior written notice of its
intention to do so.
Section 8.5 Level and Character of Service.
The party providing Utility Services hereunder shall use its commercially
reasonable efforts to provide such Utility Services in substantial accordance
with the historical practices at USS/KOBE's facility. Without limiting the
generality of the foregoing, the parties will use reasonable efforts to provide
to each other the Utility Services at the points of delivery and with the
service characteristics set forth on Attachment F hereto and otherwise
substantially at volumes, timing and priority that are in accordance with
historical practices at USS/KOBE's facility. The parties acknowledge that
certain services incidental to the supply of Utility Services are addressed in
Sections III and IV hereof as RTI Services or NEWTUBE Services and that
notwithstanding anything to the contrary contained in Attachment F hereto, the
providing party's compensation therefor shall be governed exclusively by
Sections III and IV to the extent such services are covered therein. Any
additional service shall be provided only by mutual agreement.
Section 8.6 Metering and Cost Allocation.
(a) NEWTUBE and RTI shall install and maintain metering equipment in
accordance with Attachment F attached hereto. The cost of installing
such metering equipment shall be allocated as set forth on
Attachment F. Metering maintenance costs shall be borne equally by
RTI and NEWTUBE. Other internal maintenance costs for facilities
used to deliver Utility Services hereunder (e.g., electrical
substations) shall ---- be allocated between the parties according
to mutually agreed upon formulae or, in the absence thereof,
according to each parties' relative utilization of the affected
Utility Service. RTI and NEWTUBE shall allocate third party charges
for Utility Services on the basis of the metering or, in cases where
metering is not yet installed or is not called for on Attachment F,
according to estimated usage based on historical USS/KOBE division
allocations (subject to adjustment for known usage changes). Third
party charges billed to the receiving party hereunder shall be based
on the parties' respective pro rata portion (as determined pursuant
to this paragraph) of the providing party's out-of-pocket costs
payable to the third party. Internal costs chargeable to the
receiving party shall be based on the provider "s actual out-of-
pocket costs (including salary or wage plus benefits of personnel
performing the reimbursable services, pro rated for service time
hereunder) without mark-up for general overhead or profit.
(b) All billings and payments hereunder shall be made in accordance with
Section 5.3 hereof.
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(c) So long as the receiving party is in compliance with its maintenance
obligations hereunder, it will not be assessed any line loss,
leakage or distribution charge with respect to Utility Services
provided hereunder. Neither party shall charge the other any
connection or similar start-up fees not imposed by a third party.
All rate differentials, cost savings, surcharges and other pricing
variables will be allocated pro rata between RTI and NEWTUBE as
provided above so that each party receives the same blended rate for
Utility Services provided by third parties.
(d) Notwithstanding the foregoing general cost allocation provisions,
the cost of operating the lagoon service water system shall be
allocated as follows. The parties hereto agree that the liabilities,
obligations and expenses relating to the post-Closing operation of
the lagoon service water system and related use of the lagoon
located on RTI's Lorain property, including, without limitation,
liabilities, obligations and expenses relating to (i) environmental
investigations, remediations, fines and penalties, (ii) operational
costs, maintenance, dredging and (subject to the first following
proviso) capital expenditures necessary or desirable to permit the
continued operation of the lagoon in a manner consistent with its
present use, or (iii) releases and discharges to the Black River to
the extent related to the post-Closing operations of the lagoon
service water system (including spillover), will be deemed to be the
liabilities, expenses and obligations of each of RTI and NEWTUBE in
proportion to the volumes of each such party's (and its Affiliates')
discharge of waste water and other materials to the lagoon from the
Closing Date through the date of the incurrence of such liabilities,
obligations or expenses, and each party hereto promptly will
reimburse the other in cash with respect to such party's portion of
any such liabilities, obligations and expenditures; provided,
however, that, in the event any material capital expenditures
relating to the construction of new facilities necessary or
desirable to permit the continued operation of the lagoon are to be
made by RTI, RTI shall provide NEWTUBE with as much advance notice
of the need for such capital expenditures as is practicable, and
NEWTUBE shall be permitted to decline to participate in such capital
expenditures by ceasing use of the lagoon by NEWTUBE and its
Affiliates no later than the date on which the new capital
improvements become operational; and provided further, however, that
NEWTUBE shall not be bound to pay for any settlement of liability
claims with a third party, any settlement of liability claims, fine
or penalty imposed by a governmental, judicial or administrative
body, or any other operational change having a material increase on
the cost of operation of the lagoon unless it has been given
reasonable prior notice thereof and an opportunity to consult with
RTI regarding the rationale, scope, cost and advisability of the
same (provided that RTI shall determine whatever any of the
foregoing will be effected following such consultation with
NEWTUBE). The parties hereto agree that the liabilities and
obligations of NEWTUBE described in this paragraph (d) shall be
deemed "USS/KOBE Tubular Liabilities" for all purposes under the
Master Agreement.
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(e) Should RTI or NEWTUBE incur increased costs in providing Utility
Services hereunder due to changes in laws or regulations or their
enforcement or new interpretations thereof, the receiving party
shall reimburse the providing party therefor in accordance with the
pro ration allocation established pursuant to this Section 8.6.
(f) The receiving party shall pay or shall reimburse the provider for
any sales and use taxes, utility gross receipts taxes, or other
taxes arising in connection with the Utility Services supplied under
this Agreement (excluding income taxes or taxes based on net income
and the like).
(g) Pursuant to Article VI of this Agreement, RTI will be leasing
certain buildings from NEWTUBE. For so long as any such lease
arrangement remains in effect, RTI will either (i) pay NEWTUBE for
Utility Services provided to the applicable building (if NEWTUBE
pays the third party provider directly) or (ii) deduct RTI's Utility
Service usage at the applicable building from its billings to
NEWTUBE (if RTI pays the third party provider directly), all in
accordance with the allocation provisions set forth in this Section
8.6.
Section 8.7. Curtailments of Utility Services.
Each party has familiarized itself with the terms and conditions under
which USS/KOBE currently purchases electricity and natural gas and the
transportation of same, and, in particular, with the fact that both (as well as
other utilities acquired from third parties) are at times purchased and
transported on an interruptible basis. When the supply of electricity and
natural gas (as well as other utilities acquired from third parties) is
curtailed or interrupted by the third party supplier, the supply of same to
NEWTUBE and RTI will be curtailed or interrupted equally, on a pro rata basis
according to historical usage patterns, in all respects including, without
limitation, the duration and severity of the curtailment or interruption. In the
event of such a curtailment or interruption, the parties agree to negotiate in
good faith to impose any different allocations that the parties reasonably deem
to be appropriate under the circumstances, given the prevailing circumstances
surrounding the curtailment/interruption and the operational needs of the
parties. Each party agrees to comply with any notice of curtailment issued by a
third party provider and each party hereby agrees to release, indemnify, defend,
and save harmless the other party, its affiliates and their partners, members,
directors, officers, employees, and agents from and against all losses, claims,
costs, liabilities, fines, and penalties of any nature arising out of the
indemnifying party's failure to comply with notices from third party providers
pertaining to curtailment or interruption of Utility Services hereunder.
Section 8.8. Changes in Third Party Providers.
Nothing in this Agreement shall be construed to limit the ability of
either party to modify its agreements with third party providers or enter into
arrangements similar or dissimilar to those
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currently in effect with suppliers and transporters of the supplier's choice for
the purchase of natural gas, electricity, or other Utility Services; provided,
however, that except as contemplated in Section 8.3 neither party shall have the
right to effect such a modification without the other's prior written consent
(which may not be unreasonably withheld) if such modification would have a
material adverse effect on the pricing, quality, timing or delivery of the
affected Utility Services hereunder or result in a material increase in the term
of such supply agreement. Nothing in this Section 8.8 shall be construed to give
either party the right to terminate any Utility Service provided to the other
party under this Agreement during the term set forth in Section 8.2.
Section 8.9. Meters.
All meters used for billing purposes will be calibrated from time to time
according to industry standards and practices. The cost of calibration will be
shared equally between RTI and NEWTUBE. The parties will coordinate with each
other as to the time and date for all calibrations and permit each other to
witness the calibration. If at any time between calibrations either party
reasonably believes inaccuracies may be occurring in any meter, a calibration
check shall be made. If a meter is found to be beyond its acceptable tolerance,
(a) the parties shall determine the difference in volume of measurement by
reason of the deviation from the applicable tolerance by assuming that such
deviation occurred immediately after the previous inspection, (b) the amounts
for which payments have been made plus the amounts then payable shall be
adjusted by one-half such assumed difference, and (c) a payment shall be made or
credit issued accordingly. If either party requests the non-regular inspection
or calibration of any meter and its deviation is found to be less than two
percent (2%), the requesting party shall reimburse the other party for the costs
of such inspection or calibrations.
Section 8.10 Force Majeure.
In the event either party's performance as a provider of Utility Services
under this Article VIII is delayed or made impossible or commercially
impracticable due to war, flood, civil commotion, fire, explosion, strike (other
than strikes by the provider's own employees), lockout or other difference with
workers, shortage of energy sources, material or labor, delay in or lack of
transportation, breakdown or accident, so called "Y2K" malfunctions, compliance
with or other action taken to carry out the intent or purpose of any law,
regulation or other requirement of any governmental authority, Acts of God, or
any cause beyond the providing party's reasonable control, the party providing
the affected Utility Services shall have additional time within which to perform
its obligations with respect to the affected Utility Services as may be
reasonably necessary under the circumstances. Nothing contained in this
paragraph shall be interpreted to extend the term of this Agreement or to
require either party to provide Utility Services for longer than the periods
specified herein.
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ARTICLE IX
Miscellaneous
Section 9.1 Headings.
The descriptive headings herein are for convenience of reference only and
do not constitute a part of this Agreement. They do not modify or affect in any
way the meaning or interpretation of this Agreement.
Section 9.2 Records.
Each party shall maintain such records relating to the administrative
services rendered hereunder as shall be reasonably necessary for the calculation
of amounts payable under Section 5.1 and Article VIII. Each party hereto, at all
reasonable times, shall have the right (at its own expense) to have its
employees, agents, attorneys, and accountants (including both internal auditors
and independent public accountants) inspect the books and records of the other
party insofar as they relate to such party's rights and obligations under this
Agreement. Any audit shall be at the sole expense of the party making the audit.
Each party shall keep confidential as Proprietary Information all information
learned in such audit, other than as may be required to be disclosed by law or
in any legal or arbitration proceeding involving this Agreement.
Section 9.3 Confidentiality.
(a) RTI and NEWTUBE acknowledge that all information on about the
operations, properties, finances, prospects, marketing, processes,
products, methods, computer programs, procedures, machinery,
apparatus or trade secrets owned or held or used (including under
license from or agreement with third parties) by the other that is
disclosed to RTI or NEWTUBE, as the case may be, during the course
of performing its obligations under this Agreement is the property
of, and is proprietary and confidential to, the disclosing party
(the "Proprietary Information").
(b) RTI and NEWTUBE agree that they shall not make any disclosure of the
other's Proprietary Information (including methods or concepts
utilized therein, other than those commonly known to professionals
in the field) to any person other than affiliates, directors,
partners, officers, employees and agents of and consultants to RTI
or NEWTUBE to whom such disclosure is necessary or convenient for
performance of its obligations hereunder and except as may be
required by applicable legal requirements or by the court of
competent jurisdiction. RTI and NEWTUBE shall appropriately notify
each officer, employee, agent and consultant to whom any such
disclosure of the other's Proprietary Information is made that such
disclosure is made in confidence and shall be kept in confidence by
such person.
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(c) RTI and NEWTUBE each agrees to use reasonable efforts to protect the
other's Proprietary Information.
(d) RTI and NEWTUBE each agrees to notify the other promptly in the
event that it becomes aware of the unauthorized possession or use of
the other's Proprietary Information (or any part thereof) by any
third person, including any of its officers, employees, agents or
consultants. RTI and NEWTUBE each further agrees to reasonably
cooperate with the other in connection with its efforts to terminate
or prevent such unauthorized possession or use of such Proprietary
Information. NEWTUBE or RTI, as the case may be, shall pay the
receiving party's reasonable out-of-pocket expenses in so
cooperating, unless the unauthorized possession or use of the
Proprietary Information resulted from the willful misconduct or
gross negligence of such nonproprietary party.
(e) Notwithstanding any other provision of this Agreement, the
obligation of RTI and NEWTUBE to maintain the confidentiality of the
Proprietary Information shall not apply to any portion of such
Proprietary Information that:
(i) was in the public domain at the time of NEWTUBE's or RTI's
disclosure to the other;
(ii) enters the public domain through no fault of the receiving
party;
(iii) was communicated to the receiving party by a third party free
of any obligation of confidence known to the receiving party;
or
(iv) was developed by officers, employees or agents of or
consultants to the receiving party independently of and
without reference to the Proprietary Information; provided,
however, that Proprietary Information which is specific shall
not be considered to be within the exception provided by this
Section 7.4(e) merely because it is embraced by general
information in the public domain; provided further, that any
combination of features within the Proprietary Information
shall not be deemed within such exception merely because
individual features are within the public domain, but only if
the combination itself is within the public domain.
Section 9.4 Assignment.
Except as otherwise expressly set forth herein, neither party's rights or
obligations hereunder can be assigned, delegated or subcontracted to any third
party without the prior written consent of the other party hereto, except that
(a) either party may assign all of its rights and obligations hereunder in
connection with the transfer of substantially all the assets of the on-site
operations of such party, or the transfer of at least fifty percent (50%) of the
voting equity of such party, and (b)
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either party may subcontract all or any part of its obligations hereunder to any
of its affiliates or subsidiaries; provided, however, that the transferring
party shall remain responsible for such obligations. Any assignment, delegation
or subcontract that is not made in compliance with this section shall be void.
Section 9.5 No Financial Obligations to Other Party.
Neither RTI nor any of its affiliates shall have any obligation hereunder
to provide any funds to NEWTUBE (except for payments expressly provided for
herein), or to guarantee any of its obligations, or encumber any of its or their
assets, or in any way whatsoever lend its or their credit to NEWTUBE. Neither
NEWTUBE nor any of its affiliates shall have any obligation hereunder to provide
any funds to RTI (except for payments expressly provided for herein), or to
guarantee any of its obligations, or encumber any of its or their assets, or in
any way whatsoever lend its or their credit to RTI.
Section 9.6 Notice.
Any notice to be given hereunder shall be given in accordance with Section
19.3 of the Master Agreement.
Section 9.7 Governing Law.
This Agreement shall be construed and enforced in accordance with the laws
of the State of Ohio, except for the conflicts of laws provision thereof.
Section 9.8 No Third Party Rights.
Subject to the provisions of Sections 3.3(b), 4.3(b), 8.7 and 9.3 above,
this Agreement is intended to be solely for the benefit of the parties hereto
and their successors, assigns or delegates. Nothing in this Agreement is
intended to confer any benefits upon, create any rights in favor of, or impose
any obligations upon, any Person other than the parties hereto.
Section 9.9 Waiver and Amendment.
No waiver shall be deemed to have been made by either party of any of its
rights under this Agreement unless the same shall be in a writing that expressly
refers to this Section 9.9 and is signed on its behalf by its authorized
officer. Any such waiver shall constitute a waiver only with respect to the
specific matter described in such writing and shall in no way impair the rights
of the party granting such waiver in any other respect or at any other time. No
amendment or modification of any provision of this Agreement shall be effective
unless in writing and signed by both parties.
Section 9.10 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute a
single instrument.
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Section 9.11 Severability.
In case any one or more of the provisions contained in this Agreement is
adjudged to be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby, except to the extent necessary
to avoid an unjust or inequitable result.
Section 9.12 Entire Agreement.
This Agreement (including the Attachments hereto) and, to the extent
specifically referenced herein, the Master Agreement (including the exhibits
thereto), contain the entire understanding and agreement between the parties as
to the matters covered herein, and supersede and replace any prior
understanding, agreement or statement of intent, whether written or oral.
9.13 Indemnification.
(a) RTI agrees to indemnify, defend and save harmless NEWTUBE and its
affiliates and their respective partners, members, directors, officers,
employees, contractors and suppliers from and against any all obligations,
liabilities, claims and demands for damage to the property of or injuries to any
persons which may be suffered by or asserted against NEWTUBE and its affiliates
and their respective partners, members, directors, officers, employees, agents,
contractors, suppliers, or their property to the extent arising out of any
material breach of this Agreement by RTI or the gross negligence or intentional
misconduct of RTI, or any of its directors, officers, employees, agents,
contractors or suppliers in connection with the performance of this Agreement;
provided, however, that RTI shall not be liable to NEWTUBE for any indirect,
special, consequential or punitive damages. To the extent permitted by
applicable law, except to the extent arising from any such indemnified person's
gross negligence or intentional misconduct, RTI shall indemnify, defend, and
hold NEWTUBE and its affiliates and their respective partners, members,
officers, directors, employees, agents and representatives harmless from all
claims against it by any RTI employee or any employee of any subcontractor or
agent of RTI, with regard to bodily injury, disease or death, including those
claims which would be covered by the constitutional and statutory immunity from
suit and causes of action provided to employers in Section 35, Article II of the
Ohio Constitution and Ohio Revised Code Section 4123.74, as well as any other
similar immunity provided for or by any statute, law or constitution of the
state of Ohio and of any other applicable state. Solely in regard to this
indemnity, RTI does hereby expressly and specifically waive its constitutional
and statutory immunity from suit and causes of action provided to employers in
Section 35, Article II of the Ohio Constitution and Ohio Revised Code Section
4123.74, as well as any other similar immunity provided for or by any statute,
law or constitution of the state of Ohio and of any other applicable state.
(b) NEWTUBE agrees to indemnify, defend and save harmless RTI and its
affiliates and their respective partners, members, directors, officers,
employees, contractors and suppliers from and against any all obligations,
liabilities, claims and demands for damage to the property of or injuries
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to any persons which may be suffered by or asserted against RTI and its
affiliates and their respective partners, members, directors, officers,
employees, agents, contractors, suppliers, or their property to the extent
arising out of any material breach of this Agreement by NEWTUBE or the gross
negligence or intentional misconduct of NEWTUBE, or any of its directors,
officers, employees, agents, contractors or suppliers in connection with the
performance of this Agreement; provided, however, that NEWTUBE shall not be
liable to RTI for any indirect, special, consequential or punitive damages. To
the extent permitted by applicable law, except to the extent arising from any
such indemnified person's gross negligence or intentional misconduct, NEWTUBE
shall indemnify, defend, and hold RTI and its affiliates and their respective
partners, members, officers, directors, employees, agents and representatives
harmless from all claims against it by any NEWTUBE employee or any employee of
any subcontractor or agent of NEWTUBE, with regard to bodily injury, disease or
death, including those claims which would be covered by the constitutional and
statutory immunity from suit and causes of action provided to employers in
Section 35, Article II of the Ohio Constitution and Ohio Revised Code Section
4123.74, as well as any other similar immunity provided for or by any statute,
law or constitution of the state of Ohio and of any other applicable state.
Solely in regard to this indemnity, NEWTUBE does hereby expressly and
specifically waive its constitutional and statutory immunity from suit and
causes of action provided to employers in Section 35, Article II of the Ohio
Constitution and Ohio Revised Code Section 4123.74, as well as any other similar
immunity provided for or by any statute, law or constitution of the state of
Ohio and of any other applicable state.
9.14 Other Services.
If, after the execution of this Agreement, the parties mutually determine
that a service which needs to be provided by one party to the other in order to
achieve the intent of this Agreement was inadvertently omitted, then the parties
shall (a) in cases where the omitted service was not within, and constitutes a
material change in scope from, the general scope of services described herein,
negotiate in good faith to agree to the terms and conditions upon which such
omitted service will be added to this Agreement, it being agreed that the
charges for such services will be determined on a basis consistent with the
methodology used for determining the initial prices provided for herein, as set
forth in Section 5.1, or (b) in all other cases, provide such service to the
other (with the providing party being determined in a manner consistent with the
allocation of services responsibility hereunder) at no additional cost (except
as contemplated in Attachment C) in accordance with the terms and conditions set
forth herein with respect to the class of services under which the omitted
service should have originally been listed.
9.15 Sourcing Changes.
The party providing any service shall retain the right to select, change
or outsource any equipment, materials, procedures or personnel (including
vendors, suppliers or contractors) used in performing the services, so long as
such action does not adversely affect the costs, quality, kind, timing, priority
or amount of services provided to the recipient. The parties agree that each
party
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may obtain the RTI Services or the NEWTUBE Services, as the case may be, it
requires from third parties other than the party designated as the provider
herein.
9.16 Survival.
The rights, obligations, covenants and agreements of the parties herein
shall survive the Closing of the transactions contemplated by the Master
Agreement and, to the extent expressly provided herein, the termination of this
Agreement with respect to any or all of the RTI Services, NEWTUBE Services or
Utility Services.
9.17 No Partnership.
Nothing contained herein shall in any way cause either party hereto to
become a partner in the conduct of the other party's business or a joint
venturer or a member of a joint enterprise with the other party.
9.18 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties' successors and permitted assigns.
9.19 Limitation of Liability for USS/KOBE Legacy Items.
Notwithstanding anything else set forth in this Agreement, in no event
shall RTI or any of its post-Closing Affiliates have any liability to the extent
arising from or related to any event, occurrence or defect existing as of the
date hereof in any asset, property, system, software or premises of USS/KOBE or
any of its pre-Closing Affiliates, or for any failure to comply with the terms
of this Agreement to the extent caused by any of the foregoing.
9.20 Specific Performance.
The parties acknowledge and agree that, from and after the Closing, a
violation of any of the covenants or agreements contained in this Agreement will
cause the parties irreparable injury for which adequate remedy at law is not
available. Accordingly, it is agreed that each party will be entitled to an
injunction, restraining order or other equitable relief to prevent breaches of
such covenants and agreements and to enforce specifically the terms and
provisions thereof in any court of competent jurisdiction, in addition to any
other remedy to which it may be entitled at law or in equity.
-24-
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement
effective on the date first written above.
REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC
By: /s/ John B. George
---------------------------------
LORAIN TUBULAR COMPANY, LLC
By: /s/ R.M. Stanton
---------------------------------
-25-
<PAGE>
EXECUTION COPY
Republic Technologies International, LLC
3770 Embassy Parkway
Akron, Ohio 44333
USX Corporation
600 Grant Street
Pittsburgh, Pennsylvania 15219
August 13, 1999
Ladies and Gentleman:
This letter agreement is being delivered in connection with the Master
Restructuring Agreement (the "MRA"), dated as of August 13, 1999, among Bar
Technologies Inc., RES Holding Corporation, Republic Engineered Steels, Inc.,
Republic Technologies International Holdings, LLC, Republic Technologies
International, LLC ("RTI Opco"), Blackstone Capital Partners II Merchant Banking
Fund L.P., Blackstone Offshore Capital Partners II L.P., Blackstone Family
Investment Partnership II L.P., The Veritas Capital Fund, L.P., HVR Holdings,
L.L.C., USX Corporation ("USX"), Kobe Steel, Ltd. ("Kobe"), USS Lorain Holding
Company, Inc. ("USX Holdings"), Kobe Delaware Inc., Kobe/Lorain Inc. ("Kobe
Holdings"), USX RTI Holdings, Inc., Kobe RTI Holdings, Inc., Lorain Tubular
Company, LLC ("NewTube") and USS/Kobe Steel Company ("USS/Kobe"), providing for,
among other things, the merger of USX Holdings and Kobe Holdings, each a 50%
general partner of USS/Kobe, with and into RTI Opco. Capitalized terms used but
not defined herein shall have the meanings assigned to them in the Master
Restructuring Agreement.
Upon the Closing, RTI Opco will assume trade payables of USS/Kobe
outstanding as of the Closing and due to USX and its Affiliates (other than
USS/Kobe and NewTube) in the aggregate amount of approximately $41.0 million, as
reflected on the USS/Kobe Bar Business Closing Balance Sheet (collectively, the
"USX Payables"). This letter agreement sets forth the agreement between RTI Opco
and USX as to the terms and conditions of the payment by RTI Opco of the USX
Payables.
RTI Opco and USX agree that, (i) following the Closing, RTI Opco will
pay the portion of the USX Payables that exceeds $30.0 million within 30 days
following the Closing Date, and (ii) the remaining $30.0 million aggregate
principal amount of the USX Payables (such amount, the "Deferred USX Payable")
will be paid on a deferred basis as provided below.
RTI Opco and USX further agree that RTI Opco will not be obligated to
pay all or any portion of the Deferred USX Payable for a period of 23 months
following August 1, 1999. At the end of such 23 month period (such date, the
"Deferred Payment Date"), RTI Opco will be
<PAGE>
2
obligated to pay, in full, the Deferred USX Payable, plus interest on the
Deferred USX Payable accruing from August 1, 1999 to the Deferred Payment Date
at the rate of 1% per month, compounding monthly (i.e., 12.68% per annum) (the
"Deferred Interest").
RTI Opco and USX further agree that RTI Opco will have the right (the
"Early Payment Right"), but not the obligation, to pay all or any part of the
Deferred USX Payable (such amount, the "Prepaid Amount"), at any time or from
time to time, prior to the Deferred Payment Date. In the event RTI Opco
exercises its Early Payment Right, any interest that shall have accrued on the
Prepaid Amount in accordance with the preceding paragraph will be forgiven by
USX and no longer be due or payable by RTI Opco.
RTI Opco and USX further agree that (i) no portion of the Deferred USX
Payable or of any other payables or other amounts due to USX or its Affiliates
from RTI Opco or its Affiliates may be offset against any payables or other
amounts due to RTI Opco or its Affiliates from USX or its Affiliates and (ii) no
portion of any other payables or other amounts due to RTI Opco or its Affiliates
from USX or its Affiliates may be offset against any payables or other amounts
due to USX or its Affiliates from RTI Opco or its Affiliates; provided, however,
that either of RTI Opco or USX may, upon 60 days written notice to the other,
terminate the provisions of this paragraph (but not any other portion of this
letter agreement).
Each of RTI Opco and USX shall cause its Affiliates to comply with the
terms and conditions of this letter agreement.
This letter agreement shall be governed by the laws of the State of New
York and may be executed in two or more counterparts, each of which shall be
deemed an original or which together shall constitute one and the same
instrument.
<PAGE>
3
Very truly yours,
Republic Technologies International, LLC
By: /s/ John B. George
-------------------------------------
Name: John B. George
Title: Vice President of Finance,
Treasurer and Secretary
Acknowledged and Accepted,
USX Corporation
By: /s/ A. E. Ferrara, Jr.
--------------------------------
Name: A. E. Ferrara, Jr.
Title: Vice President-Stratgic
Planning
<PAGE>
EXECUTION COPY
USX Corporation
600 Grant Street
Pittsburgh, Pennsylvania 15219
August 13, 1999
Republic Technologies International, LLC
3770 Embassy Parkway
Akron, Ohio 44333
Lorain Tubular Company, LLC
c/o USX Corporation
600 Grant Street
Pittsburgh, Pennsylvania 15219
Kobe Steel, Ltd.
10-26 Wakinohamacho 2-Chome
Chuo-Ku, Kobe City, Hyugo 651-0072
Ladies and Gentleman:
Reference is made to the Asset Purchase and Contribution Agreement,
dated as of May 31, 1989 (the "Contribution Agreement"), among Kobe Steel, Ltd.
("Kobe"), Kobe/Lorain Inc. ("Kobe Holdings"), USX Corporation ("USX"), USS
Lorain Holding Company, Inc. ("USX Holdings") and USS/Kobe Steel Company
("USS/Kobe") providing for, among other things, the contribution by USX of
certain real property, equipment, inventory and other assets located at Lorain,
Ohio ("Lorain Works") to USS/Kobe and the assumption by USS/Kobe of certain
related liabilities. The Contribution Agreement provided that the responsibility
for certain environmental liabilities arising prior to the date thereof would be
borne by USX and for certain others would be borne by USS/Kobe.
This letter is being delivered in connection with the Master
Restructuring Agreement (the "MRA"), dated as of August 13, 1999, among Bar
Technologies Inc., RES Holding Corporation, Republic Engineered Steels, Inc.,
Republic Technologies International Holdings, LLC, Republic Technologies
International, LLC ("RTI Opco"), Blackstone Capital Partners II Merchant Banking
Fund L.P., Blackstone Offshore Capital Partners II L.P., Blackstone Family
Investment Partnership II L.P., The Veritas Capital Fund, L.P., HVR Holdings,
L.L.C., USX, Kobe, USX Holdings, Kobe Holdings, USX RTI Holdings, Inc., Kobe
Delaware Inc., Kobe RTI Holdings, Inc., Lorain Tubular Company, LLC ("NewTube")
and USS/Kobe providing for, among other things, the transfer by USS/Kobe to
NewTube of the USS/Kobe Tubular Assets (as defined in the MRA) and the
assumption by NewTube of the USS/Kobe Tubular Liabilities (as defined in the
MRA), followed by the merger of USX Holdings and Kobe Holdings, each a 50%
general partner in USS/Kobe, with and into RTI Opco in order to combine the
USS/Kobe Bar Business
<PAGE>
2
(as defined in the MRA) with the business of RTI Opco (together, the
"Transactions"). As a result of the Transactions, the assets and liabilities of
USS/Kobe, including those contributed by USX under the Contribution Agreement,
will be split between NewTube and RTI Opco. In connection with the Transactions,
the parties hereto desire to set forth the rights and obligations following the
consummation of the Transactions of each of USX, NewTube and RTI Opco for
environmental liabilities previously governed by the Contribution Agreement (the
date of such consummation, the "Closing Date") as follows.
Unless otherwise specified herein, capitalized terms used but not
defined herein shall have the meanings assigned to them in the Contribution
Agreement. References herein to Schedules refer to the Schedules to the
Contribution Agreement.
Section 1.1 Inactive and Closed Production Facilities.
(a) Responsibility and liability for the cost of performing
any Environmental Remediation at or caused by any of the inactive or closed
production facilities listed in Schedule 11.1 shall be allocated as follows: (i)
RTI Opco and NewTube (collectively, in the manner set forth in this clause (a)
below) will assume responsibility and liability for the first $10,000,000 (such
amount, the "Closed Facility Basket") of such costs (whether or not necessary to
satisfy an Agency Demand) to be spent at any or all of the inactive or closed
production facilities listed in Schedule 11.1, and (ii) once RTI Opco and
NewTube have, under the terms of this Section 1.1, paid, agreed to pay, or
authorized the payment of a total of $10,000,000 toward such costs, USX shall
retain all responsibility and liability, as a Retained Liability, for any and
all costs of Environmental Remediation in excess of $10,000,000 (the "Additional
Closed Facility Amounts") which are necessary to satisfy any Agency Demand
applicable to any or all of the inactive or closed production facilities listed
in Schedule 11.1; provided, however, that costs incurred by RTI Opco or NewTube
to perform any Environmental Remediation, to the extent not necessary to satisfy
an Agency Demand, shall be not be counted toward the Closed Facility Basket
unless USX has approved such Environmental Remediation, such approval not to be
unreasonably withheld. RTI Opco and NewTube shall be responsible for funding the
Closed Facility Basket as follows: (a) any amounts actually paid by USS/Kobe
under the Closed Facility Basket prior to the Closing Date shall be deemed to
have been contributed by NewTube; and (b) any amounts paid by RTI Opco or
NewTube under the Closed Facility Basket on and after the Closing Date shall be
borne by the party responsible and liable for such liability in accordance with
the MRA (i.e., NewTube shall be responsible for paying all amounts to the extent
arising, directly or indirectly, from or in connection with the USS/Kobe Tubular
Liabilities and RTI Opco shall be responsible for paying all amounts to the
extent arising, directly or indirectly, from or in connection with the USS/Kobe
Bar Liabilities (as defined in the MRA)) until the Closed Facility basket has
been fully paid. Once the Closed Facility Basket has been fully exhausted, USX
shall pay any and all Additional Closed Facility Amounts as provided in the
first sentence of this clause (a) to the party that bears responsibility and
liability for such costs under the MRA; provided, however, that in the event
that RTI Opco or NewTube paid more than $5,000,000 of the amounts that exhausted
the Closed Facility Basket (the "Closed Facility Over-Contributing Party") (the
amount by which the contribution of the Closed Facility Over-Contributing Party
exceeds that of the other party, the "Closed Facility Catch-up Amount"),
<PAGE>
3
USX shall pay any Additional Closed Facility Amounts otherwise owing hereunder
to the other party instead to both of RTI Opco and NewTube in the same
proportion that such parties contributed to the Closed Facility Basket until
such time as the Closed Facility Over-Contributing Party has received an amount,
otherwise owing hereunder to the other party, equal to the Closed Facility
Catch-up Amount. For example, if RTI Opco has paid $7,000,000 and NewTube has
paid $3,000,000 of the amounts that exhausted the Closed Facility Basket,
Additional Closed Facility Amounts otherwise due to NewTube from USX shall
instead be paid 70% to RTI Opco and 30% to NewTube until such time as RTI Opco
has received Additional Closed Facility Amounts equal to $4,000,000 (the full
amount of the Closed Facility Catch-up Amount).
(b) To the extent USS/Kobe has caused, or RTI Opco or NewTube
causes, a Release of a Chemical Substance onto one of the inactive or closed
production facilities listed in Schedule 11.1 and there is an Agency Demand for
Environmental Remediation at the affected facility: (i) RTI Opco and NewTube
shall assume responsibility and liability (in accordance with the MRA) for only
the cost of that portion of the Environmental Remediation required to respond to
the Release caused by USS/Kobe, RTI Opco or NewTube and such costs shall not be
counted toward satisfaction of RTI Opco's and NewTube's responsibility for the
first $10,000,000 of such Environmental Remediation costs set forth in Section
1.1(a)(i); and (ii) the remainder of such costs necessary to satisfy an Agency
Demand for Environmental Remediation shall be allocated between RTI Opco and
NewTube and USX in accordance with Section 1.1(a).
(c)(i) Where an Agency Demand for Environmental Remediation
was triggered solely by USS/Kobe's decision, or would be triggered solely by RTI
Opco's or NewTube's decision, to make Use of any portion of an inactive or
closed production facility listed in Schedule 11.1, and where no Agency Demand
for Environmental Remediation at that portion of such facility has been made
prior to the time of such decision to make Use of such facility, then the cost
of such Environmental Remediation shall be allocated between RTI Opco and
NewTube and USX in accordance with Section 1.1(a) only if no other portion of
the Real Property is available at that time which would both (x) be suitable for
such Use, and (y) be able to be put to that Use without the need for any
Environmental Remediation.
(c)(ii) Any cost of Environmental Remediation at or caused by
the facilities listed in Schedule 11.1 which does not qualify under Section
1.1(c)(i) for allocation between RTI Opco and NewTube and USX in accordance with
Section 1.1(a) shall not be counted toward satisfaction of RTI Opco's and
NewTube's responsibility for the first $10,000,000 of costs of Environmental
Remediation set forth in Section 1.1(a)(i).
(d) For the purposes of Sections 1.1(c) and 1.2(c), the "Use"
of an inactive or closed production facility listed in Schedule 11.1 or an
inactive, identified solid waste management unit listed in Schedule 11.2 means:
(i) resumption of the facility's or unit's original designed purpose; (ii)
installation and operation of new production facilities; (iii) construction and
operation of a new building or other structure; or (iv) any physical site
preparation for a storage area requiring soil excavation, but does not mean: (x)
performance of routine security, maintenance, or similar protective activities;
(y) operation, replacement, or upgrading of existing
<PAGE>
4
utility lines, roads, railroad track, or the like; or (z) storage of raw
materials, finished products, or equipment.
Section 1.2 Identified Solid Waste Management Units.
(a) Responsibility and liability for the cost of performing
any Environmental Remediation at or caused by any of the identified solid waste
management units listed in Schedule 11.2 shall be allocated as follows: (i) RTI
Opco and NewTube (collectively, in the manner set forth in this clause (a)
below) will assume responsibility and liability for the first $9,000,000 (such
amount, the "SWMU Basket") of such costs (whether or not necessary to satisfy an
Agency Demand) to be spent at any or all of the identified solid waste
management units listed in Schedule 11.2; and (ii) once RTI Opco and NewTube
have, under the terms of this Section 1.2, paid, agreed to pay, or authorized
the payment of a total of $9,000,000 toward such costs, USX shall retain all
responsibility and liability, as a Retained Liability, for any and all costs of
Environmental Remediation in excess of $9,000,000 (the "Additional SWMU
Amounts") to be incurred after the Closing which are necessary to satisfy any
Agency Demand applicable to any or all of the identified solid waste management
units listed in Schedule 11.2; provided, however, that costs incurred by RTI
Opco or NewTube to perform any Environmental Remediation, to the extent not
necessary to satisfy an Agency Demand, shall be not be counted toward the SWMU
Basket unless USX has approved such Environmental Remediation, such approval not
to be unreasonably withheld. RTI Opco and NewTube shall be responsible for
funding the SWMU Basket as follows: (a) any amounts actually paid by USS/Kobe
under the SWMU Basket prior to the Closing Date shall be deemed to have been
contributed by NewTube; and (b) any amounts paid by RTI Opco or NewTube under
the SWMU Basket on and after the Closing Date shall be borne by the party
responsible and liable for such liability in accordance with the MRA (i.e.,
NewTube shall be responsible for paying all amounts to the extent arising,
directly or indirectly, from or in connection with the USS/Kobe Tubular
Liabilities and RTI Opco shall be responsible for paying all amounts to the
extent arising, directly or indirectly, from or in connection with the USS/Kobe
Bar Liabilities) until the SWMU basket has been fully paid. Once the SWMU Basket
has been fully exhausted, USX shall pay any and all Additional SWMU Amounts as
provided in the first sentence of this clause (a) to the party that bears
responsibility and liability for such costs under the MRA; provided, however,
that in the event that RTI Opco or NewTube paid more than $4,500,000 of the
amounts that exhausted the SWMU Basket (the "SWMU Over-Contributing Party") (the
amount by which the contribution of the SWMU Over-Contributing Party exceeds
that of the other party, the "SWMU Catch-up Amount"), USX shall pay any
Additional SWMU Amounts otherwise owing hereunder to the other party instead to
both of RTI Opco and NewTube in the same proportion that such parties
contributed to the SWMU Basket until such time as the SWMU Over-Contributing
Party has received an amount, otherwise owing hereunder to the other party,
equal to the SWMU Catch-up Amount. For example, if RTI Opco has paid $6,000,000
and NewTube has paid $3,000,000 of the amounts that exhausted the SWMU Basket,
Additional SWMU Amounts otherwise due to NewTube from USX shall instead be paid
66-2/3% to RTI Opco and 33-1/3% to NewTube until such time as RTI Opco has
received Additional SWMU Amounts equal to $3,000,000 (the full amount of the
SWMU Catch-up Amount).
<PAGE>
5
(b) To the extent USS/Kobe has caused, or RTI Opco or NewTube
causes, a Release of a Chemical Substance onto one of the identified solid waste
management units listed in Schedule 11.2 and there is an Agency Demand for
Environmental Remediation at the affected unit: (i) RTI Opco and NewTube shall
assume responsibility and liability (in accordance with the MRA) for only the
cost of that portion of the Environmental Remediation required to respond to the
Release caused by USS/Kobe, RTI Opco or NewTube and such costs shall not be
counted toward satisfaction of RTI Opco's and NewTube's responsibility for the
first $9,000,000 of such costs of Environmental Remediation set forth in Section
1.2(a)(i); and (ii) the remainder of such costs necessary to satisfy an Agency
Demand for Environmental Remediation at such units shall be allocated between
RTI Opco and NewTube and USX in accordance with Section 1.2(a).
(c)(i) Where an Agency Demand for Environmental Remediation
was triggered solely by USS/Kobe's decision, or would be triggered solely by RTI
Opco's or NewTube's decision, to make Use of any portion of an inactive,
identified solid waste management unit listed in Schedule 11.2 and identified as
inactive in Schedule 11.2, and where no Agency Demand for Environmental
Remediation at such unit has been made prior to the time of such decision to
make Use of such inactive unit, the cost of such Environmental Remediation shall
be allocated between RTI Opco and NewTube and USX as set forth in Section 1.2(a)
only if no other portion of the Real Property is available at that time which
would both (x) be suitable for such Use, and (y) be able to be put to that Use
without the need for any Environmental Remediation.
(c)(ii) Any cost of Environmental Remediation which does not
qualify under Section 1.2(c)(i) for allocation between RTI Opco and NewTube and
USX in accordance with Section 1.2(a) shall not be counted toward satisfaction
of RTI Opco's and NewTube's responsibility for the first $9,000,000 of costs of
Environmental Remediation set forth in Section 1.2(a)(i).
Section 1.3 Agency Demands for Environmental Remediation at
Additional Areas of the Real Property.
(a) Responsibility and liability for the cost of performing
any Environmental Remediation necessary to satisfy any Agency Demand made on or
before December 31, 1991 and applicable to any portion of the Real Property,
other than those listed in Schedules 11.1, 11.2, 11.4, and 11.5 shall be
allocated as follows: (i) RTI Opco and NewTube (collectively, in the manner set
forth in this clause (a) below) will assume responsibility and liability for the
first $12,000,000 (such amount, the "General Basket") of such costs to be spent
at any and all such unlisted areas; and (ii) once RTI Opco and NewTube have,
under the terms of this Section 1.3, paid, agreed to pay, or authorized the
payment of a total of $12,000,000 toward such costs, USX shall retain all
responsibility and liability, as a Retained Liability, for any and all costs of
Environmental Remediation in excess of $12,000,000 (the "Additional General
Amounts") which are necessary to satisfy any Agency Demand made on or before
December 31, 1991 applicable to any and all such unlisted areas. RTI Opco and
NewTube shall be responsible for funding the General Basket as follows: (a) any
amounts actually paid by USS/Kobe under the General Basket prior to the Closing
Date shall be deemed to have been contributed by NewTube;
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6
and (b) any amounts paid by RTI Opco or NewTube under the General Basket on and
after the Closing Date shall be borne by the party responsible and liable for
such liability in accordance with the MRA (i.e., NewTube shall be responsible
for paying all amounts to the extent arising, directly or indirectly, from or in
connection with the USS/Kobe Tubular Liabilities and RTI Opco shall be
responsible for paying all amounts to the extent arising, directly or
indirectly, from or in connection with the USS/Kobe Bar Liabilities) until the
General Basket has been fully paid. Once the General Basket has been fully
exhausted, USX shall pay any and all Additional General Amounts as provided in
the first sentence of this clause (a) to the party that bears responsibility and
liability for such costs under the MRA; provided, however, that in the event
that RTI Opco or NewTube paid more than $6,000,000 of the amounts that exhausted
the General Basket (the "General Over-Contributing Party") (the amount by which
the contribution of the General Over-Contributing Party exceeds that of the
other party, the "General Catch-up Amount"), USX shall pay any Additional
General Amounts otherwise owing hereunder to the other party instead to both of
RTI Opco and NewTube in the same proportion that such parties contributed to the
General Basket until such time as the General Over-Contributing Party has
received an amount, otherwise owing hereunder to the other party, equal to the
General Catch-up Amount. For example, if RTI Opco has paid $8,000,000 and
NewTube has paid $4,000,000 of the amounts that exhausted the General Basket,
Additional General Amounts otherwise due to NewTube from USX shall instead be
paid 66-2/3% to RTI Opco and 33-1/3% to NewTube until such time as RTI Opco has
received Additional General Amounts equal to $4,000,000 (the full amount of the
General Catch-up Amount).
(b) If USS/Kobe caused a Release of a Chemical Substance onto
any portion of the Real Property, other than those listed in Schedules 11.1,
11.2, 11.4, and 11.5 and there was an Agency Demand made on or before December
31, 1991 for Environmental Remediation at any such unlisted area, RTI Opco and
NewTube shall assume responsibility and liability (in accordance with the MRA)
for only the cost of that portion of the Environmental Remediation required to
respond to the Release caused by USS/Kobe, and such costs shall not be counted
toward satisfaction of RTI Opco and NewTube's responsibility for the first
$12,000,000 of the cost of such Environmental Remediation set forth in Section
l.3(a)(i); and the remainder of such costs necessary to satisfy an Agency Demand
made on or before December 31, 1991 for Environmental Remediation at any such
area shall be allocated between RTI Opco and NewTube and USX in accordance with
Section 1.3(a).
Section 1.4 USX Environmental Projects. USX shall retain all
responsibility and liability, as Retained Liabilities, for: (i) the cost of
completing all of the environmental projects listed in Schedule 11.4; and (ii)
any fines, penalties, or other costs required to satisfy any Agency Demand
arising out of or related to satisfaction of any Legal Requirement or
Environmental Law applicable to the performance leading to the completion of any
such environmental project, regardless of whether such costs exceed the amounts
previously budgeted and authorized by USX for completion of such projects.
Section 1.5 Active Solid Waste Management Units. Schedule 11.5
sets forth a list of the active solid waste management units located on the Real
Property that, in addition to
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those solid waste management units listed on Schedule 11.1, 11.2 or 11.4, will
be excepted from the allocation of liabilities described in Section 1.3(a).
Section 1.6 Groundwater Remediation Costs. In addition to, and
without limiting the effects of, any other provision hereof, responsibility and
liability for the cost of performing any Groundwater Remediation (other than the
costs of performing Environmental Remediation of groundwater associated with the
USX environmental projects listed in Schedule 11.4, for which responsibility is
retained by USX) shall be allocated as follows: (i) RTI Opco and NewTube and
will assume responsibility and liability for 65 percent of such costs (allocated
in accordance with the MRA); and (ii) USX shall retain responsibility and
liability, as a Retained Liability, for 35 percent of such costs.
Section 1.7 Liability for Off-Site Environmental Conditions.
(a) USX shall retain all responsibility and liability, as a
Retained Liability, for all costs, claims, and liabilities for Environmental
Remediation and Groundwater Remediation caused by, arising out of, or otherwise
relating to acts or omissions of either USX or USX's USS division ("USS"), or
their agents prior to June 30, 1989, with respect to any site, property, or area
(other than the Real Property) used for or affected by any disposal or Release
of any Chemical Substance caused by, arranged by, or attributable to USX, USS,
or their agents.
(b) RTI Opco and NewTube shall assume all responsibility and
liability (in accordance with the MRA) for all costs, claims, and liabilities
for Environmental Remediation and Groundwater Remediation caused by, arising out
of, or otherwise relating to acts or omissions of USS/Kobe, RTI Opco or NewTube
or their agents on or after June 30, 1989, with respect to any site, property,
or area (other than the Real Property) used for or affected by any disposal or
Release of any Chemical Substance caused, arranged by, or attributable to
USS/Kobe, RTI Opco or NewTube or their agents.
(c) In the event that any site, property, or area (other than
the Real Property) has been or is used for or affected by any disposal or
Release of any Chemical Substance that was or is caused by, arranged by, or
attributable to both: (i) the acts or omissions of either USX, USS, or their
agents prior to June 30, 1989; and (ii) the acts or omissions of USS/Kobe, RTI
Opco or NewTube or their agents on or after June 30, 1989, then all costs,
claims, and liabilities for Environmental Remediation and Groundwater
Remediation caused by, arising out of, or otherwise relating to such acts or
omissions shall be allocated between RTI Opco and NewTube and USX on a pro-rata
basis determined by the volume of Chemical Substance disposed of or Released on
any such site, property, or area which is attributable to each party. Any such
liability allocated to USX pursuant to this Section 1.7(c) shall be a Retained
Liability.
(d) USX agrees and acknowledges that the term "Real Property"
as used in this Section 1.7 will not be deemed to include portions of the Black
River not owned by USX, USS/Kobe or NewTube, as the case may be, as part of
Lorain Works.
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8
Section 1.8 Asbestos Survey and Remediation. USX shall retain
all responsibility and liability, as a Retained Liability, for: (i) the costs of
completing the entire asbestos survey authorized at the Lorain Works in
existence at June 30, 1989; and (ii) the costs of remediating all asbestos and
asbestos-containing material identified as friable in the Lorain Works asbestos
survey in existence at June 30, 1989. For purposes of this provision, costs of
remediation shall include but not be limited to all costs of testing, analysis,
encapsulation, removal, packaging and on-site and off-site transportation,
management, and disposal of asbestos and asbestos-containing material.
Section 1.9 Pre-June 30, 1989 Violation of Environmental Laws.
USX shall retain responsibility and liability, as a Retained Liability, for any
criminal penalties, civil penalties, Damages, or other costs based on, arising
out of, related to, or necessary to resolve any violations or alleged violations
of any Environmental Law which occurred at the Lorain Works prior to June 30,
1989; provided, that notice of such violation or alleged violation was issued by
any governmental body, provided by any other person, or was otherwise given to
USX on or before December 30, 1989; provided, further, however, that this
limitation on USX's responsibility and liability for costs related to such
violations of Environmental Laws shall not apply to or in any way limit those
Retained Liabilities relating to any pre-June 30, 1989 violations of
Environmental Laws which relate to or are otherwise based on USX's obligations
set forth in Sections 1.4, 1.7, and 1.8.
Section 1.10 Changes in Environmental Law. Responsibility and
liability for the costs of complying with any requirement of any Environmental
Law which was or is changed after June 30, 1989 shall be allocated as follows:
(i) USX shall retain all responsibility and costs, as a Retained Liability, for
complying with any requirement of any Environmental Law which was or is changed
after June 30, 1989 which applies to or otherwise affects the requirements
applicable to performance of the D-2 hazardous waste landfill and Black River
dredging project listed and identified in Schedule 11.4; (ii) if any requirement
of any Environmental Law pertaining to Groundwater Remediation was or is changed
after June 30, 1989, it shall have no effect on the allocation of responsibility
and liability set forth in Section 1.6 for the cost of performing any
Groundwater Remediation; (iii) if any Environmental Remediation of any site,
property, or area (other than the Real Property) used for or affected by any
disposal or Release of any Chemical Substance was or is changed after June 30,
1989, it shall have no effect on the allocation of responsibility and liability
set forth in Section 1.7 for the cost of performing any such Environmental
Remediation; (iv) if any requirement of any Environmental Law applicable to the
Environmental Remediation of any portion of the Real Property referred to in
Sections 1.1, 1.2, or 1.3 was or is changed after June 30, 1989, it shall have
no effect on the allocation of responsibility and liability set forth in
Sections 1.1, 1.2 and 1.3 for the cost of performing any such Environmental
Remediation if the change implements a specific statutory provision that was
enacted on or before June 30, 1989; provided, however, that once any such
portion of the Real Property has undergone Environmental Remediation for which a
certification of complete closure or approval has been issued by the appropriate
governmental agencies, the costs of and responsibility for any additional
Environmental Remediation which is subsequently required of that portion of the
Real Property shall be assumed by RTI Opco and NewTube (in accordance with the
MRA); and (v) notwithstanding the foregoing, if any
<PAGE>
9
requirement of any Environmental Law applicable to the Environmental Remediation
of any portion of the Real Property referred to in Sections 1.1, 1.2, or 1.3 was
or is changed after June 30, 1989 and such change would apply a more stringent
control technology or performance standard to any production facility or
operating unit under either the Clean Air Act or the Clean Water Act, then RTI
Opco and NewTube (in accordance with the MRA) shall assume the cost of complying
with that more stringent control technology or performance standard.
Section 1.11 Validity. In the event any one or more of the
provisions contained in this Letter should be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby.
Section 1.12 Governing Law. This Agreement will be governed by
and construed in accordance with the law of the State of New York.
<PAGE>
10
Very truly yours,
USX Corporation
By: /s/ A. E. Ferrara, Jr.
-------------------------------
Name: A. E. Ferrara, Jr.
Title: Vice President-Strategic
Planning
Acknowledged and Accepted,
Republic Technologies International, LLC
By: /s/ John B. George
----------------------------------------
Name: John B. George
Title: Authorized Person
Lorain Tubular Company, LLC
By: /s/ R. M. Stanton
----------------------------------------
Name: R. M. Stanton
Title:
Kobe Steel, Ltd.
By: /s/ Susumu Okushima
----------------------------------------
Name: Susumu Okushima
Title:
<PAGE>
THIS AMENDMENT NO. 2 TO MASTER AGREEMENT (the "Amendment") is
dated as of this __ day of August 1999, by and between JOHNSTOWN INDUSTRIAL
DEVELOPMENT CORPORATION, a nonprofit corporation organized and existing under
the laws of the Commonwealth of Pennsylvania and an industrial development
agency certified by PIDA ("JIDC"), the COUNTY OF CAMBRIA, a county of the fourth
class under the laws of Pennsylvania ("Cambria County"), the CITY OF JOHNSTOWN,
a home rule city of the third class organized and existing under its home rule
charter (the "City of Johnstown") (JIDC, Cambria County, and the City of
Johnstown collectively, the "Assistance Entities"), and REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC, a Delaware limited liability company (the "Borrower").
ARTICLE I
BACKGROUND
1.01. The Assistance Entities, together with the COMMONWEALTH
OF PENNSYLVANIA, acting by and through the DEPARTMENT OF COMMERCE ("Commerce'),
THE COMMONWEALTH OF PENNSYLVANIA acting by and through the DEPARTMENT OF
COMMUNITY AFFAIRS ("DCA"), THE PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY, a
body corporate and politic and an agency and instrumentality of the Commonwealth
of Pennsylvania (`PIDA"), are parties to a Master Agreement dated July 18, 1994,
as amended by Amendment No.1 thereto dated September 21, 1994 (such agreement,
as so amended, the "original Master Agreement"), providing for the acquisition
and subsequent modernization, by a Delaware corporation then named BRW STEEL
CORPORATION and subsequently renamed BAR TECHNOLOGIES, INC. authorized to carry
on business as a foreign corporation (such corporation, "BarTech"), of certain
facilities in
<PAGE>
2
Cambria County, Pennsylvania formerly owned by Bethlehem Steel Corporation and
comprising a portion of its Bar, Rod and Wire Division and for financial
assistance to BarTech by the Assistance Entities for a portion of the cost of
such acquisition and modernization.
1.02. In connection with a recapitalization of and a change in
control in BarTech effected April 2, 1996, BarTech and certain of the Assistance
Entities entered into a letter agreement dated March __,1996, providing for
amendment of certain of the terms and conditions of the original Master
Agreement (the "1996 Letter Agreement"), a true and correct copy of which is
attached as Exhibit A hereto.
1.03. Subsequent to the 1996 Letter Agreement, BarTech has
requested and the Assistance Entities have agreed to certain additional changes
to the Original Master Agreement, as set forth in a letter from John M.
Whitlock, Deputy Chief Counsel of the Commonwealth of Pennsylvania Department of
Community and Economic Development to BarTech dated October 31,1997 (the "1997
Letter Agreement"), a true and correct copy of which is attached as Exhibit B
hereto.
1.04. As of the date hereof, the following events are taking
place, pursuant to a Master Restructuring Agreement dated ________,1999, a true
and correct copy of which, exclusive of exhibits, schedules and appendices, is
attached as Exhibit C-1 hereto (the "Master Restructuring Agreement"), and as
described in a Consent Information Memorandum dated July __, 1999, a true and
correct copy of which is attached as Exhibit C-2 hereto: (a) the Facility is
being acquired by the Borrower named herein, (b) the PIDA Loans and the Sunny
Day Loan (each as defined in the Master Agreement) are being prepaid in full,
(c) the Assistance Entities whose loans are not being prepaid in full are
consenting to the placement of additional senior and superior liens on the
Facility Real Property and Facility Equipment, pursuant to an Amended and
<PAGE>
3
Restated Intercreditor and Subordination Agreement of even date herewith between
and among the Borrower, the Assistance Entities, United States Trust Company of
New York, as Collateral Agent, United States Trust Company of New York, as
Trustee (the "Trustee"), BankBoston, N.A., as Agent (the "Agent"), Republic
Technologies International Holdings, LLC, a Delaware limited liability company
("Holdings"), RTI Capital Corp., a Delaware corporation, Bliss & Laughlin LLC, a
Delaware limited liability company ("Bliss LLC"), Canadian Drawn Steel Company,
a Canadian corporation, Nimishillen & Tuscarawas, LLC, a Delaware limited
liability company ("N&T") and certain other parties thereto (the "Intercreditor
Agreement"), (d) the ECP Loan is being closed, (e) all payments of principal and
interest on the BID Loan and CDBG Loans required under the respective notes
therefor to be paid on or before the date hereof are being made as of the date
hereof to the extent not made previously, notwithstanding any prior waiver or
deferral agreement by the Assistance Entities or any of them with respect
thereto; (f) the terms of the EDP Loans, the BID Loan, the CDBG Loan and the
Section 108 Loans (as defined in the Section 108 Loan Agreement dated as of July
20, 1994, as amended, between and among Cambria County, the City of Johnstown,
BarTech, and "BRW Steel Corporation--Johnstown", a former subsidiary of BarTech
subsequently merged into BarTech (such agreement, the "Section 108 Loan
Agreement", and such loans, the "Section 108 Loans") (the EDP Loans, the BID
Loan, the CDBG Loans and the Section 108 Loans collectively, the "Loans") are
being assumed by the Borrower and amended and restated as set forth in Amended
and Restated Loan Agreements and Amended and Restated Notes being executed and
delivered by the Borrower concurrently herewith, and (g) BarTech is being
released from is obligations in respect of the Loans.
<PAGE>
4
1.05. In light of the foregoing, the Assistance Entities and
the Borrower wish to enter into this Amendment No. 2 to the Master Agreement to
reflect the changes described herein and to confirm the amendments, waivers and
payment deferrals referred to in the 1996 Letter Agreement and 1997 Letter
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto, intending to be
legally bound hereby, agree as follows:
ARTICLE II
AMENDMENTS TO ORIGINAL MASTER AGREEMENT
Section 2.01. Substitution of Borrower for BarTech. On the
date hereof, Borrower will assume all the obligations, responsibilities and
liabilities of BarTech in respect of the Loans, and each of Holdings, Bliss LLC,
and N&T (the "Guarantors") will guarantee and act as surety for such
obligations. Subject to this assumption by the Borrower and guarantee by the
Guarantors, the Assistance Entities will release and discharge BarTech from all
obligations in respect of the Loans, and BarTech will release and discharge the
Assistance Entities from any and all obligations to it. The parties hereto agree
that any reference to "Borrower" in the Master Agreement shall mean the Borrower
as defined in this Amendment.
Section 2.02. Closing on ECP Loan. Borrower, the Guarantors
and the City of Johnstown will execute and deliver the Loan Agreement, Note and
Guaranty for the ECP Loan in substantially the form attached as Exhibits D-1,
D-2 and D-3 hereto; subject to such execution and delivery by the Borrower and
the Guarantors, the City of Johnstown will disburse the proceeds of the ECP Loan
to the Borrower on the date hereof.
Section 2.03. Repayment Sunny Day Loans: Payment of
Arrearages. On the date hereof, Borrower will repay the full outstanding
principal and interest balances of the PIDA and
<PAGE>
5
Sunny Day Loans by wire transfer to the Commonwealth of Pennsylvania as directed
by the Commonwealth of Pennsylvania. On the date hereof, Borrower will pay to
JIDC an aggregate amount equal to the difference between the sum of all
scheduled payments of principal and interest due to be made under the BID Note
as originally in effect (without giving effect to any deferral of principal or
interest payments heretofore granted) and the sum of all such payments actually
made through the date hereof. On the date hereof, Borrower will pay to Cambria
County an aggregate amount equal to the difference between the sum of all
scheduled payments of principal and interest due to be made under the CDBG Note
as originally in effect (without giving effect to any deferral of principal or
interest payments heretofore granted) and the sum of all such payments actually
made through the date hereof.
Section 2.04. Amended and Restated Loan Documents; Amendment
No. 2 to Section 108 Loan Agreement. The EDP Loans, CDBG Loans, and BID Loans
shall be amended and restated as set forth in Exhibits E-1 through E-_, F-1
through F-_, and G-1 through G-_ attached hereto. The Section 108 Loan Agreement
shall be amended as set forth in Amendment No. 2 to the Section 108 Loan
Agreement set forth as Exhibit H hereto.
Section 2.05. Appendix C: Appendix C to the original Master
Agreement is hereby restated and replaced in is entirety by the form of Appendix
C attached to this Amendment. All references in any of the Loan Documents to
"Appendix C to the Master Agreement" shall henceforth refer to Appendix C as
amended and restated herein.
To induce the Assistance Entities to consent to the
transactions occurring on the date hereof, including without limitation the
assumption of the Loans by Borrower and the release of BarTech, Borrower assumes
and repeats, as of the date of this Amendment, the representations and
warranties set forth in Appendix C to the Master Agreement.
<PAGE>
6
Section 2.06. Amended and Restated Appendix D. Except as
otherwise provided in this Amendment, Appendix D to the original Master
Agreement is hereby restated and replaced in its entirety by the form of
Appendix D attached to this Amendment. All references in any of the Loan
Documents to "Appendix D to the Master Agreement" shall henceforth refer to
Appendix D as amended and restated herein.
Section 2.07. Affirmation of 1997 Letter Agreement. Any other
provision of this Amendment notwithstanding, the Borrower accepts and agrees to
the 1997 Letter Agreement and to those provisions of the original Master
Agreement specifically amended or otherwise referred to in the 1997 Letter
Agreement. Without limiting the generality of the foregoing, Section D.1.5 of
the Original Master Agreement (as amended by the 1997 Letter Agreement) shall
remain unchanged and shall not be amended hereby.
Section 2.08. Fulfillment of Financing Obligations. Borrower
acknowledges that, upon receipt by the Borrower of the proceeds of the ECP Loan
as described in section 2.02 hereof, the Assistance Entities, Commerce, PIDA and
DCA shall have fulfilled in all respects their obligations to provide funds
under the Master Agreement.
Section 2.09. Collateral. The Collateral for the Loans shall
be as set forth in Section 4.2 of the Intercreditor Agreement.
Section 2.10. Release of Lower Works Property and Separation
of Utilities. The Assistance Entities acknowledge the cooperation of BarTech in
preparing for the donation of the property known as the "Lower Works" to one or
more of the Assistance Entities for purposes of industrial redevelopment and
historic preservation, including without limitation the incurrence by BarTech of
significant expense for separation of utilities and improvement of access to the
Lower Works site. Borrower pledges to use its best reasonable efforts to
complete the donation of the
<PAGE>
7
Lower Works in a timely fashion and in connection therewith to carry out the
currently identified projects for access and separation of utilities. The
parties hereto agree that any reference to the "Facility" in the Master
Agreement shall henceforth be deemed not to refer to the Lower Works.
ARTICLE III
MISCELLANEOUS
Section 3.01. (a) References to Master Agreement. All
references in this instrument and in all other agreements, instruments and
documents executed and delivered by the parties hereto or any of them to the
Master Agreement shall be deemed to refer to the original Master Agreement as
further amended by this Amendment and as hereafter amended, supplemented or
otherwise modified pursuant to its terms.
(b) Upon execution and delivery of this instrument, each
reference in the Master Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import, and each reference in any document related
thereto or executed in connection therewith or herewith, shall mean and be a
reference to the Master Agreement as amended hereby and the Master Agreement and
this Amendment shall be read together and construed as one single instrument.
Section 3.02 Master Agreement Preserved. (a) Except as
expressly amended by this Agreement, the original Master Agreement and any
document related thereto or executed in connection therewith, shall remain in
full force and effect and are hereby ratified and confirmed.
(b) The Master Agreement, as defined in this Amendment to
include the amendments referred to herein, shall be automatically incorporated
by reference in all agreements, instruments and documents executed and delivered
by the parties hereto or any of
<PAGE>
8
them which incorporate the Master Agreement by reference therein, all of which
are expressly ratified and confirmed hereby.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any party under the Master Agreement or any
document related thereto or constitute a waiver of the Master Agreement or any
provision of any document related thereto.
Section 3.03. Defined Terms. All capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Master
Agreement, or, if not defined in the Master Agreement, in the Intercreditor
Agreement.
Section 3.04. Address for Notices. For purposes of the Master
Agreement and the Loan Documents, notices to the Borrower shall be addressed to
the following address, or to such other address as Borrower may direct in a
notice to the Assistance Entities:
REPUBLIC TECHNOLOGIES INTERNATIONAL LLC
3770 Embassy Parkway
Akron, OH 44333
Telecopy: (330) 670-3020
Attn: Thomas Tyrrell
<PAGE>
9
IN WITNESS WHEREOF, the parties have caused this Amendment to
be duly executed by their duly authorized officers as of the day and year first
above written.
THE CITY OF JOHNSTOWN
By:
- -------------------------------- -------------------------------------
City Clerk City Manager
ATTEST: JOHNSTOWN INDUSTRIAL DEVELOPMENT
CORPORATION
By:
- -------------------------------- -------------------------------------
County Clerk Title: President
ATTEST: THE COUNTY OF CAMBRIA
By:
- -------------------------------- -------------------------------------
County Clerk President Commissioner
ATTEST: REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC.
By:
- -------------------------------- -------------------------------------
Title:
(COMPANY SEAL)
<PAGE>
10
ACKNOWLEDGEMENT BY THE COMMONWEALTH OF PENNSYLVANIA
The Commonwealth of Pennsylvania, Acting by and through its
Department of Community and Economic Development (formerly known as the
Department of Commerce), on its own behalf and as successor to the Commonwealth
of Pennsylvania Acting by and through the Department of Community Affairs,
hereby acknowledges and consents to the execution and delivery by the Assistance
Entities of this Amendment No. 2 to Master Agreement.
THE COMMONWEALTH OF PENNSYLVANIA, Acting by and
through its DEPARTMENT OF COMMUNITY AND ECONOMIC
DEVELOPMENT
By:
-------------------------------------
Emily J. White, Deputy Secretary
By:
-------------------------------------
David E. Black, Deputy Secretary
<PAGE>
PARTICIPATION AGREEMENT
This Participation Agreement (this "Agreement") is made as of
August 13, 1999 between USX Corporation ("USX") and Republic Technologies
International, LLC ("Republic").
W I T N E S S E T H :
Whereas, pursuant to the Asset Purchase and Contribution
Agreement dated as of May 31, 1989 and an Assignment and Assumption Agreement
dated June 30, 1989 (collectively, the "Asset Agreements") both among Kobe
Steel, Ltd., Kobe/Lorain Inc., USX, USS Lorain Holding Company, Inc. and
USS/KOBE Steel Company ("UKS"), UKS has been performing USX's obligations under,
inter alia, certain agreements set forth in Schedule 2.1 (d) (4) of the
aforesaid Asset Purchase and Contribution Agreement respecting: (a) $4,745,000
Ohio Air Quality Development Authority Floating Rate Environmental Improvement
Revenue Bonds, 1980 Series B (United States Steel Corporation Project) (the
"1980B Bonds"), and (b) $9,000,000 State of Ohio Variable Rate Demand
Environmental Improvement Revenue Bonds, Series 1984 (United States Steel
Corporation Project) (the "1984 Bonds"); and
Whereas, on November 16, 1995, USX engaged in the refunding of
various environmental revenue bonds, including the 1980B Bonds, in order to
achieve debt service savings and to extend the maturities of such bonds; and
Whereas, because UKS would benefit from that refunding, it
entered into a Participation Agreement with USX dated November 16, 1995 (the
"1995 Participation Agreement") pursuant to which UKS agreed to pay the debt
service on $4,745,000 (46.70%) of $10,160,000 Ohio Air Quality Development
Authority Variable Rate Environmental Improvement Revenue Bonds (USX Corporation
Project) Refunding Series of 1995 (the "1995 Bonds"-- the 1984 Bonds and the
1995 Bonds are collectively referred to as the "Bonds"); and
Whereas, Republic has, on the date hereof, effectively merged
with UKS and in connection therewith it has been agreed Republic will, to the
extent set forth in this Agreement, assume USX's obligations respecting the 1984
Bonds as well as 46.70% of USX's obligations respecting the 1995 Bonds as set
forth herein (collectively, the "EIRB Obligations").
Now, therefore, in consideration of the premises and intending
to be legally bound, the parties hereto agree as follows:
1. Republic assumes all of USX's payment obligations
respecting the EIRB Obligations including, without limitation, the obligation to
pay debt service on the 1984 Bonds and 46.70% of the debt service on the 1995
Bonds. The term "debt service" is meant to include all sums due with respect to
the Bonds including, without limitation, payments of principal, interest and
premium, letter of credit fees and expenses, trustee fees and expenses, issuer
fees and expenses and remarketing fees and expenses.
<PAGE>
2
2. Republic agrees to employ all reasonable efforts to take
all such action or refrain from acting so as to assure USX's compliance, and to
cooperate with USX in its endeavors to comply, with its obligations under the
various documents respecting the Bonds (collectively, the "Bond Documents")
including, without limitation, covenants respecting the financed facilities, in
each case, necessary to avoid the occurrence of an Event of Default under the
Bond Documents or cause the interest on the Bonds to be included in the gross
income of the holders thereof except holders who are "substantial users" or
"related persons" as defined in Section 147(a) of the Internal Revenue Code of
1986, as amended or its predecessor.
3. Subject to USX's discretion regarding the availability of
letters of credit respecting the Bonds as hereinafter described, Republic may
from time to time direct conversion of the 1984 Bonds to different interest rate
periods by providing an appropriate notice (i.e., so as to allow sufficient time
under the provisions of the Bond Documents respecting the 1984 Bonds) in writing
to USX, and USX shall undertake all reasonable efforts to effectuate such
conversion. If Republic notifies USX in writing that Republic elects to lawfully
redeem all or part of the 1984 Bonds and supplies adequate funds therefor, USX
shall be required to effectuate such redemption(s) and Republic's obligations
under this Agreement shall be reduced accordingly. USX shall not, without the
prior written consent of Republic, direct the redemption of any 1984 Bonds prior
to maturity. Except as expressly granted by this Agreement, Republic shall have
no rights with respect to the 1984 Bonds. USX will not, without the prior
written consent of Republic, convert the 1984 Bonds to a different interest
rate. Notwithstanding anything in this Agreement to the contrary, Republic's
ability to direct conversion of the 1984 Bonds to a different interest rate
period and maintain a given interest rate period shall be subject to USX's
willingness to maintain an appropriate letter of credit respecting the 1984
Bonds.
4. Republic may from time to time suggest conversion of the
1995 Bonds to different interest rate periods to USX, but may not direct such
conversions. If Republic notifies USX in writing that Republic elects to
lawfully redeem all or part of its 46.70% share of the 1995 Bonds and supplies
adequate funds therefor, USX shall be required to effectuate such redemption(s)
and Republic's obligations under this Agreement shall be reduced accordingly.
USX shall not, without the prior written consent of Republic, direct the
redemption of any 1995 Bonds attributable to Republic's 46.70% share of the 1995
Bonds prior to maturity. Except as expressly granted by this Agreement, Republic
shall have no rights with respect to the 1995 Bonds. USX shall, inter alia, be
entitled to convert the 1995 Bonds to different interest rates at any time,
provided that it shall advise Republic in writing at or prior to such
conversion. Notwithstanding the foregoing and subject to USX's rights regarding
its ability not to extend or renew letters of credit as set forth elsewhere in
this Agreement, USX will not convert the 1995 Bonds to a fixed interest rate
without the prior written consent of Republic.
5. USX represents and warrants that to the best of its
knowledge: (a) there are no matured or unmatured events of default currently
outstanding under the Bonds Documents that could reasonably be expected to cause
an acceleration of the obligations thereunder, and (b) the interest on the Bonds
is excludible from gross income of the holders thereof except holders who are
"substantial users" or "related persons" as defined in Section 147(a) of the
Internal Revenue Code of 1986, as amended or its predecessor.
<PAGE>
3
USX agrees to employ all reasonable efforts to take all such
action or refrain from acting so as to assure compliance with its obligations
under the Bond Documents including, without limitation, covenants respecting the
financed facilities in each case necessary to avoid the occurrence of an event
of default under the Bond Documents or cause the interest on the Bonds to be
included in the gross income of the holders thereof except holders who are
"substantial users" or "related persons" as defined in Section 147(a) of the
Internal Revenue Code of 1986, as amended or its predecessor.
USX agrees to refrain from amending or modifying the Bond
Documents without the prior written consent of Republic (such consent not to be
unreasonably withheld or delayed).
USX shall have no obligation to maintain any letter of credit
with respect to the Bonds. If any such letter of credit is terminated, USX shall
advise Republic in writing as promptly as practicable. USX shall advise Republic
promptly if it elects not to renew or continue any letter of credit that
supports payment of the Bonds.
If as a result of USX's conveyance of the facilities financed
by the proceeds of the 1984 Bonds to UKS or Republic, the 1984 Bonds become due
prior to maturity, the following shall occur: (a) USX shall pay the amount due
on the 1984 Bonds upon such acceleration (including, if applicable, amounts due
under the letter of credit, if any, relating to the 1984 Bonds), (b) Republic
shall pay USX interest on the first business day of each month payable in
arrears on the principal sum of the 1984 Bonds (i.e., $9,000,000) at a rate
equal to the average rate of interest on the 1984 Bonds for the preceding year,
and (c) Republic shall pay USX an amount equal to the principal sum of the 1984
Bonds (i.e., $9,000,000) on the maturity date thereof (December 1, 2001).
6. (a) The following shall be "Events of Default" under this
Agreement:
(i) Republic shall fail to make any payment hereunder
when due and such failure shall continue for two business days
after Republic becomes aware thereof;
(ii) Republic shall fail to comply with any other
covenant contained in this Agreement and such failure shall
continue for more than thirty (30) days after Republic becomes
aware of it provided that such period shall be extended to the
extent (but only to the extent) it does not precipitate an
Event of Default under the applicable Bond Documents;
(iii) Republic shall make a general assignment for
the benefit of creditors, or file or have filed a petition in
bankruptcy, or a petition or answer seeking a readjustment of
Republic's indebtedness under the United States Bankruptcy
Code or any similar law or code, or Republic shall consent to
the appointment of a receiver or trustee of any of its
respective properties; or
<PAGE>
4
(iv) Republic shall be adjudged bankrupt or
insolvent, or a petition or proceedings for bankruptcy shall
be filed against Republic, and Republic shall admit the
material allegations thereof, or an order, judgment, or decree
shall be made approving such a petition, and such order,
judgment or decree shall not be vacated or stayed within sixty
(60) days of its entry, or a receiver or trustee shall be
appointed for Republic or its properties or any part thereof
and remain in possession thereof for sixty (60) days.
(b) Upon the occurrence of any one or more Events of Default
pursuant to subparagraphs (iii) or (iv) of paragraph 6(a), all sums then or
thereafter due hereunder shall become immediately due and payable. Upon the
occurrence of any one or more of the other Events of Default, all sums then or
hereafter due hereunder shall, at USX's option, immediately become due and
payable. Overdue amounts shall bear interest at a rate of interest equal to that
announced from time to time by Morgan Guaranty Trust Company of New York as its
"prime rate" plus two percent per annum.
7. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof and supersedes any other
agreement, whether written or oral, that may have been made or entered into by
any party hereto (or by any director, officer or representative of such parties)
relating to the matters contemplated hereby. By its execution and delivery of
this Agreement, USX releases UKS from its obligations with respect to the Bonds
under the Asset Agreements and the 1995 Participation Agreement. It is the
intent of the parties that the obligations agreed to by Republic under this
Agreement supercede any obligations with respect to the Bonds Republic would
succeed to under the Asset Agreements and the 1995 Participation Agreement.
8. The recitals set forth at the beginning of this Agreement
are true and correct and are incorporated into the terms of this Agreement.
9. This Agreement and all the terms and provisions hereof
shall be binding upon and shall inure to the benefit of the parties and their
respective legal representatives, heirs, successors and assigns. Notwithstanding
the foregoing, no party may assign its rights or obligations under this
Agreement without the written consent of the other.
10. This Agreement may be executed in one or more
counterparts, each of which shall, for all purposes, be deemed an original and
all of such counterparts, taken together, shall constitute one and the same
Agreement.
11. In case any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein and, in lieu of each such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement, a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and still be legal, valid and enforceable.
<PAGE>
5
12. Each of the parties hereto agrees to execute all documents
and instruments and to take or to cause to be taken all actions that are
necessary or appropriate to complete the transactions contemplated by this
Agreement.
13. No waiver of any provision of this Agreement shall be
valid unless it is in writing and executed by the party to be charged. The
waiver by any party of any breach of this Agreement (whether in writing, by
course of conduct or otherwise) shall not operate or be construed as a waiver of
any subsequent breach.
14. Nothing in this Agreement, express or implied, is
intended to confer upon any third party any rights or remedies under or by
reason of this Agreement. Each party represents that it is entering into this
Agreement as principal for its own account and not as an agent for any other
party.
15. By its execution in the space hereinafter provided, Kobe
Steel, Ltd. acknowledges the appropriateness of this agreement and its consent
to the execution and delivery of this agreement by the parties hereto.
16. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
<PAGE>
6
Witness the due execution hereof.
USX Corporation
By:
-------------------------------------
Name: A.E. Ferrara, Jr.
Title: Vice President
Republic International Technologies, LLC
By:
-------------------------------------
Name: Thomas N. Tyrrell
Title: Chief Executive Officer
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, made on May 20, 1999 by and between Republic Technologies
International (Bar Technologies, Inc. and Republic Engineered Steels, Inc.), and
RES Acquisition Corp., a Delaware limited liability company and Delaware
corporations (hereinafter "Company" shall refer to these entities and to the
survivor entity in any combination of such entities) and George Babcoke (the
"Executive").
RECITALS
In order to induce the Executive to serve as the Executive Vice President
and General Manager--Steel Manufacturing of the Company, the Company desires to
provide the Executive with compensation and other benefits on the terms and
conditions set forth in this Agreement.
The Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive during the term hereof as the Executive Vice
President and General Manager--Steel Manufacturing. In this capacity, the
Executive shall report to the President of the Company (the "President") and
shall have the customary powers, responsibilities and authorities of an
executive vice president and general manager--steel manufacturing of
corporations of the size, type and nature of the Company, as it exists from time
to time, and as are assigned by the President. It is understood by the parties
that the size, type, and nature of the Company is expected to expand rapidly via
acquisition or other business combination and that Executive's duties will be
commensurate with the duties of an executive vice president and general
manager--steel manufacturing of such expanded enterprise.
1.2 This Agreement is contingent on the consummation of the merger
or other business combination of Republic Technologies International (Bar
Technologies, Inc and Republic Engineered Steels, Inc) and USS/KOBE's Lorain
steelmaking and bar producing division. This Agreement shall have no force or
effect if this condition is not satisfied.
1.3 Subject to the terms and conditions of this Agreement, the
Executive hereby accepts employment as the Executive Vice President and General
Manager--Steel Manufacturing of the Company commencing as of July 1 1999, or
such other date as the transaction described in subsection 1.2 above is
consummated, and agrees to devote his full business time and efforts to the
performance of services, duties and responsibilities in connection therewith,
subject at all times to review and
<PAGE>
control of the President. During the term of Employment, the Executive also
agrees to serve, if elected, as an officer and/or director of any Subsidiary of
the Company, without the payment of any additional compensation therefor.
1.4 Nothing in this Agreement shall preclude the Executive from
engaging in charitable and community affairs, from managing any passive
investment (i.e., an investment with respect to which the Executive is in no way
involved with the management or operation of the entity in which the Executive
has invested) made by him in publicly traded equity securities or other property
(provided that no such investment may exceed 1% of the equity of any entity,
without the prior approval of the President) or from serving, subject to the
prior approval of the President, as a member of boards of directors or as a
trustee of any other corporation, association or entity, to the extent that any
of the above activities do not interfere with the performance of his duties
hereunder. For purposes of the preceding sentence, any approval by the President
required herein shall not be unreasonably withheld.
2. Term of Employment. The Executive's term of employment under this
Agreement (the "Term of Employment") shall commence on July 1, 1999 and, subject
to the terms hereof, shall terminate on the earlier of (i) September 30, 2001,
(the "Initial Term") or (ii) termination of the Executive's employment pursuant
to this Agreement; provided, however, that subsequent to the Initial Term, the
Executive's Term of Employment under this Agreement shall automatically renew
annually each October 1 for one year renewal terms (the "Renewal Term"); unless
the Company shall deliver to the Executive or the Executive shall deliver to the
Company written notice, at least 90 days prior to the expiration of the Initial
Term or any Renewal Term, that the Term of Employment shall not be extended, in
which case the Term of Employment will end at its then scheduled expiration date
and shall not be further extended except by written agreement of the Company and
the Executive.
3. Compensation.
3.1 Salary. During the Initial Term of the Executive's employment
under the terms of this Agreement, the Company shall pay Executive a base salary
("Base Salary") at the rate of not less than Two Hundred and Thirty-five
Thousand Dollars ($235,000) per annum. Base Salary shall be payable in
accordance with the ordinary payroll practices of the Company. During the Term
of Employment, the CEO shall, in good faith, review and, if determined by the
CEO to be appropriate, increase the Executive's salary at least annually and in
accordance with the Company's customary procedures and practices regarding the
salaries of senior executives, which procedures and practices, for example, will
include a review of the performance of the Company and the Executive, and any
increase in the cost of living during the relevant period. Increases in the rate
of salary, once granted, shall not be subject to revocation or decrease
thereafter.
3.2 Annual Bonus. (a) In addition to his base salary, the Executive
shall be eligible to receive an annual bonus (the "Annual Bonus"). Annual Bonus
amounts payable to the Executive shall be determined in the sole discretion of
the CEO and
<PAGE>
those members of the Board of Directors who were nominated and elected at the
request of Blackstone. Subject to the foregoing, the Annual Bonus shall be
determined in accordance with the Company's customary procedures and practices
regarding bonus awards to senior executives, which procedures and practices, for
example, shall include an evaluation of the Company's progress in meeting its
cash flow targets during the relevant period; notwithstanding the foregoing, the
Annual Bonus shall not be less than Seventy-five Thousand Dollars ($75,000) for
the fiscal years ending December 31, 1999 and December 31, 2000 (the "Minimum
Bonus"). If EBITDA (as such term is defined in paragraph (c) below) equals or
exceeds the EBITDA targets hereafter set by the CEO and/or the Board in
consultation with Executive for any fiscal year under this Agreement, the Annual
Bonus shall be at least One Hundred and Twenty-five Thousand Dollars ($125,000)
(the "Target Bonus"); provided, however, that such methodology for the
determination of the Annual Bonus shall only be utilized until such time as a
formula based on increase in shareholder value is mutually agreed upon by the
parties hereto; provided, further, if due to conditions beyond the Executive's
control, the EBITDA targets are not met for any fiscal year during the Term of
this Agreement, or targets are not met under such other methodology as is being
utilized for any fiscal year during the Term of this Agreement, the CEO and the
Board, in their sole discretion, may override such targets, and award the
Executive an Annual Bonus irrespective of the achievement of such targets.
Executive's Annual Bonus for 1999 shall not be prorated to reflect partial
employment during such year to the extent he forfeits any 1999 bonus from his
former employer. "Blackstone" shall mean, collectively, Blackstone Capital
Partners II Merchant Banking Fund L.P., Blackstone Offshore Capital Partners II
L.P., Blackstone Family Investment Partnership II L.P., The Blackstone Group
L.P. and their affiliates.
(b) The Annual Bonus shall be payable as soon as practicable after
December 31 of each calendar year in which such Annual Bonus was earned (the
"Bonus Term"); but in any event, the Annual Bonus shall be paid no later than 90
business days following the end of the Bonus Term; provided, however, no Annual
Bonus shall be payable unless the Executive is employed on the last day of each
such Bonus Term. The proviso in the previous sentence shall not apply if the
Executive's employment is terminated pursuant to Section 6.1 or 6.4 of this
Agreement.
(c) For purposes of this Section 3.2 "EBITDA" shall mean the
consolidated net income of the Company for the bonus period plus, to the extent
deducted in computing such consolidated net income, without duplication, the sum
of (a) income tax expense, (b) interest expense, (c) depreciation and
amortization expense, (d) any special charges (including, without limitation,
any noncash fees or expenses incurred in connection with the Transactions) and
any extraordinary or non-recurring losses, (e) monitoring and management fees
paid to any of the funds, the Veritas Entities and/or their respective
Affiliates, (f) dividend payments on and mandatory redemptions of the Bethlehem
Preferred Stock, in each case made in accordance with the terms thereof and to
the extent permitted by Section 6.06(d), (g) noncash expenses incurred in
connection with an employee stock ownership plan and (h) other noncash items
reducing consolidated net income, minus, to the extent added in computing such
consolidated net income, without duplication, (i) interest income, (ii)
<PAGE>
extraordinary or nonrecurring gains and (iii) other noncash items increasing
consolidated net income.
All terms and section references in the above definition of EBITDA shall have
the same meaning as in the Credit Agreement by and between Bar Technologies,
Inc., Bliss & Laughlin Steel Company, the Lenders named therein and Chemical
Bank Delaware dated as of April 2, 1996.
3.3 Signing Bonus. Executive shall receive a signing bonus of Three
Hundred Thousand Dollars ($300,000) ("Signing Bonus") within 30 days after the
Executive's Term of Employment commences; provided that this amount shall be
reduced dollar for dollar by the amount of any severance, continuing
compensation, deferred bonus, or other benefit (other than a qualified
retirement plan benefit) that is or will be paid to the Executive by USS/KOBE or
U.S. Steel. Furthermore, if the Executive resigns or the Executive's Term of
Employment is terminated for Cause (as defined in Section 6.2(b) hereof), the
Executive shall immediately repay the following portion of the Signing Bonus to
the Company (less the applicable portion of any federal, state or local income
tax paid by the Executive on the Signing Bonus): If such resignation or
termination occurs (i) on or before June 30, 2000, 100%; (ii) after June 30,
2000 but on or before June 30, 2001, 66.67%; or (iii) after June 30, 2001 but on
or before September 30, 2001, 33.33%.
4. Employee Benefits.
4.1 Stock Options. The Executive shall be eligible to receive
through an option plan one percent (1.00%) of the total available authorized and
outstanding common shares plus options on a fully diluted basis (including all
equity or options of the entire management team) of the survivor entity of the
business combination between Bar Technologies, Inc. and Republic Engineered
Steels, Inc. Such option shall be subject to dilution that may result from any
other action or transaction involving shares of Company, including the
anticipated combination with USS/KOBE's Lorain steelmaking and bar producing
division. The Executive shall receive the benefits of an Option Agreement (the
"Option Agreement"), which Option Agreement shall be drafted subsequent to the
signing of this Agreement and which Option Agreement shall contain terms
substantially similar to the Option Term Sheet, a copy of which is attached
hereto as Appendix A. The Executive shall also be eligible to participate in a
performance stock plan on a pro rata basis like other key executives, said plan
to be developed at a later date.
4.2 Employee Welfare Benefit Programs, Plans and Practices. The
Company shall provide the Executive while employed hereunder with coverage under
all welfare benefit programs, plans and practices (commensurate with his
position in the Company and to the extent permitted under any employee benefit
plan) in accordance with the terms thereof, which the Company makes available to
its senior executives.
<PAGE>
4.3 Vacation. The Executive shall be entitled to twenty (20)
business days paid vacation each calendar year, which shall be taken at such
times as are consistent with the Executive's responsibilities hereunder. Any
vacation days not taken by March 31 of the following year, unless approved by
the CEO, shall be forfeited without pay.
4.4 Additional Perquisites. During the Executive's employment
hereunder, the Company shall provide the Executive with (i) term life insurance
in an amount equal to two (2) times Base Salary; (ii) payment for initiation
fees at a social, dining, athletic or country club that the CEO has approved for
use by Executive for priority business entertainment purposes; (iii) the right
to participate in the 401(k) plan; (iv) long-term disability coverage providing
a monthly benefit of Twelve Thousand Five Hundred Dollars ($12,500); and (v) a
one-thousand dollar ($1,000) annual allowance for tax return preparation
expenses. Executive shall provide documentation of expenses under item (v) as
requested by Company.
5. Expenses. Subject to prevailing Company policy or such guidelines as
may be established by the CEO, the Company will reimburse the Executive for all
reasonable expenses incurred by the Executive in carrying out his duties.
6. Termination of Employment.
6.1 Termination Not for Cause or for Good Reason. (a) The Company or
Executive may terminate the Executive's Term of Employment at any time for any
reason by written notice. If the Executive's employment is terminated (i) by the
Company at the end of the Initial or any Renewal Term by giving notice of
nonrenewal under Section 2, or by the Company prior to the end of the Initial
Term or any Renewal Term, for any reason other than Cause (as defined in Section
6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death or (ii)
by the Executive for Good Reason (as defined in Section 6.1(b) hereof) the
Company shall continue to pay Executive's Base Salary and the Minimum Bonus or
the Target Bonus, as applicable, to the later of (i) June 30, 2002 or (ii) the
date that is one year from the date of such termination, with such payments to
be made in accordance with the terms of Sections 3.1 and 3.2. In addition,
Executive shall, during the period that he continues to be compensated under
this Agreement, continue participation and benefits under Company's welfare
benefit plans and programs that he is otherwise participating in prior to
cessation of employment; provided that, if such participation and benefits
cannot be provided under the terms of the applicable plans or programs, the
Company shall pay or reimburse Executive his costs for substantially equivalent
coverage.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) A reduction by the Company in Executive's Base Salary, a
reduction of the Minimum Bonus or Target Bonus, or a material change to the
formula used to determine bonus awards, provided that a change to such formula
that is mutually agreed to by the parties as contemplated under Section 3.2
shall not be "Good
<PAGE>
Reason" for this purpose; or
(ii) A substantial diminution or material adverse change in
the Executive's duties, responsibilities or reporting responsibility, unless due
to a promotion or increased responsibility; or
(iii) Relocation of Executive's primary work site to a
location more than fifty (50) miles from the Company's headquarters in Akron,
Ohio; provided, however, that a relocation of the Company's headquarters within
the State of Ohio shall not constitute "Good Reason" for this purpose.
6.2 Voluntary Termination by the Executive; Discharge for Cause. (a)
In the event that the Executive's employment is terminated (i) by the Company
for Cause, as hereinafter defined or (ii) by the Executive other than for Good
Reason, Disability or death, the Executive shall only be entitled to receive (i)
any Base Salary accrued but unpaid prior to such termination, (ii) any earned
but unpaid bonus from a prior Bonus Term, and (iii) any benefits provided under
the employee benefit programs, plans and practices referred to in Section 4.2
hereof, in accordance with their terms. After the termination of the Executive's
employment under this Section 6.2, the obligations of the Company under this
Agreement to make any further payments, or provide any benefit specified herein,
to the Executive shall thereupon cease and terminate, except any benefits that
may be required by federal or state law.
(b) As used herein, the term "Cause" shall be limited to (i) willful
gross misconduct by the Executive in the performance of his duties hereunder,
(ii) willful gross neglect by the Executive of his duties hereunder (other than
due to Disability, as such term is defined in Section 6.3 hereof) or repeated
and willful failure to follow reasonable instructions of the CEO, (iii) any
breach of the provisions of Section 11 of this Agreement by the Executive or
(iv) conviction or plea of guilty or nolo contendere by the Executive to any
felony (or indictable offense). Termination of the Executive pursuant to this
Section 6.2 shall be made by delivery to the Executive of written notice, given
at least 30 days prior to such Termination, from the CEO specifying the
particulars of the conduct by the Executive set forth in any of clauses (i)
through (iv) above. Termination shall be effective on the date set forth in the
notice, unless within 30 days after receiving such notice, the Executive shall
have cured Cause to the reasonable satisfaction of the Board of Directors;
provided, however, that no cure shall be possible for (A) any breach of Section
11 of this Agreement by the Executive or (B) a conviction or plea of nolo
contendere by the Executive to any felony (or indictable offense); and provided
further that Executive may be required to vacate Company premises prior to the
effective date of termination in those instances.
6.3 Disability. In the event that Executive is unable to perform his
duties under this Agreement on account of a disability which continues for one
hundred eighty (180) consecutive days or more, or for an aggregate of one
hundred eighty (180) days in any period of twelve (12) months, Company may, in
its discretion, terminate Executive's employment hereunder and Company's
obligation to make payments under Section 3 shall, except for earned but unpaid
salary and bonuses, cease immediately
<PAGE>
upon such termination, or, if later, shall cease on the date Executive becomes
entitled to benefits under the Company's long-term disability program. The
Company may, in its discretion, require written confirmation from a physician of
Disability during any extended absence. For purposes of this Agreement,
"Disability," shall be defined by the terms of the Company's long-term
disability policy, or, in the absence of such policy, as a physical or mental
disability that prevents Executive from performing substantially all of his
duties under this Agreement and which is expected to be permanent. The
commencement date and expected duration of any physical or mental condition that
prevents Executive from performing his duties hereunder shall be determined by a
medical doctor selected by mutual agreement between Executive and the Company.
6.4 Death. In the event of the Executive's death during his Term of
Employment hereunder or at any time thereafter while payments are still owing to
the Executive under the terms of this Agreement, all obligations of the Company
to make any further payments, other than the obligation to pay any accrued but
unpaid Base Salary and a pro rata share of the prior year's Annual Bonus, shall
terminate upon the Executive's death, and benefits shall become payable under
the Company's life and accidental death insurance program in accordance with its
terms.
6.5 No Further Notice, Compensation or Indemnity. (a) The Executive
understands and agrees that he shall not be entitled to any further notice,
compensation or indemnity upon Termination of Employment under this Agreement
other than amounts specified in this Section 6 and the Option Shares as set
forth in Appendix A hereto. Executive shall not have any obligation to seek
comparable employment following such termination or resignation. However, any
payment hereunder shall be offset by any compensation the Executive earns with a
new employer or from self-employment, but no such offset shall apply to any
compensation earned by Executive if his employment with Company is terminated
within twelve (12) months of a Change in Control (i) by the Company or successor
other than for Cause (as defined in Section 6.2) or (ii) by Executive for Good
Reason (as defined in Section 6.1).
(b) A "Change in Control" occurs on the first date on which the
holdings of Blackstone (as defined in Section 3.2 above) or Veritas, or the
combined holdings of Blackstone and Veritas, do not represent more than 50% of
the voting control of the Company. "Veritas" means "Veritas Entities or their
respective Affiliates", as that term is defined in the Credit Agreement by and
between Bar Technologies, Inc., Bliss & Laughlin Steel Company, the Lenders
named therein and Chemical Bank Delaware dated as of April 2, 1996.
6.6 The Executive's Duty to Provide Materials. Upon the termination
of the Term of Employment for any reason, the Executive or his estate shall
surrender to the Company all correspondence, letters, files, contracts, mailing
lists, customer lists, advertising material, ledgers, supplies, equipment,
checks, and all other materials and records of any kind that are the property of
the Company or any of its subsidiaries or affiliates, that may be in the
Executive's possession or under his control, including all copies of any of the
foregoing; provided, however, the Executive shall not be required to
<PAGE>
surrender his personal rolodex, telephone book and personal materials.
6.7. Certain Reduction of Payments.
(a) Anything in this Agreement to the contrary notwithstanding, if
it is determined that any portion of the sum of (i) the amounts paid or payable
to the Executive or for the Executive's benefit under the Agreement (the
"Agreement Benefits") and (ii) the amount of all other payments, and the value
of all other benefits received or to be received by the Executive or for the
Executive's benefit (collectively, along with Agreement Benefits, referred to as
"Benefits"), is likely to result in the imposition of a tax to the Executive or
his estate under Code Section 4999 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code"), the aggregate present value of the
Agreement Benefits yet to be paid to the Executive shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Agreement, "Reduced
Amount" shall be an amount expressed as a single sum that maximizes the
aggregate present value of Agreement Benefits previously paid and yet to be paid
to the Executive without causing the aggregate of any Benefits previously paid
and yet to be paid to the Executive to be subject to taxation to the Executive
or his estate under Section 4999 of the Code. The provisions of this subsection
(a) and subsection (b) shall be applied in a manner that is consistent with the
provisions of subsection (c) below, and to the extent required, the provisions
of subsection (c) shall supersede the provisions of this subsection (a) and
subsection (b) to permit such consistency.
(b) If, determined in a manner consistent with subsection (a) above,
Agreement Benefits in excess of the Reduced Amount are paid to the Executive or
for his benefit, or the Internal Revenue Service asserts that the amount of
Benefits received by the Executive or for his benefit are in excess of the
amounts not subject to tax under Section 4999 of the Code, and such assertion is
determined to have a high probability of being successful, such excess amounts
(hereinafter referred to as "Overpayments") shall be treated for all purposes as
a loan to the Executive. The amount treated as a loan, together with interest at
the applicable federal rate provided for in Section 1274(d) of the Code, shall
be paid by the Executive to the Company as soon as practicable following the
date the Executive is notified in writing of such Overpayments.
(c) In the event that payment of any Benefits would result in all or
a portion of such payment to be subject to excise tax under Section 4999 of the
Code, then the Executive's payment shall be either (i) the full payment or (ii)
such lesser amount which would result in no portion of the payment being subject
to excise tax under Section 4999 of the Code, whichever of the foregoing
amounts, taking into account the applicable federal, state and local employment
taxes, income taxes, and the excise tax imposed by Section 4999 of the Code,
results in the Executive's receipt, on an after-tax basis, of the greatest
amount of the payment notwithstanding that all or some portion of the payment
may be taxable under Section 4999 of the Code.
<PAGE>
(d) All determinations required to be made under this Amendment
shall be made by a nationally recognized accounting firm selected by the Company
(the "Accounting Firm"). The Company shall cause the Accounting Firm to provide
detailed supporting calculations of its determinations to the Executive and the
Company. All fees and expenses of the Accounting Firm shall be borne equally by
the Executive and the Company.
7. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company: Republic Technologies International
(Bar Technologies, Inc. and
Republic Engineered Steels, Inc.)
3770 Embassy Parkway
Akron, Ohio 44333
Attention: Thomas N. Tyrrell
with a copy to: R. Jeffrey Pollock, Esq.
McDonald, Hopkins, Burke &
Haber Co., L.P.A.
600 Superior Avenue, Suite 2100
Cleveland, OH 44114
To Executive: George Babcoke
31725 Leeward Ct.
Avon Lake, Ohio 44012
with a copy to: Jay C. Marcie
32730 Walker Road, Suite I-6
Avon Lake, Ohio 44012
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.
8. Separability; Legal Fees. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. Each party shall bear the costs of any legal
fees and other fees and expenses which may be incurred in respect of enforcing
its respective rights under this Agreement.
9. Assignment. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be
<PAGE>
assignable or otherwise subject to hypothecation by the Executive (except by
will or, in the case of the Options, by trust for the benefit of the Executive's
spouse and/or children or by operation of the laws of intestate succession) or
by the Company, except that the Company may assign this Agreement to any
successor (whether by merger, purchase or otherwise) to all or substantially all
of the stock, assets or business of the Company. If this Agreement is not
assumed by a successor to Company, the Agreement may be terminated by Executive
under the terms of Section 6.1(a) as a termination for Good Reason.
10. Amendment. This Agreement may only be amended by written agreement of
the parties hereto.
11. Nondisclosure of Confidential Information; Non-Competition. (a) The
Executive shall not, without the prior written consent of the Company, use,
divulge, disclose or make accessible to any other person, firm, partnership,
corporation or other entity any Confidential Information pertaining to the
business of the Company or any of its affiliates, except (i) while employed by
the Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order the Executive to divulge, disclose or make accessible such
information. For purposes of this Section 11(a), "Confidential Information"
shall mean non-public information concerning the financial data, strategic
business plans, product development (or other proprietary product data),
customer lists, marketing plans and other non-public, proprietary and
confidential information of the Company, Bliss & Laughlin Industries Inc. or
their respective affiliates or customers, that, in any case, is not otherwise
available to the public (other than by the Executive's breach of the terms
hereof).
(b) In consideration of the Company's obligations under this
Agreement the Executive agrees that during the period of his employment
hereunder and for a period of twelve (12) months thereafter, without the prior
written consent of the Board, (i) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have any
financial interest in, any business which is in competition with the business of
the Company and (ii) he shall not, on his own behalf or on behalf of any person,
firm or company, directly or indirectly, solicit or offer employment to any
person who has been employed by the Company at any time during the 12 months
immediately preceding such solicitation.
(c) For purposes of this Section 11, a business shall be deemed to
be in competition with the Company if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company as a part of the business
of the Company within the same geographic area in which the Company effects such
purchases, sales or dealings or
<PAGE>
renders such services. Nothing in this Section 11 shall be construed so as to
preclude the Executive from investing in any publicly or privately held company,
provided the Executive's beneficial ownership of any class of such company's
securities does not exceed 1% of the outstanding securities of such class.
(d) The Executive agrees that this covenant not to compete is
reasonable under the circumstances and will not interfere with his ability to
earn a living or to otherwise meet his financial obligations. The Executive and
the Company agree that if in the opinion of any court of competent jurisdiction
such restraint is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of
this covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. The Executive agrees that any breach of
the covenants contained in this Section 11 would irreparably injure the Company.
Accordingly, the Executive agrees that the Company may, in addition to pursuing
any other remedies it may have in law or in equity, cease making any payments
otherwise required by this Agreement and obtain an injunction against the
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by the Executive. Notwithstanding the
expiration of the term of this Agreement, the provisions of this Section 11
hereunder shall remain in effect as long as is necessary to give effect thereto.
12. Beneficiaries; References. The Executive shall be entitled to select
(and change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
the Executive's death, and may change such election, in either case by giving
the Company written notice thereof. In the event of the Executive's death or a
judicial determination of his incompetence, reference in this Agreement to the
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative. Any reference to the masculine gender in
this Agreement shall include, where appropriate, the feminine.
13. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 13 are in addition to the survivorship provisions of
any other section of this Agreement.
14. Arbitration. Except as otherwise provided in Section 11(d) hereof, any
dispute or controversy arising under or in connection with this Agreement shall
be resolved by binding arbitration held in the City of Cleveland, Ohio and
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at the time of the arbitration. Each party
shall bear its own expenses in connection with any such arbitration and joint
expenses shall be borne by both parties in equal portions.
15. Governing Law. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Ohio without reference to
rules relating to conflicts of law.
<PAGE>
16. Effect on Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding, both written and oral, between the
Company, any affiliate of the Company or any predecessor of the Company or
affiliate of the Company and the Executive.
17. Withholding. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
19. Indemnification. Executive shall be provided with the same
indemnifications and directors and officers insurance coverages as apply to the
key officers and directors of the Company.
COMPANY
/s/ Thomas N. Tyrell
----------------------------------------
Thomas N. Tyrrell, CEO
EXECUTIVE
/s/ George Babcoke
----------------------------------------
George Babcoke
<PAGE>
Appendix A
OPTION TERM SHEET
EQUITY OWNERSHIP
Stock Options Upon the effective date of the Agreement pursuant to a stock
option agreement including, among other provisions, the terms
set forth below, the Company shall grant the Executive
nonqualified options (or at Company's discretion, incentive
stock options with or without nonqualified options) to
purchase one percent (1.00%) of the total Available Common
Stock of Company. "Available Common Stock" of the Company
shall be defined as the authorized and outstanding common
shares plus options on a fully diluted basis (including all
equity or options of the entire management team), taking into
account the effects of the contemplated merger and any related
transactions to the merger.
Option Term The option term shall be 10 years; provided, however, that
exercisable options shall expire earlier upon termination
of employment as follows:
Termination for Cause/Quit w/o Good Reason: Immediately upon
termination of employment.
Termination w/o Cause/Quit w/Good Reason: the remaining term
of the Agreement (i.e. during the applicable salary
continuation period) plus three months.
A termination of employment at the expiration of the Agreement
on account of the Company's notice of nonrenewal, or a
termination during the term by mutual agreement of the
parties: One year after termination of employment.
Death/Disability: One year after termination of employment.
Unexercisable options will terminate upon termination of
employment, unless vesting acceleration is
<PAGE>
explicitly provided for.
Option Exercise Options shall be granted at an exercise price which is equal
Price to the price per share paid by Blackstone.
EXERCISABILITY OF OPTIONS
- --Vesting Options shall become exercisable with respect to 33 1/3% of
the shares subject to such options on each June 30, 2000,
2001, 2002 respectively, if the Executive's Term of Employment
continues through and includes such dates.
Options shall expire and no longer be exercisable following
termination of employment by the Company for Cause,
resignation by the Executive without Good Reason, or
nonrenewal by Executive, but shall accelerate and become fully
exercisable upon the earliest of (i) death, (ii) disability,
(iii) termination without Cause or resignation for Good Reason
(collectively, a "Good Termination"), or (iv) on the first
date on which the holdings of Blackstone (as defined in
Section 3.2 above) or Veritas, or the combined holdings of
Blackstone and Veritas, do not represent more than 50% of the
voting control of the Company. "Veritas" means "Veritas
Entities or their respective Affiliates", as that term is
defined in the Credit Agreement by and between Bar
Technologies, Inc., Bliss & Laughlin Steel Company, the
Lenders named therein and Chemical Bank Delaware dated as of
April 2, 1996. If the Company gives notice of nonrenewal at
the expiration of the Initial or any renewal terms, unvested
options shall vest in accordance with the schedule set forth
above during the applicable salary continuation period;
options that do not vest by that date shall terminate.
Dilution The Executive's exercisable and unexercisable options shall be
of Stock Options subject to the same dilution as may apply to all common
stockholders, provided that the anticipated transaction
referred to in Section 4.1 of the Agreement shall not have a
dilutive effect on the one percent (1.00%) discussed herein.
Adjustments In the event of any change in the outstanding common stock by
reason of a stock split, spin-off, stock dividend, stock
combination or reclassification, recapitalization, conso-
lidation or merger, or similar event, the Board shall adjust
appropriately the number of shares subject to options under
this
<PAGE>
Term Sheet and make other revisions as it deems are equitably
required.
Nontransfer- Except as otherwise provided herein, the Executive cannot sell
ability or otherwise transfer the options and shares purchased upon
exercise of an option ("Option Shares") prior to a Public
Offering that includes Blackstone shares. Any sale of Option
Shares shall in all cases be completed in compliance with
applicable securities laws. Transfers of Option Shares shall
be permitted in the event of death to beneficiaries of the
estate, and during lifetime to trusts, the beneficiaries of
which are the Executive, a charitable institution or
institutions selected by Executive, or members of his family,
and options may, in the event of death, be exercised by
beneficiaries or the estate, subject in all cases to agreeing
to be bound by the same terms as the Executive. As a condition
to exercising options, the Executive must agree to be bound by
the terms of the stockholders' agreement that will be drafted
subsequent to the Employment Agreement.
Rights The Executive shall have the same voting, dividend and other
rights with respect to Option Shares as the Company's other
common stockholders.
Registration Option Shares: It is expected that the stockholder agreement
Rights/Public will provide piggyback rights.
Offering
Options: Immediately following the first Public Offering that
includes Blackstone shares, the Company shall file, at its own
expenses, an S-8 to register the shares subject to option,
which shares shall be subject to an applicable "standard
underwriter lock-up agreement."
Tagalong/ It is expected that the stockholder's agreement will provide
Dragalong Rights tagalong and dragalong rights.
Puts and Calls Puts and calls for the options and Option Shares shall be as
set forth in Appendix B; provided, however, if there is a
Change in Control prior to a Public Offering, any Option
Shares or exercisable Options (i) may be put to the Company at
the difference between FMV and the exercise price, but (ii)
the Company shall not have a call; provided, further, no put
or call shall be consummated if such put or call would result
in a violation of applicable law or the terms of any financing
documents. There shall be no puts or calls subsequent to a
Public Offering. An exercise period (e.g., one year after
termination of employment) will otherwise be specified for
puts and calls.
- --Fair Market If there is no public trading market for the shares of the
Value ("FMV") Company, the FMV of the shares will be the per
<PAGE>
share price, as determined by the Board in good faith;
provided, however, if the Executive or Executive's
beneficiaries or estate disagree with the Board's
determination, the FMV shall be determined by an independent
nationally recognized, full service investment banker who
follows the Company and is reasonablely acceptable to both the
Company and the Executive or Executive's beneficiaries or
estate.
- --Public Public offering shall mean the sale of the shares of any
Offering class of the Company's stock to the public pursuant to an
effective registration statement (other than a registration
statement on Form S-4 or S-8 or any similar or successor form)
filed under the Securities Act of 1933, as amended.
<PAGE>
Appendix B
PUTS AND CALLS
<TABLE>
<S>
BAD TERMINATIONS GOOD TERMINATIONS
<C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Fired for Quit w/o Fired w/o "Cause"/ Quit Death/Disability
"Cause" "Good with "Good Reason"
Reason"
- ----------------------------------------------------------------------------------------------------------------
Option Any Option Any Option Any Option Shares can be May put Option Shares to
Shares Shares can be Shares can be Called at FMV prior to a Company at FMV prior to a
Called at the Called at the Public Offering. Public Offering.
lesser of cost lesser of cost
or FMV. or FMV. Any Option Shares may be
put to the Company at FMV
No Put. No put. prior to a Public Offering. No put or call subsequent to
a Public Offering.
No put or call subsequent
to a Public Offering.
- ----------------------------------------------------------------------------------------------------------------
Options All Options All Options Options shall remain Options shall remain
terminate terminate outstanding until termination outstanding until termination
without any without any of the Agreement plus 3 of employment plus one
payment. payment. months. year.
May put Options to the May put Options to
Company at the difference Company at the difference
between FMV and the between FMV and the
exercise price prior to a exercise price prior to a
Public Offering. Public Offering.
No put or call subsequent to No put or call subsequent to
a Public Offering. a Public Offering.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Options at Expiration of Employment Term: If employment terminates because
the Executive gives notice of intent not to renew, all options shall
terminate without payment at termination of employment in that event. If
employment is terminated because the Company elects not to renew the
Agreement, Executive shall vest in options during the applicable salary
continuation period under Section 6.1. Unvested options at the end of such
period shall terminate.
<PAGE>
1998 SETTLEMENT AGREEMENT
Between
UNITED STEELWORKERS OF AMERICA, AFL-CIO
And
BarTech and RES Acquisition Corporation
<PAGE>
Settlement Agreement
Table Of Contents
I. Bargaining Structure, Harmonization of Agreements, and Economics Page 3
A. Bargaining Structure/Single Agreement/Expiration Dates 3
B. Harmonization and Extension of Terms and Conditions of
Employment 5
C. RESI CBA Economic Modifications 8
D. NuBar Profit Sharing 10
E. Pension Plan Modifications 14
F. Insurance 18
II. Early Retirement Buyout Package ("ERB") and Voluntary Severance Plan
("VSP") 19
A. Purpose 19
B. Amount of ERB Package 20
C. ERB Eligibility 21
D. Distribution of ERB's: Priority and Procedures 21
E. Additional Duties of JIC 23
F. Voluntary Severance Plan 23
G. Limited Exception to Employment Security Plan 24
H. Special Provision for Certain Non-ERB-Eligible Employees
Affected by a Possible Plant Shutdown at Willimantic 25
III. Appendices
A. A Master Agreement set forth in Appendix A 1
Article I - Purpose, Scope, And Recognition 1
Article II - Union Security and Check-off 2
Article III - Management Rights 3
Article IV - Responsibilities of the Parties 3
Article V - Workforce Flexibility 4
Article VI - Partnership 6
Article VII - Capital Spending Plan, Upstreaming and Management
Fees 18
Article VIII - Employment Security Plan 20
Article IX - Neutrality 23
Article X - Successorship 29
Article XI - Contracting Out 30
Article XII - New Employee Orientation 42
Article XIII - Hiring Preference 44
Article XIV - Board of Directors 44
Article XV - Institute for Career Development 45
Article XVI - Manning of New Operations 49
Article XVII - Right to Bid 53
Article XVIII - Union Role In Negotiation of Benefits 55
Article XIX - Printing of Contracts 56
<PAGE>
Article XX - SOAR/PAC 56
Article XXI - Family and Medial Leave Act 57
Article XXII - Leave of Absence Policy for Union Employees 62
Article XXIII - Grievance and Arbitration Procedure 63
Article XXIV - Suspension and Discharge 67
Article XXV - Safety and Health 68
Article XXVI - Allowance for Funeral Leave 73
Article XXVII - Hours of Work 74
Article XXVIII - Holidays 76
Article XXIX - Vacation 77
Article XXX - Jury Duty 78
Article XXXI - Employees in Military Service 79
Article XXXII - Savings Clause 81
Article XXXIII - Seniority 81
Article XXXIV - Severance 86
Article XXXV - Substance Abuse 89
Article XXXVI - Wages 93
Article XXXVII - Termination Date 96
B. Letter of Understanding covering the Corporate Structure
of NuBar as set forth in Appendix B 97
C. Letter of Understanding Modifying the Employment Security
Article of the Master Agreement as set forth in Appendix C 99
D. Letter of Understanding covering the merger of the Gary Dunes
and 7TH Avenue Plants of RESI as set forth in Appendix D 100
E. Letter of Understanding covering the Interest Arbitration Award
(1997) as set forth in Appendix E 101
F. Letter of Understanding covering the merger of the RESI DCP
and DBP as set forth in Appendix F 102
G. letter of Understanding modifying the Neutrality Article of the
Master Agreement as set forth in Appendix G 103
H. Letter of Understanding covering the NuBar Share Purchase as set
forth in Appendix H 104
I. Letter of Understanding covering the Ratification Process in
Negotiations in year 2003 as set forth in Appendix I 105
J. Letter of Understanding covering the Reimbursement to Local
Union for Negotiations as set forth in Appendix J 106
K. Letter of Understanding covering the RESI Share Sale as set
forth in Appendix K 107
L. Letter of Understanding modifying the Successorship regarding
the Cold Finished Plans as set forth in Appendix L 108
M. Letter of Understanding covering Retiree Health Care costs
as set forth in Appendix M 110
N. Letter of Understanding covering C&BL Railroad as set forth
in Appendix N 111
<PAGE>
O. Letter of Understanding covering BarTech Employee Equity
Interest as set forth in Appendix O 112
P. Letter of Understanding covering Incentive Plan Redevelopment
as set forth in Appendix P 113
Q. Letter of Understanding covering Job Classification
Consolidation as set forth in Appendix Q 114
R. Letter of Understanding covering Deletions from RESI
Predecessor Labor Agreement as set forth in Appendix R 120
<PAGE>
1998 SETTLEMENT AGREEMENT
Between
UNITED STEELWORKERS OF AMERICA, AFL-CIO
And
BarTech and RES Acquisition Corporation
WHEREAS, the controlling stockholders of Bar Technologies Inc.
(hereinafter "BarTech") who are affiliated with Blackstone Management Partners
L.P. ("Blackstone") have formed a corporation ("RES Acquisition Corporation")
which has made a friendly proposal to Republic Engineered Steels, Inc. ("RESI")
to acquire all of the shares of RESI(such acquisition, the "RESI Acquisition")
and RESI and RES Acquisition Corporation have entered into an Agreement and Plan
of Merger (the "Merger Agreement") dated as of July 23, 1998 pursuant to such
proposal. As soon as practicable following consummation of the RESI Acquisition,
it is intended that BarTech and RES Acquisition Corporation engage in a business
combination transaction (the "Transaction"), with the resulting combined entity
currently expected to be known as NuBar (the closing of such Transaction the
"Closing"); and
WHEREAS, in the event that the Transaction is completed, the combined
entity NuBar would own the following plants represented by the United
Steelworkers of America (the "USWA" or "Union"): from BarTech, the plants in
Johnstown, Pennsylvania, and Lackawanna, New York; from BarTech's subsidiary
Bliss & Laughlin Steel Company ("B&L") and Canadian Drawn Steel Company
("Canadian Drawn"), the plants in Harvey, Illinois, and Hamilton, Ontario
(Canada) respectively; and from RESI, Massillon Cold Finish, Massillon Hot Roll,
Special Metals (Massillon), all in Massillon, Ohio, and Canton Eighth Street in
Canton, Ohio, the plant in Chicago, Illinois, the cold-finished plants in Beaver
Falls, Pennsylvania, Willimantic, Connecticut, Seventh Avenue and Dunes Highway,
both in Gary, Indiana, and a stainless plant in Baltimore, Maryland. In
addition, NuBar would own B&L's cold-finished plants in Batavia, Illinois,
Cartersville, Georgia (both non-union), and Medina, Ohio (Machinists Union); and
Final Settlement Agreement August 1, 1998
-1-
<PAGE>
WHEREAS, if the Transaction is consummated, NuBar will build a bar mill
and processing facility(ies) in Stark County to be manned with USWA-represented
employees. At the same time, the NuBar business plan calls for a significant
reduction of RESI plant support and administrative personnel, the closing of the
Canton 12" mill, the ingot route at the #4 melt shop and blooming mill, the
Massillon 18" mill, associated processing operations, and a reduction in the
number of the combined entity's cold finishing operations. Overall, a decline in
the net hourly headcount of about 1,400 is expected during the four (4) years of
transition/consolidation after the consummation of the Transaction; and
WHEREAS, in discussions with BarTech and RES Acquisition Corporation, the
Union has emphasized its objectives of, among other things, encouraging the
contemplated new construction in Stark County, providing a decent and humane set
of retirement options for employees affected by headcount reductions, and
assuring that any NuBar transaction preserve as many bargaining units jobs as
possible; and
WHEREAS, RES Acquisition Corporation has indicated that it will not enter
into the Merger Agreement unless this Settlement Agreement has first been
entered into by the Union and will not consummate the acquisition of a majority
of the outstanding RESI shares unless the Master Agreement (as defined below)
has first been ratified by the Union's members affected thereby, the
effectiveness of this Settlement Agreement and the Master Agreement conditional
upon the acquisition of a majority of the outstanding RESI shares by RES
Acquisition Corporation and RES Acquisition Corporation having elected a
majority of the RESI directors (the "RESI Control Position") for those employees
currently employed by RESI ("RESI Employees"); and the Closing (or earlier as
described below) for these employees currently employed by BarTech/B&L/Canadian
Drawn ("BarTech Employees"); RES Acquisition Corporation will use all reasonable
efforts to promptly following its acquisition of a majority of the outstanding
RESI shares to elect a majority of the RESI directors; and
WHEREAS, while RES Acquisition Corporation is under no obligation pursuant
hereto to complete the RESI Acquisition, it is understood that the RESI
Acquisition and subsequent Transaction would, if consummated, necessitate
customary steps, including, among others, the negotiation and ratification of a
Final Settlement Agreement August 1, 1998
-2-
<PAGE>
complete labor agreement for RESI and/or for NuBar, approval by the RESI
employee-owners and stockholders, clearance under applicable antitrust
standards, and, after completion of the foregoing, refinancing of outside
indebtedness to facilitate the Closing of the Transaction.
NOW THEREFORE IT IS AGREED that:
The parties to this Settlement Agreement shall be BarTech, RES Acquisition
Corporation and the Union. This Settlement Agreement sets forth the new Master
Labor Agreement ("Master Agreement") and the plant-specific agreements and will
be the basis for the benefit agreements (together the "1998 BLA") to be agreed
upon by BarTech, RES Acquisition Corporation, and the Union prior to obtaining
the RESI Control Position. This Settlement Agreement and the 1998 BLA shall only
become effective upon obtaining the RESI Control Position for the RESI Employees
( the "RESI Effective Date") and upon the earlier to occur of: (i) the Closing
of the Transaction; and (ii) the date that is five (5) months after the closing
of the RESI Acquisition for the BarTech Employees (the "BarTech Effective
Date"). The parties enter into this Settlement Agreement as of August 2, 1998.
I. Bargaining Structure, Harmonization of Agreements, and Economics
A. Bargaining Structure/Single Agreement/Expiration Dates
1. Upon obtaining the RESI Control Position and, where applicable,
the BarTech Effective Date, RES Acquisition Corporation/NuBar and any and
all of its present and future portfolio companies, subsidiaries,
Affiliates (as defined below), and/or parent corporations (other than
Blackstone, Veritas, any other private equity fund or their respective
successor(s)-in- interest and their respective existing or future
affiliates) shall be jointly and severally obligated to the Union under a
single new 1998 BLA applicable to all USWA-represented facilities of NuBar
other than Canadian Drawn Steel which shall be covered by a separate
collective bargaining agreement which shall be coterminous with the
agreement covering the other
Final Settlement Agreement August 1, 1998
-3-
<PAGE>
plants. The 1998 BLA shall address certain subjects on a "Master
Agreement" basis and other issues on the basis of the former corporate
identity of the plants in question or a plant-specific basis (hereinafter
"Plant-Specific Agreement").
The current labor agreements (exclusive of their benefits agreements) between
RESI and the Union, BarTech and the Union, and Bliss & Laughlin and the Union,
(each a "Predecessor Labor Agreement" or "PLA" and collectively, "the
Predecessor Labor Agreements") shall:
(i) remain in effect until the RESI Effective Date or BarTech Effective
Date, as applicable;
(ii) with respect to the BarTech and B&L PLA's continue in effect
thereafter for items to be harmonized up to and through their
complete harmonization
(iii) otherwise be replaced by the Master and Plant-Specific Agreements as
well as this Settlement Agreement.
The benefits agreements associated with the PLA's shall continue in effect until
merged or harmonized together pursuant to new NuBar benefits agreements to be
adopted by the parties in accordance with this Settlement Agreement and the
Master and Plant-Specific Agreements.
The formerly separate bargaining units under the PLA's shall, upon the BarTech
Effective Date be merged into a single bargaining unit. The termination dates
previously established by the PLA's shall be amended and extended to give the
1998 BLA a termination date of October 31, 2003.
Wherever this Settlement Agreement sets forth an understanding not described as
plant-specific, such understanding shall be included in the Master portions of
the 1998 BLA. Any language in the Plant-Specific Agreements which conflicts with
the master portion of the 1998 BLA shall displace the master provisions of the
1998 BLA.
2. In the negotiation of a successor agreement to the 1998 BLA,
bargaining shall begin with plant-level representatives negotiating
over the topics covered in their agreements on
Final Settlement Agreement August 1, 1998
-4-
<PAGE>
plant-specific issues. After an appropriate interval of such
bargaining, Master bargaining shall commence, and all issues still
unresolved in the plant-specific bargaining shall be referred to the
Master bargaining for resolution.
B. Harmonization and Extension of Terms and Conditions of Employment
1. B&L Harvey, Illinois Plant - The parties agree upon the
following:
(a) Harmonization Process - The parties shall negotiate to
harmonize all economic items applying to the Harvey,
Illinois plant of NuBar so as to match those items in
all material respects to those applicable to the former
RESI facilities (as amended in the 1998 BLA). With
respect to pensions, such harmonization shall take
effect on November 30, 1998. With respect to wages,
effective December 1, 1998 all hourly rates shall be
adjusted to the same hourly wage rates as the applicable
hourly wage rates for RESI Cold Rolled Bar
classifications. In recognition of the classification
rate adjustments, the Company will implement a
production based incentive plan (the "Harvey Incentive
Plan" or "HIP"). The production based incentive plan
will be designed to provide an earnings opportunity
equal to the average earnings opportunity of the RESI
Cold Rolled Bar production based incentive plans
(adjusted for straightline harmonization). Such plan
will provide an earnings opportunity (approximate
average of $2.29 per/hr) equal to the difference between
the adjusted B&L Harvey hourly classification rates and
the total (hourly rates and incentive earnings) hourly
earnings of similar classification of RESI Cold Rolled
Bar rates. At a minimum the HIP shall guarantee the
difference between the B&L Harvey classifications in
effect on
Final Settlement Agreement August 1, 1998
-5-
<PAGE>
November 30, 1998 and the new adjusted rates. The
guarantee and remaining earnings opportunity of the HIP
will be paid in the regular payroll periods. On November
1, 1999 and each succeeding November 1st of the BLA the
B&L Harvey classification rates will be adjusted to the
RESI Cold Rolled Bar classification rates. A mutually
acceptable reduction of job classes to five (rolling up
rates) shall be developed prior to December 1, 1998. All
other economic items shall be harmonized on a relatively
straight line basis with effective dates between
November 30, 1998, and February 28, 2003, with full
harmonization to be effective on the latter date. Once
harmonization on any item is achieved, that item shall
remain fully harmonized for the balance of the 1998 BLA.
(b) Extension Process - Representatives of the parties shall
identify local and other appropriate issues to be
resolved and to be included in this Settlement
Agreement.
2. BarTech (Johnstown and Lackawanna) - The parties agree upon
the following:
(a) Harmonization Process - effective February 28, 2001:
(i) There shall be adopted a production-based bonus
plan expected to yield at target the same payout
as the former RESI facilities' then-current
average incentive yield;
(ii) The job class of each BarTech job shall be
harmonized to the job class to which similar RESI
jobs are assigned; and
(iii) There shall be full harmonization to the RESI
Final Settlement Agreement August 1, 1998
-6-
<PAGE>
pension plan with full credit for BarTech service.
(iv) In accordance with the 1994 BarTech Collective
Bargaining Agreement, all hourly wage rate
increases for BarTech classifications shall be
implemented as scheduled. However, on March 1,
2001 the classification wage rates shall be
adjusted to the same hourly wage rates as the
applicable hourly wage rates for RESI Hot Rolled
Bar classifications. In recognition of the
classification rate adjustments, the Company will
implement a production based incentive plan (the
"BarTech Incentive Plan" or "BIP"). The production
based incentive plan will be designed to provide
an earnings opportunity equal to the average
earnings opportunity of the RESI Hot Rolled Bar
production based incentive plans (adjusted for
straightline harmonization). Such plan will
provide an earnings opportunity (approximate
average of $2.16 per/hr) equal to the difference
between the adjusted BarTech hourly classification
rates and the total (hourly rates and incentive
earnings) hourly earnings of similar
classifications of RESI Hot Rolled Bar rates. At a
minimum the BarTech Incentive Plan shall guarantee
the difference between the BarTech classifications
in effect on February 28, 2001 and the new
adjusted rates, plus $.25. The guarantee and
remaining earnings opportunity of the BIP will be
paid in the regular payroll periods. On November
1, 2002 the BarTech classification rates will be
adjusted to the just increased RESI Hot Rolled Bar
classification rates. The BIP will guarantee the
difference between the November 1, 2002
classification rates and the classification rates
in effect on February 28, 2001, plus $.75. The
guarantee and
Final Settlement Agreement August 1, 1998
-7-
<PAGE>
remaining earnings opportunity (at target $2.80
per/hr) of BIP will be paid in the regular payroll
periods. With respect to all other economic items
applying to the Johnstown and Lackawanna plants,
the parties shall negotiate to harmonize such
items so as to match those items in all material
respects to those applicable to the former RESI
facilities (as amended in the 1998 BLA). Such
harmonization shall be achieved on a relatively
straight line basis on effective dates between
February 28, 2001, and February 28, 2003, with
full harmonization to be effective on the latter
date. Once harmonization on any item is achieved,
that item shall remain fully harmonized for the
balance of the 1998 BLA.
(b) Extension Process - Representatives of the parties shall
identify local and other appropriate issues to be
resolved and to be included in this Settlement
Agreement. In addition, the parties have agreed that,
effective March 1, 2001, for vacation entitlement, to
credit BarTech employees with their former Bethlehem
Service, to a maximum of seventeen (17) years of former
Bethlehem service.
3. Canadian Drawn Steel - Hamilton, Ontario: The parties have
reached a Settlement Agreement for Canadian Drawn Steel. Such
Settlement Agreement includes the portions of this Settlement
Agreement which shall be applicable to Canadian Drawn Steel in
addition to the economics and terms and conditions of
employment.
C. RESI CBA Economic Modifications
1. The new 1998 BLA shall provide for the following economic
provisions applicable to former RESI Hot Rolled Bar
facilities:
Final Settlement Agreement August 1, 1998
-8-
<PAGE>
(a) On the RESI Effective Date: $.25 across the board in
SHWR for both non-incentive and incentive workers
(b) November 1, 1999: $.25 across the board in SHWR for both
non-incentive and incentive workers
(c) November 1, 2000: $.50 across the board in SHWR for both
non-incentive and incentive workers
(d) November 1, 2001: $.50 across the board in SHWR for
non-incentive and incentive workers
(e) November 1, 2002: $.75 across the board in SHWR for
non-incentive and incentive workers
2. The new 1998 BLA shall also provide for the following economic
provisions applicable to former RESI Cold Finished Bar
facilities:
(a) On the RESI Effective Date: $.25 across the board in
SHWR for both non-incentive and incentive workers
(b) November 1, 1999: $.25 across the board in SHWR for both
non-incentive and incentive workers
(c) November 1, 2000: $.25 across the board in SHWR for both
non-incentive and incentive workers
(d) November 1, 2001: $.25 across the board in SHWR for both
non-incentive and incentive workers
(e) November 1, 2002: $.25 across the board in SHWR for both
non-incentive and incentive workers
3. A mutually acceptable reduction of Job Classes to five
(rolling up rates) to be agreed to prior to the RESI Effective
Date.
Final Settlement Agreement August 1, 1998
-9-
<PAGE>
4. $1,000 Signing Bonus immediately following the RESI Effective
Date for all employees accruing continuous service. In return
for such payment, the Union agrees to withdraw all grievances
and related NLRB charges concerning the issue of Target 60
implementation, and the triggering of Employment Security as
it relates to Functional Analysis.
D. NuBar Profit Sharing Plan
1. Effective for BarTech Employees, the BarTech Effective Date
and for RESI Employees effective the first fiscal quarter
following the RESI Effective Date, the Company shall implement
a Profit Sharing Plan as described herein.
2. Level of Payout
The Company agrees that it will create a Profit-Sharing Pool
(the "Pool"). The Pool will be determined on a quarterly basis
as follows:
NuBar will pay into the Pool 4% of all Profits (as defined
below) that amount to greater than 12% of NuBar sales revenue
and less than 20% of NuBar sales revenue;
NuBar will pay into the Pool 6% of all Profits (as defined
below) that amount to greater than or equal to 20% of NuBar
sales revenue.
3. Calculation of Profits
Profits shall be calculated in accordance with generally
accepted accounting principles as used by the Company in the
preparation of its financial statements for reporting to
NuBar's shareholders.
For the purposes of this Plan, Profit shall be defined as Net
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Earnings, excluding:
(a) The amount by which total compensation and related
expenses for any individual exceeds 5X the total actual
compensation for the average USWA- represented
employee.
(b) Any one-time payments to non-bargaining unit employees.
(c) The costs of OSHA, MSHA, EPA, SEC or other civil and
criminal penalties and the cost of correcting any
regulatory or other violations of law.
(d) Cumulative effect on prior years of a change in
accounting principles.
(e) Income or loss related to any charges or credits
(whether or not identified as special credits or
charges) for unusual, infrequently occurring or
extraordinary items.
(f) Any expense recorded for any income or other taxes.
(g) Any fees or other similar charges directly or indirectly
paid to individuals or entities for goods or services
priced on other than an arms-length basis.
(h) Any costs, or the expense associated with this Plan or
any other profit-sharing or similar plan.
Notwithstanding anything to the contrary contained in this
Agreement, post-retirement employee benefit expenses will be
taken into account in the calculation of Profit in the same
manner that they would have been taken into account prior to
the adoption of FASB 106.
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4. Distribution
The Profit Sharing Pool (the "Pool") shall be distributed as
follows:
The Pool shall be sub-divided based on total participant hours
worked, into two sub-pools (i) one for the former RESI
employees and NuBar new hire USWA represented employees
working at former RESI facilities (the "RESI Pool") and (ii)
one for the former BarTech production and maintenance
represented and non-represented employees and NuBar new hire
production and maintenance represented and non-represented
employees working at former BarTech/B&L/Canadian Drawn
facilities (the "BarTech Pool").
The RESI Pool shall be divided as follows:
(a) 20% of the RESI Pool shall be distributed to the group
of RESI/NuBar retirees who retire(d) or otherwise
terminated prior to the effective date of the 1998 BLA,
or after the effective date of the 1998 BLA on a non-ERB
pension, in proportion to their Restoration Account
Balances.
(b) 40% of the RESI Pool shall be distributed to active
former RESI employees in proportion to their Restoration
Account Balances.
(c) 40% of the RESI Pool shall be distributed to active
former RESI employees and NuBar new hire employees at
former RESI facilities in proportion to their hours
paid, (including paid union time) with a cap for this
purpose, of 2,080 hours per employee.
After the Restoration Account obligations in (a) and/or (b)
above have been extinguished, funds designated for (a) and/or
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(b) will be allotted to (c) above.
The BarTech Pool shall be distributed to former BarTech
employees and NuBar new hire employees working at former
BarTech/B&L facilities in proportion to their hours paid
(including paid union time), with a cap for this purpose of
2,080 hours per employee.
5. Administration of the Plan
The Plan will be administered by the Company in accordance
with its terms and the costs of administration shall be the
responsibility of the Company. Upon determination of each
Profit Sharing calculation, such calculation shall be
forwarded to the chairman of the Union negotiating committee
accompanied by a Certificate of Officer signed by the
Vice-President, Finance of the Company, stating that the
Profit Sharing Calculation was made in accordance with
generally accepted accounting principles and the definition of
Profit described herein.
The Union, through its Negotiating Committee Chairman or
his/her designee, shall have the right to review the
calculations used to derive Profit under the Plan. The Company
shall provide said designee with any information requested in
connection with such review.
In the event that a disagreement exists between the Company's
Profit Sharing calculation and the results obtained by the
Union designee's review, the Company Chairman and the Union
Chairman of the respective Negotiating Committees shall
attempt to reach an agreement regarding the disagreement. In
the event that they cannot resolve the dispute, either party
may submit such dispute to final and binding arbitration under
the Grievance Procedure outlined in this Labor Agreement.
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E. Pension Plan Modifications
NuBar Pension Program
Effective at Former RESI Plants 11/1/96 (As Defined in Pension Term Sheet)
Effective at B&L 12/01/98, and at BarTech 03/01/01
1. Monthly Benefit Amount
(a) Floor Multiplier of $35 for each year of continuous
service.
(b) Effective May 1, 2003, increase Floor Multiplier to $46.
(c) Offsets to Monthly Benefit Amount
Deductions made for annuity value/pension benefit of
(where applicable):
LTV DB, LTV DC, RESI DC (exclusive of its 401(k)
component), BarTech 401(k) (exclusive of employee
contribution).
Offset for above amounts only when benefits paid under
Defined Benefit Plan.
Workers' Compensation, Public Pension or Severance
Allowance will not be offset.
2. Special Payment- a flat dollar amount, based on the 1998
average of all employees' vacation allotment, increased by 3%
per year during the term of this agreement. Such payment shall
be reduced by the value of the employee's vacation taken in
the year of entitlement.
3. $400 Monthly Supplement
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Applicable to Permanent Incapacity, 70/80 and Rule-of-65
Retirements.
The increase in pension will be payable until the participant
becomes eligible for Public Pension or dies.
For Rule-of-65 Retirements only, traditional earnings offset
for supplement with earnings threshold equal to Age 65-69
earnings amount under Social Security Act and indexed
thereafter.
4. Retirement Eligibility
Traditional steel industry eligibility requirements for:
- Normal Retirement - Age 65/5
- 62/15 Retirement
- 30-Year Retirement
- Reduced --60/15 Retirement
- Permanent Incapacity Retirement
- 70/80 Retirement
- Rule-of-65 Retirement
- Deferred Vested Retirement
Use traditional steel industry reduction factors for 60/15 and
Deferred Vested Retirements.
Under the Rule-of-65 Retirement, the parties have agreed to
the following Suitable Long Term Employment (SLTE) Plant
Groupings:
I. Willimantic, CT
Lackawanna, NY
II. Lackawanna, NY
Beaver Falls, PA
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Johnstown, PA
Massillon, OH
Canton, OH
III. Harvey, IL
Chicago, IL
Gary, IN
IV. Johnstown, PA
Baltimore, MD
5. Continuous Service
All service with LTV/RESI, B&L, Canadian Drawn and BarTech
will be recognized under the plan for purposes of determining
eligibility, vesting and benefit accrual. All service with
Bethlehem will be recognized under the plan for purposes of
determining eligibility and vesting.
Use traditional steel industry rules for crediting continuous
service.
6. Payment Forms
(a) Automatic Five-Year Term Certain.
(b) Automatic 50% Spouse Option.
(c) Co-Pensioner Options (50% and 100%)
Traditional steel industry rules for calculation and
eligibility with steel industry upgraded and simplified
percentages tables.
7. Survivor Benefits
(a) Retirement Equity Act (REACT) Pre-Retirement Annuity
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Coverage.
(b) Surviving Spouses' Benefits with minimum of $350/$200.
Traditional steel industry rules for calculation and
eligibility with steel industry upgraded and simplified
percentages table for REACT coverage.
8. Other Pension Provisions
The supplement will be continued beyond age 62 for those
participants born in 1938 or later so that the future maximum
reduction from the amount at full Social Security retirement
age (67 in the year 2022) is the same percentage as currently
applicable (20%) at age 65 for the full Social Security
retirement amount.
9. Other Benefit Plans - Effective upon closing of the RESI
Acquisition
(a) Discontinue contributions to RESI DC. (Discontinue
BarTech DC effective 03/01/01)
(b) Discontinue new contributions to Disability Income
Benefit Plan. Maintain for current recipients at present
benefit levels.
(c) ABA/IMF provisions.
It is the intent of the parties for the NuBar pension and
welfare benefit plans ("NuBar Plans") to replace and/or be
merged with the corresponding plans maintained by RESI. In the
period prior to the closing of the RESI Acquisition,
representatives of the parties will address and resolve the
issues raised by the change over to the NuBar plans
("change-over").The objective
Final Settlement Agreement August 1, 1998
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of the parties will be to provide a smooth transition from
current RESI program coverage to that provided under the NuBar
Plans. Issues to be resolved include, but are not limited to,
how employees and/or retirees under current RESI plans will be
affected by the change-over, and the disposition of such
programs as Extended SUB, the Disability Income Benefits plan,
the Income Maintenance Fund, and the Additional Benefits
Account (including its relationship to the retiree insurance
program). In no event shall any employee or retiree be made
worse off as a result of the changeover.
10. Bethlehem Service Recognition Payment
(a) Eligibility:
(i) Former Bethlehem employees who meet the
eligibility requirements for re-employment rights
under the BarTech PLA; and
(ii) Have at least five years of BarTech/NuBar
continuous service.
(b) Benefit - such eligible employees shall receive an
additional monthly benefit to their NuBar Pension. The
benefit will equal their years of Bethlehem service, as
used to calculate Bethlehem continuous service for
pension purposes, multiplied by $7.00.
11. Lag Date
The Pension Agreement will remain in effect for five (5)
months after the termination of the collective bargaining
agreement.
F. Insurance
1. Amend Section 7.4 of the RESI Program of Insurance Benefits to
provide for vision examination every 12 months.
Final Settlement Agreement August 1, 1998
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2. Amend Section 7.3 of the RESI Program of Insurance Benefits to
increase frame allowance to $50.
3. Amend Section 11.3 of the RESI Program of Hospital and Medical
Benefits for eligible Pensioners and Surviving Spouses to
increase life insurance for future retirees to $5000 effective
February 28, 2001.
II. Early Retirement Buyout Package ("ERB") and Voluntary Severance
Plan ("VSP")
The RESI and B&L (Harvey) plant-specific portion of the 1998 BLA will
include the following Early Retirement Buyout Package:
A. Purpose:
The Company and Union agree that significant reductions in manning
levels at the former RESI facilities are essential to enable NuBar
to become competitive and thereby improve job security. In order to
lessen the impact on employees, the parties have agreed to the
following:
1. Present facilities covered by the 1993 RESI BLA and the B&L
(Harvey) BLA shall be covered by this ERB program.
2. The Company's business plan calls for a reduction in the net
number of bargaining unit jobs at former RESI facilities by
approximately fourteen hundred (1400) during the approximately
four (4) years of the transition/consolidation. This net
reduction in bargaining unit jobs will be accomplished through
the shutdown of plant(s) (or departments or subdivisions
thereof), capital investments and productivity improvements
due to work rule and job classification improvements.
3. Over the term of the Agreement, in lieu of any other facility
closure benefits payable to ERB recipients under the 1998
Final Settlement Agreement August 1, 1998
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BLA, NuBar will offer an additional type of pension under the
pension agreement to be called an Early Retirement Buyout
(ERB) in accordance with the following:
Number of ERB's:
(a) The Company shall offer one ERB for each net job
eliminated due to:
(i) changes in work practices and/or job
classification; or
(ii) new capital investment; or
(iii) facility closures, including plants, departments,
or subdivisions thereof
(hereinafter, any one of (i), (ii) or (iii)
referred to as a "Headcount Reduction,") minus;
(iv) the number of RESI and B&L Harvey bargaining unit
employees who quit, die, are terminated for cause,
voluntarily transfer, or retire (on other than an
ERB);
(b) the number of ERB's offered shall be the greater of;
(i) 1000; or
(ii) the number which results from the process described in
Section A-3(a) above.
B. Amount of ERB Package:
An ERB package shall consist of:
1. An unreduced Pension calculated in accordance with the
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pension agreement; and
2. At the option of the employee, either:
(a) a $15,000 lump sum payment upon retirement; or
(b) For a retiree who retires prior to reaching age 61, a
total pension supplement of $700 per month (without any
earnings offset), beginning with the individual's last
day worked. Such pension supplement shall cease when the
retiree attains an age sufficient to be eligible for 80%
of full social security old age insurance benefit at
social security retirement; and
3. Retiree health and life insurance; and
4. A $10,000 lump sum cash payment in full satisfaction of the
employee's Restoration Account.
C. ERB Eligibility:
To be eligible for an ERB, a bargaining unit employee must:
1. Satisfy the age and service requirements of at least a Rule of
65, 70/80, 65/5, 62/15, or 30 year retirement pension.
2. Have the greatest continuous service among a group of
employees eligible to apply for ERB's under the priority rules
set forth below in Subsection D.
D. Distribution of ERB's: Priority and Procedures
1. During the term of the 1998 BLA, the respective Chairmen of
the Negotiating Committee shall meet on at least a quarterly
basis to:
(a) discuss and develop the implementation of an annual
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Headcount Reduction Plan for each one (1) of three (3)
Regions. Such Regions shall be:
(i) Region 1 (all RESI plants in Illinois and Indiana
and B&L Harvey); and
(ii) Region 2 (all RESI plants in Ohio and
Pennsylvania); and
(iii) Region 3 (all other RESI plants);
(b) receive updates and progress reports on the Headcount
Reduction Plan and the number of ERB's that have been
offered and accepted in the affected plants, departments
and Regions; and
(c) no more than twice per/year, determine and notify each
plant management and Local Union President and/or Unit
Chairperson of the number of Headcount Reductions that
have been assigned to each plant in accordance with the
Headcount Reduction Plan.
2. There shall be a Joint Implementation Committee (JIC) in each
Region composed of three representatives of the Company and
three representatives of the Union. The JIC members shall be
appointed by each of the party's respective Negotiating
Committee Chairmen. The JIC shall award ERB's, with each plant
having initially allocated to it the number of Headcount
Reductions indicated in the notification referred to in
paragraph 1 above. The JIC shall be authorized to oversee the
allocation and awarding of ERB's in accordance with this
Memorandum, the new 1998 BLA, and rules of implementation
adopted by mutual agreement of the JIC. Among the subjects
such rules may address are the rules for applying for and
accepting an ERB, and the effect of changing one's mind, etc.
3. Unless the JIC mutually agrees otherwise, ERB's shall be
granted with the following priority:
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(a) First, among eligible affected employees in the affected
Plant;
(b) Next, among eligible employees in the affected Plant;
(c) Next, among eligible employees throughout the Region.
Within any of the priority tiers listed above, the
eligible employee with the greatest corporate continuous
service shall have first right to an ERB.
4. If an ERB-eligible employee chooses not to accept an offer of
an ERB, that employee shall retain all seniority rights under
the applicable collective bargaining agreement. To meet
operational needs, the Company may retain an employee who
accepts an ERB for up to six (6) months, or a period of time
not to exceed twelve (12) months as mutually agreed to by the
employee and the Company.
E. Additional Duties of JIC
Among the tasks of the JIC shall be the administration of specific
rules regarding the job-related movement of employees within the
plant.
F. Voluntary Severance Plan
In the event that the ERB's outlined above do not provide the
necessary work force reductions, the JIC shall institute a Voluntary
Severance Plan ("VSP") in order to achieve the necessary work force
reductions as determined in the Annual Headcount Reduction Plan. The
VSP participants will have the option of:
1. A single lump sum payment of $50,000; or
2. 36 monthly payments of $1,666; or
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3. 36 monthly payments of $1,333 and continuation of all health
and medical benefits;
VSP Eligibility: Employees not meeting the age and service
requirements for an ERB shall be eligible for a VSP in accordance
with this Section F.
VSP's will be offered to VSP eligible employees in the same order as
outlined above in paragraph D-3.
VSP's will be limited to the difference between the number of
headcount reductions as determined in the particular Headcount
Reduction Plan and the accepted ERB's associated with such Plan.
When an accumulated total of eight hundred (800) ERB's have been
accepted, the Company may offer up to an additional two hundred
(200) VSP's. However, such VSP's will be restricted to the
acceptance of one (1) VSP for each two (2) ERB's offered.
Employees who decline offered ERB's shall not be eligible for VSP's.
G. Limited Exception to Employment Security Plan
If at any given time, after offering ERBs and VSPs to achieve
targeted Headcount Reductions, the number of (a) targeted Headcount
Reductions within the facilities exceeds (b) the total of:
1. Voluntary terminations as outlined in Section A-3(a)(iv)
above; and
2. Accepted ERB's; and
3. Accepted VSP's;
(the difference between (a) and (b) above herein called an
"Excess"), then the Company may, notwithstanding the Employment
Security
Final Settlement Agreement August 1, 1998
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Plan, lay off and have on layoff a number of employees equal to the
lesser of
(i) 300; or
(ii) the Excess.
H. Special Provision for Certain Non-ERB-Eligible Employees Affected
by a Possible Plant Shutdown at Willimantic
If an employee:
1. Experiences the permanent shutdown of his or her plant; and
2. Is not eligible for an ERB; and
then such employee shall have the option of either exercising any
right to a job to which he or she qualifies by virtue of the BLA or
receiving a VSP. Such VSP's are in addition to the VSP's described
in Section F.
III. The parties hereby adopt the following:
A. A Master Agreement set forth in Appendix A.
B. Letter of Understanding covering the Corporate Structure of NuBar as
set forth in Appendix B.
C. Letter of Understanding modifying the Employment Security Article of
the Master Agreement as set forth in Appendix C.
D. Letter of Understanding covering the merger of the Gary Dunes and
7th Avenue Plants of RESI as set forth in Appendix D.
E. Letter of Understanding covering the Interest Arbitration Award
Final Settlement Agreement August 1, 1998
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(1997) as set forth in Appendix E.
F. Letter of Understanding covering the merger of the RESI DCP and DBP
as set forth in Appendix F.
G. Letter of Understanding modifying the Neutrality Article of the
Master Agreement as set forth in Appendix G.
H. Letter of Understanding covering the NuBar Share Purchase as set
forth in Appendix H.
I. Letter of Understanding covering the Ratification Process in
Negotiations in year 2003 as set forth in Appendix I.
J. Letter of Understanding covering the Reimbursement to Local Unions
for Negotiations as set forth in Appendix J.
K. Letter of Understanding covering the RESI Share Sale as set forth in
Appendix K.
L. Letter of Understanding modifying the Successorship regarding the
Cold Finished Plants as set forth in Appendix L.
M. Letter of Understanding covering Retiree Health Care costs as set
forth in Appendix M.
N. Letter of Understanding covering C&BL Railroad as set forth in
Appendix N.
O. Letter of Understanding covering BarTech Employee Equity Interest as
set forth in Appendix O.
P. Letter of Understanding covering Incentive Plan Redevelopment as set
forth in Appendix P.
Q. Letter of Understanding covering Job Classification Consolidation as
set forth in Appendix Q.
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R. Letter of Understanding covering deletions from the RESI predecessor
Labor Agreement.
IV. The termination date of the new agreement shall be October 31, 2003. The
termination date of the benefits agreements shall be extended to expire on
February 28, 2004.
Executed this 2nd day of August, 1998.
United Steelworkers of America AFL-CIO RES Acquisition Corporation
- ----------------------------------- ----------------------------------------
Bar Technologies Inc.
Bliss & Laughlin Steel Company
-----------------------------------------
Canadian Drawn Steel Company
-----------------------------------------
Final Settlement Agreement August 1, 1998
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APPENDIX A
AGREEMENT
THIS AGREEMENT, made and entered into by and between RES Acquisition
Corporation and/or NuBar(hereinafter referred to as the "Company"), and the
United Steelworkers of America, AFL-CIO (hereinafter referred to as "Union").
ARTICLE I
PURPOSE, SCOPE, AND RECOGNITION
Section 1 - Purpose
It is the intent and purpose of the parties hereto to set forth herein the
agreement covering rates of pay, hours of work, and conditions of employment to
be observed between the parties hereto for the Employees of the Company in the
bargaining units of the Company set forth in this Article.
Section 2 - Recognition
The Union having been designated the exclusive collective bargaining
representative of the Employees of the Company as defined in this Article, the
Company recognizes the Union as such exclusive representative. Accordingly, the
Union makes this Agreement in its capacity as the exclusive collective
bargaining representative of such Employees. The provisions of this Agreement
constitute the sole procedure for the processing and settlement of any claim by
an Employee or the Union of a violation by the Company of this Agreement. As the
representative of the Employees, the Union may process complaints and grievances
through the complaint and grievance procedure, including arbitration, in
accordance with this Agreement or adjust or settle the same.
Section 3 - Coverage
In accordance with and subject to the provisions of the Labor Management
Relations Act, 1947, as amended, the Company recognizes the Union as the
exclusive bargaining agency of the production and maintenance Employees (with
the exceptions hereinafter specified in this Article ) of the Company's steel
manufacturing and finishing
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facilities for which units the Union is certified by the National Labor
Relations Board or may be, during the life of this Agreement, recognized by the
Company as the exclusive collective bargaining representative of the Company for
the purpose of collective bargaining in respect to rates of pay, hours of work,
and conditions of employment.
Section 4 - Employee Defined
The term "Employee," as used in this Agreement, shall mean the production
and maintenance Employees, but shall not include executives, foremen, assistant
foremen, supervisors who do not work with tools, draftsmen, timekeepers,
first-aid men and nurses, plant protection, office and salaried employees and,
bricklayers at the steel manufacturing and finishing plants. ( Except Gary and
Johnstown O&T employees that have been agreed to by the parties.)
ARTICLE II
UNION SECURITY AND CHECK-OFF
Each employee, who fails voluntarily to acquire or maintain membership in
the Union, shall be required as a condition of employment, on and after the
thirtieth (30th) day following the beginning of employment or the effective date
of this provision, whichever is later, to pay to the Union each month an agency
fee as a contribution towards the Union's expenses as a collective bargaining
representative. The agency fee for the first month shall be in an amount equal
to the Union's regular and usual monthly dues, including an initiation fee if
applicable, and for each month thereafter in an amount equal to the regular and
usual monthly dues.
During the life of this contract, the Company agrees to deduct from an
employee's pay monthly dues, assessments, and initiation fees as designated by
the International Secretary/Treasurer of the Union and as authorized by a signed
voluntary check-off request. Such proceeds will be mailed to the International
Secretary/Treasurer of the United Steelworkers of America, or its successor,
Five Gateway Center, Pittsburgh, PA, 15222.
The Union agrees to save the Company harmless from any action growing out
of these deductions commenced by or on behalf of any employee or by any agency
of the Federal or State or Local government against the Company, the Union
assumes full
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responsibility for the disposition of the funds so deducted once they have been
turned over to the International Secretary/Treasurer of the Union.
ARTICLE III
MANAGEMENT RIGHTS
All rights of management not bargained away by the expressed terms of this
Agreement, are reserved and retained by the Company. The reserved and retained
rights of management shall include, but not be limited to the right to plan and
direct the work force and plant operations; to maintain discipline; to
discipline, suspend or discharge employees for just cause; to assign or demote;
to hire employees and to release employees from duty so long as not inconsistent
a with the express provisions of this Agreement; to introduce new or reasonably
modified production and bonus standards, to discontinue or alter existing
facilities; to establish and schedule shifts, to determine the products to be
manufactured, the location at which they will be manufactured, the services to
be performed, the scheduling of production, the size and composition of work
crews and of the work force, and decide to the processes and methods employed in
production; to establish and implement reasonable rules and regulations.
ARTICLE IV
RESPONSIBILITIES OF THE PARTIES
Section 1 - Responsibilities and Nondiscrimination
Each of the parties hereto acknowledges the rights and responsibilities of
the other party and agrees to discharge its responsibilities under this
Agreement.
There shall be no discrimination, restraint or coercion against any
employee because of membership in the Union.
It is the continuing policy of the Company and the Union that the
provisions of this Agreement and the actions of these parties shall be
consistent with all local, state, and federal employment laws. Neither party
shall retaliate against any employee who exercises his rights thereunder.
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Section 2 - Civil Rights Committee
A joint Committee on Civil Rights shall be established at each plant. The
Union representation on the committee shall be no more than three members of the
Union, in addition to the Local Union President/Unit Chairperson and Chairman of
the Grievance Committee. The Union members shall be certified to the plant
manager by the Union and the Company members shall be certified to the Union.
Section 3 - No Strike - No Lockout
During the term of this Agreement, the Union, its agents, members,
representatives and employees of the Company shall not instigate, promote,
sponsor, encourage, condone or engage in any strike, sympathy strike, picketing,
slowdown, stoppage of work, withholding of services, honoring the picket line of
this or any other Union at the Company's facility, or other interruption or
interference of any sort with the business of the Company for any reason under
any circumstance. The Company shall have the right to discharge or otherwise
discipline any employee who does engage in any form of the foregoing described
conduct during the term of this Agreement, and any employee so disciplined will
have recourse to the grievance procedure solely to determine whether such
employee engaged in the conduct herein prohibited. The Arbitrator will have no
authority to modify the discipline. The Company shall not lockout during the
term of this Agreement.
ARTICLE V
WORKFORCE FLEXIBILITY
The parties recognize that employment security and productivity
improvement is inseparably linked to attaining sustained profitability. These
issues must be addressed on balance and in relationship to each other.
Accordingly, the parties agree to jointly maximize the effective
utilization of the workforce and equipment and achieve continuous improvement by
implementing new and innovative approaches to the way work is performed.
The parties further recognize that one of the major barriers to
productivity is the continued application of restrictive and unnecessary past
practices, local agreements, and local working conditions ("practices"). Based
on the Company's agreement to the
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Employment Security provisions of this Agreement, the Union commits to eliminate
those "practices" which are inconsistent with the parties' desire to redesign
and restructure work so that it can be performed in the most efficient and
effective manner. Accordingly, the parties commit to eliminate those
"practices."
The parties further agree that in order to maximize productivity goals and
achieve a philosophy of continuous improvement the manner in which work has
historically been performed must be changed to adopt new innovative work
methods, job responsibilities, and assignments of work. Trade and Craft
positions must change into a multicraft approach. Training requirements and
programs must be developed and implemented to obtain competitiveness in the
maintenance forces. Those employees unable to achieve full Multicraft status
will still be expected to perform in a more flexible, expanded role consistent
with safety and their qualifications and abilities. Non-craft employees may,
consistent with standardized safety practices and the employee's qualifications
and abilities, assist Trade and Craft employees in maintenance duties.
It is the agreed-upon goal of the parties to achieve a rapid conversion to
Maintenance Technician Mechanical ("MTM") and Maintenance Technician Electrician
("MTE") positions during the term of this agreement. In addition, production
employees must broaden their skills, become more flexible, and work as assigned
to achieve world class competitive status. Training programs will be developed
for each identified need.
The parties agree to reduce the number of job classifications by the
process of elimination and/or combination. The consolidation of job
classifications shall take place in the most expeditious manner possible and
without putting an undue work burden on employees or increasing the inherent
hazards of the job. All past practices, local agreements, and local working
conditions (other than overtime equalization agreements) will be eliminated that
conflict with the stated goal. All overtime equalization agreements shall
include provisions that require participants to be qualified for the overtime
opportunity. The local parties shall also develop a method to share the
administrative duties associated with the equalization process. Where overtime
equalization agreements do not exist, such agreements shall be negotiated within
sixty (60) days of the effective date of the 1998 Agreement.
Within ninety (90) days of the effective date of this Agreement each Local
Union will prepare a list of past practices, local agreements and/or local
working conditions,
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which it believes do not restrict the productivity, flexibility or efficiency of
the plant but produce a material benefit to bargaining unit employees. The
parties agree to adopt any such past practices, local agreements or local
working conditions which meet the standard set forth in the preceding sentences.
Such new agreements, if any, must be reduced to writing and signed by an
authorized representative of each party. Any disputes arising from this process
may be submitted to the grievance and arbitration procedure.
Nothing in this Agreement will be considered as limiting the Company's
ability to change job duties or assign employees to duties. The Company may
assign employees to any duty for which they are qualified and for any length of
time consistent with the other terms and conditions of the Agreement. The
ability of the Company to maintain a stable work force and an efficient and
profitable operation is dependent upon workforce flexibility. An employee may
not refuse to perform work or to take an assignment (consistent with the safety
relief provisions), which the employee is qualified to perform. The Company will
not assign an employee in a discriminatory or arbitrary manner.
The Company may adopt alternative work schedules consisting of a ten (10)
or twelve (12) hour per day scheduling with the approval of the Local Union
President/Unit Chairperson . No overtime pay shall be required except for hours
worked in excess of forty (40) hours per week or for hours worked beyond the
alternative scheduled daily hours. There will be no duplication or pyramiding of
overtime.
ARTICLE VI
PARTNERSHIP
Section 1 - Purpose and Intent
The Union and the Company agree that their goal is to attain the
objectives set forth in this Article. They also agree that these goals can best
and perhaps only be accomplished if decision-making authority is shared at all
levels of the enterprise. Accordingly, the parties have agreed to work toward
the objective of establishing a strategic partnership.
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The purposes of this Article are to provide a framework for Union and
employee participation for full and continuing access by appropriate Union
representatives to all books, records, and information relevant to the purpose
and objectives of this memorandum, and for the establishment of a comprehensive
training and education program, all as further described herein.
Further, the parties recognize that the changes contemplated by this
Article must evolve, especially at the plant level. Accordingly, the local
parties must have the flexibility to design participative structures that best
meet their needs at any given time and that can change as changed circumstances
and experience warrant.
Section 2 - Objectives
In furtherance of their understanding on long-term employment security,
the parties have agreed to pursue the following objectives and commitments:
(A) Increasing the quality, profitability, and competitiveness of the
enterprise and its products;
(B) Assuring that Union representatives and employees receive full and
early access to information concerning Company decisions affecting
their working lives, including early notification concerning
significant Company transactions, such as mergers, acquisitions,
dispositions, joint ventures, etc.;
(C) Creating a less authoritarian, safer, fairer, more equitable and
less stressful work environment;
(D) Responding to technological change through joint mechanisms which
will cause technology to serve the interest of both the enterprise
and the workers affected by the change;
(E) Reduction of all costs;
(F) Increasing worker responsibility and control over the workplace;
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(G) Continual training, education, and up-grading of the skills of the
work force;
(H) Creation of better jobs through the development of higher skills;
(I) Ensuring that the Company operates responsibly with respect to the
environment and other areas of public policy; and
(J) Acceptance and support by the Company of the Union and
acknowledgment of its role as an essential vehicle in attaining
these objections.
Section 3 - Full and Continuing Access to Information
Appropriate Union representatives (including consultants and advisors)
shall have access to financial and operational information that is relevant to
the development and implementation of the Business Plan as well as access to
Company employees and advisors who are responsible for such information.
As used in this Article, the term "Business Plan" shall refer to the
Company's short-term Business Plan and long-term strategic and operating plan,
including such elements as those involving products, pricing, markets, capital
spending, short and long-term cash flow forecasts, and the method and manner of
funding or financing the Business Plan. Without limiting the foregoing, the
Company shall provide the Union with early notification of any contemplated
significant transactions involving mergers, acquisitions, and continuing updates
regarding dispositions, joint ventures, and new facilities to be constructed or
established by the Company, its subsidiaries, joint ventures, or other entities
in which the Company has a financial interest.
For its part the Union will provide the Company with appropriate
information regarding Union activities, organizational changes, bargaining and
political objectives, and other plans or developments that might affect the
Company.
The use of the information contemplated by this section, will be covered
by a confidentiality agreement in form and substance satisfactory to the
parties.
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Section 4 - Comprehensive Training and Education Program For Committee
Members.
The parties recognize that the goals of this Article can be attained only
by a commitment to comprehensive and ongoing training and education.
Accordingly, the Partnership Committee and Joint Leadership Committees
(established below) shall take rigorous steps to establish training programs
necessary to the purposes of this Article. All training shall be focused on the
following objectives: the long-range goals of the Company and Union;
problem-solving techniques; communication activities; skills, attitudes,
behaviors and techniques for increasing the effectiveness of participation and
involvement activities; and methods for determining and achieving joint goals.
Without in any way limiting the comprehensiveness or continuity of the training
and education required by this Article, such activities will include at least
the following minimum standards and guidelines.
(A) Both Company and Union representatives shall receive appropriate
training by their respective organizations in how they can
accomplish their organization's goals and joint goals through
participation and involvement activities, and such training shall
not exceed the following levels:
(1) All members of Joint Leadership Committees and Coordinators
and Assistants: five (5) days per year.
(2) All members of the Joint Advisory Committees and the Joint
Problem Solving Teams: five (5) days per year.
(3) All other leadership figures of the local parties to this
Article: five (5) days per year.
(B) The Partnership Committee shall sponsor a program for at least
annual orientation and appropriate training of all members of joint
committees created under this Article.
(C) Each Joint Leadership Committee shall develop a training program
designed to increase the skills of bargaining unit and
non-bargaining unit employees concerning the subjects identified in
this Section 4.
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The training programs shall be jointly developed and shall commence
with instruction on how best to pursue organizational objectives
through use of the partnership mechanisms described in Section 5,
such instruction to satisfy the following minimum levels: for
bargaining unit employees, a one-day Union-taught orientation
session; for front line supervisors, managers, and other excluded
personnel, a one-day Management-taught orientation session.
(D) The Company shall fund all training programs referred to in this
Section, including employee time spent in such training, as though
it were time worked and such time shall be paid at the employee's
average rate of earnings as determined for vacation pay.
(E) Training referred to in this Section, other than Union training,
shall be jointly developed and implemented.
(F) The Union shall notify the Company of its intent to provide Union
training and shall review the objectives of Union training with the
Company.
Section 5 - Partnership Mechanisms
(A) Joint Strategic Partnership Committee
(1) Appointment and Composition
A Joint Strategic Partnership Committee ("Partnership
Committee") shall be established, consisting of members
appointed by the Chairman of the Union Negotiating Committee
and an equal number of Management representatives appointed by
the Company. Members of this Committee shall be active
employees of the USWA or the Company.
(2) Meetings
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The Partnership Committee shall meet at least quarterly.
(3) Information
The Partnership Committee shall receive detailed and in-depth
reports regarding all significant business and labor matters
relating to: the Business Plan, technological changes and
plans; manpower planning; safety and health measures; customer
evaluation; major organizational issues; facilities
utilization; and other significant issues and concerns raised
by the members of the Committee.
(4) Reports
The Partnership Committee shall report to Local Union and
Management personnel (including all members of Joint
Leadership or Joint Advisory Committees) on matters such as:
activities of the Partnership Committee, major issues being
considered by the Partnership Committee and information
relevant thereto; other information to keep the Local Union
leadership and Management informed and capable of further
discussion of issues related to the enterprise.
(5) Access to Board of Directors
The Union members of the Partnership Committee (and their
advisors) may appear before and be heard by the Board of
Directors at appropriate times on matters of concern to the
Partnership Committee, and such access shall be given prior to
the Board reaching a decision on such matters.
(6) Role of the Partnership Committee
(a) The Partnership Committee shall have the authority and
responsibility to reach agreement on issues relating to:
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the objectives set forth in Section 2 of this Article;
issues or programs arising under Section 5- B(4) of this
Article.
(b) Identify areas and activities for special emphasis on
improvement, and work with the appropriate Joint
Leadership Committees in implementing plans for such
improvements.
(c) Identify and address inter-department or
inter-divisional barriers which are impeding
improvement.
(d) Monitor the management of employees available as a
result of productivity improvements and the value
received from their efforts.
(B) Joint Leadership Committees
(1) Appointment and Composition
Joint Leadership Committees shall include at least three (3)
union representatives (the Local Union President/Unit
Chairperson and two (2) other members as he/she shall appoint)
and three (3) Management representatives.
(2) Meetings
The Joint Leadership Committee shall meet at least monthly. At
all Joint Leadership Committee meetings, the parties shall
engage in an open and candid exchange of information and
ideas.
(3) Information
At each meeting, the Joint Leadership Committee shall review
reports and activities of the Joint Strategic Partnership
Committee and aspects of the Business Plan as it impacts the
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areas of responsibility of the Joint Leadership Committee,
such as each month's performance of the plant, including cost
performance; quality performance, and shipments; the
production plan for the next month; manpower planning;
investment plans and performance compared to those plans;
safety and health performance; activities and needs of any
Joint Advisory Committees or Problem Solving Teams; and other
issues or concerns of interest to the parties.
(4) Scope of Responsibility
(a) Technological Change
As used herein, the term "technology" shall include
machinery, equipment, controls, materials, and software;
the phrase "technological change" shall refer to
introductions of new technology, changes in existing
technology, or both.
A Joint Leadership Committee shall establish a new
technology development and implementation program
(Technological Change Program) which shall include the
following elements:
(i) Advance Notice
The Company shall provide the Joint Leadership
Committee advance notice of any proposed
technological change no later than the beginning
of the Company's process for evaluating such a
proposal. Such notice shall be in writing, shall
to the extent and when available contain
supporting information outlined below, and shall
include updates of new or revised information
necessary for full and current understanding of
the proposed change. In the case of emergency
technological changes, the Company shall give the
maximum notice and information possible under the
circumstances.
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(ii) Within the time periods noted above, the Company
shall give the Joint Leadership Committee the
following information:
A description of the purpose and function of the
technological change, and how it would fit into
existing operations and processes; the estimated
cost of the technology, a cost justification of
it; and the proposed timetable for it;
disclosure of any service or maintenance
warranties or contracts provided or required by
the vendor (if any);
the number of type of jobs (both inside and
outside the bargaining unit) which would be
changed, added, or eliminated by the technological
change;
the anticipated impact on the skill requirements
of the work force; details of any training
programs connected with the new technology
(including duration, content, and who will
perform the training);
an outline of other options which may be
considered before formulating proposed changes;
and
the expected impact of the change on job content,
pace of work, safety and health, training needs,
and contracting out.
Union representatives on the Joint Leadership
Committee may request and receive access to
Company personnel knowledgeable about any proposed
technological change (including outside
consultants) to review, discuss, and receive
follow-up information
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concerning any technological changes proposed by
the Company or Union or their effects on the
bargaining unit.
The use of the information contemplated by this
subsection will be covered by a confidentiality
agreement in form and substance satisfactory to
the parties.
(iii) With respect to any Company decision whether to
make a technological change, Union representatives
on the Joint Leadership Committee may initiate
discussion and consideration of technological
changes that are new or different from those
proposed by the Company. The view expressed by the
Union members of the Joint Leadership Committee
shall be considered by the Company.
(b) Joint Advisory Committees
(i) Joint Advisory Committees shall be developed in
each operating area. The Joint Advisory Committee
co-chairs shall be the Grievance Committee-persons
responsible for the Area in which the Joint
Advisory Committee is established and Manager with
responsibilities for operations. The Joint
Advisory Committee shall, in addition, include
others as the co-chairs deem appropriate. The
Joint Advisory Committees may, by agreement,
invite additional persons as the Committee may
deem helpful to its purposes. The Local Union
President/Unit Chairperson and the Company Vice
President with operational responsibility for the
Area involved may attend Joint Advisory Committee
meetings as they deem necessary.
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(ii) Joint Advisory Committees shall study matters
assigned to them by the Joint Leadership Committee
or as they may agree upon and shall report any
findings back to the Joint Leadership Committee.
Such matters may relate to, among other things,
continuous improvement in quality, customer
satisfaction, costs, job enrichment/enhancement,
safety, and improved worklife. Upon direction of a
Joint Leadership Committee, Joint Advisory
Committees may: (i) devise measurements and goals
to meet plans adopted by the Joint Leadership
Committee; and (ii) be responsible for
communicating plans, results, business
information, and overall employee involvement
updates to the employees in their Area and to the
Joint Leadership Committee.
(iii) Joint Advisory Committees shall receive the
resources (including problem solving training and
information) necessary for them to determine the
best solution to specific problems. They shall not
have the authority to modify, detract, add to or
delete any portion of the Agreement.
(c) Problem Solving Teams
By joint agreement, the Joint Leadership Committees and
the Joint Advisory Committees may create one or more
Problem Solving Teams to study and report back on
specific problems. They shall receive the resources
(including problem solving training and information)
necessary for them to determine the best solution to
specific problems.
Section 6 - Employee Communications
Critical to the accomplishment of the objectives of this Article is
timely, ongoing, and unimpeded communication between and among the committees
created by this Agreement and employees. Accordingly, the parties agree as
follows:
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The results of any meetings of Joint Committees created by this Article
including the information and opinions exchanged, the conclusions reached, and
the level of participation achieved may be conveyed, where appropriate, to all
employees through their working groups by the Union representatives and
department supervision.
Section 7 - Safeguards and Resources
(A) Except as may be approved by the Partnership Committee, no joint
committee may amend or modify the Agreement.
(B) No committee authorized by this Article may affect any action with
respect to contractual grievances.
(C) Services on any Joint Leadership, Joint Advisory, or Problem Solving
Committee or Team created under this Article shall be voluntary.
(D) The Union will strive to be a full participant in the processes and
mechanisms established by this Article and bargaining unit employees
will be encouraged and expected to perform their duties within the
parameters established hereunder. However, no employee may be
disciplined or discharged for lack of commitment to participate in
the involvement processes.
(E) Employee participation and training shall normally occur during the
normal work hours and the employees shall suffer no loss of earnings
as a result thereof.
(F) No committee established under this memorandum may recommend or
affect the hiring, discipline, or discharge of any employee.
(G) At the joint invitation of the Co-chairs of any committee created
hereunder, the following Union representative may attend a committee
meeting: the Union's District Director for the district in which the
committee is located or his designee; Union headquarters personnel
or otherwise Union experts. All outside experts, advisors or
consultants shall be jointly requested.
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(H) All meeting time and necessary and reasonable expenses of joint
committees shall be paid for by the Company and no employee
attending such meetings shall suffer a loss of earnings as a result.
The parties will develop procedures for handling expenses.
(i) Union members on joint committees shall be entitled to: adequate
opportunity on Company time to caucus for purposes of study,
preparation, consultation, and review, and shall, consistent with
sub-paragraph 7-H, have their expenses defrayed by the Company.
Requests for caucus time shall be made to the appropriate Company
Management representative in a timely manner, and such requests
shall not be unreasonably denied.
(J) Joint committees may agree to employ experts from within or outside
the Company as consultants, advisors, instructors, etc., and such
experts shall be jointly selected and assigned.
ARTICLE VII
CAPITAL SPENDING PLAN, UPSTREAMING AND MANAGEMENT FEES
Section 1 The Company intends to implement the following Capital plan:
<TABLE>
<CAPTION>
CUMULATIVE CAPITAL SPENDING BY FACILITY GROUP AND YEAR
($ in Millions)
- ---------------------------------------------------------------------------------------------
YEAR JOHNSTOWN LACKAWANNA COLD RES RES
MELT SHOP ROLLING MILL FINISHED MELT ROLLING
AND SHOP MILLS
PROCESSING
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year 1 $9 $11 $10 $9 $54
Year 2 $13 $15 $36 $14 $88
Year 3 $19 $19 $61 $20 $122
Year 4 $25 $24 $81 $27 $156
Year 5 $32 $29 $93 $34 $176
- ---------------------------------------------------------------------------------------------
</TABLE>
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Section 2
During the term of this Agreement, the Company will not directly or
indirectly:
(A) declare or pay any dividend or make any other distribution in
respect of any of its capital stock; or
(B) purchase or otherwise acquire or retire any shares of its capital
stock or any other right to acquire shares of such stock or set
aside any amount for any such purpose;
in an amount (the aggregate payments made under clauses (a) and (b) above)
greater than 50% of net income, provided, however, that if the Company has
failed to meet the cumulative capital expenditure commitment as described
above, it shall make no such dividend, distribution, purchase,
acquisition, retirement or set aside whatsoever.
Section 3 - Fees
During the term of this Agreement, no fees of any kind whatsoever shall be
charged to the Company by any direct or indirect stockholder. Notwithstanding
the restrictions set forth in this Article, the Company shall be permitted to
pay to Blackstone (with a portion agreed to by Blackstone to be paid to Veritas)
(i) a transaction fee based upon 1% of total enterprise value, (ii) monitoring
or management fees in an aggregate amount in any fiscal year of up to $2.0
million and (iii) financial advisory, financing, underwriting, placement, merger
and acquisition and other investment banking or transaction fees in customary
amounts.
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ARTICLE VIII
EMPLOYMENT SECURITY PLAN
Section 1 - Effective Date
This Employment Security Plan (ESP) shall become effective for eligible
employees, as defined in Paragraph C below, the first full week following the
effective date of this Agreement.
Section 2 - Guarantee
(A) Employees eligible for this ESP may not be laid off during the term
of this Agreement except as provided below. If a disaster occurs,
the ESP will be terminated. For the purposes of this agreement,
disaster is defined as:
(1) A petition in bankruptcy for reorganization or liquidation is
filed, and the Court finds that it is necessary to reject this
agreement and issues an order under the bankruptcy laws
authorizing such rejection.
(2) Severe financial difficulties short of bankruptcy filing. Such
financial difficulties must represent a clear and present
danger to the Company's viability. Termination can occur under
this paragraph only by mutual agreement of the parties.
(3) An unexpected or unplanned major plant and/or facility outage
which is anticipated to necessitate a cessation of operations
in excess of thirty (30) days. Such disaster shall only affect
the employment security guarantee for those employees directly
impacted by the outage at the plant in which it occurs.
(B) In addition, in the event of a strike, or work stoppage by employees
covered by the Agreement, the ESP will be suspended for the duration
of such strike or work stoppage.
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(C) The guarantee provided to active eligible employees by this ESP is
defined as the opportunity to earn forty (40) hours of pay
(including hours paid for but not worked, work opportunities
declined by the employee, disciplinary time off, absenteeism,
report-off for Union business, overtime pay and premium pay), during
any payroll week. An eligible employee on approved leave of absence
or medically laid off during any payroll week shall be considered as
having been provided employment security during that week, it being
understood that the pay, if any, that such an employee is entitled
to receive while on approved leave of absence or medical layoff is
that provided by applicable law or the labor agreement, not the
earning opportunity set forth in the ESP.
Section 3 - Eligibility
(A) All employees with at least two years of corporate continuous
service and who are active as of the effective date of this
Agreement are eligible for the protections of this ESP. An active
employee who does not have at least two years of continuous service
as of the effective date of this Agreement shall be eligible for
this ESP upon attaining two years of continuous service, unless he
is on layoff at that time, in which case he shall become eligible
when he returns to active employment. An employee with two years of
service and who is inactive as of the effective date of this Plan
shall become eligible for this ESP upon his return to active status.
(B) Any full-time employee hired after the effective date of this ESP
shall be eligible for this ESP under its provisions upon attaining
two years of continuous service, unless he is on layoff at that
time, in which case he shall become eligible when he returns to
active employment.
(C) Employees eligible for employment security must continue to fully
satisfy the terms and conditions of employment.
Section 4 - Implementation
The local parties will meet for the purpose of reaching agreement on the
implementation of this ESP, including the placement of employees who would have
been
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laid off but for this ESP. Those agreements shall become part of this ESP,
and shall be consistent with the workforce flexibility provisions of the
Agreement. Such agreements may not be changed except as agreed to by the local
plant implementation committee.
Section 5 - Rate Of Pay
An employee who would have been laid off but for this ESP and who is
working in a new job assignment shall receive the higher of:
(A) the established rate of pay, including applicable incentives or
bonuses, of the job performed, or
(B) the regular rate of pay for the employee's incumbent job, including
applicable incentives or bonus.
Section 6 - Safeguards
If the Plan is temporarily, partially or permanently terminated or if any
employee is laid-off as a result of an ESP exception during the term of this
Agreement, the following shall apply:
(A) a SUB Plan identical to the SUB Plan referenced in the 1993 RESI BLA
shall be deemed to exist and be 100% funded as of the date of such
an event;
(B) the Company shall be required to begin to accrue liability and make
cash contributions as required by the SUB Plans; and
(C) the SUB plan shall be amended to allow eligibility for all employees
who may be laid-off.
Section 7 - Existing Rights
Except as expressly provided in this ESP, nothing in the ESP shall
interfere with, limit, detract from, or adversely affect in any way the rights
and obligations of the parties set forth in other provisions of the Agreement.
The Union recognizes, however,
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that management may assign work without contractual limitations to employees who
would have been laid-off for this ESP and in accordance with Section 4 of this
Article.
ARTICLE IX
NEUTRALITY
Section 1 - Introduction
Over the years, the Company and the Union have developed a constructive
and harmonious relationship built on trust, integrity and mutual respect. The
Company places a high value on the continuation and improvement of its
relationship with the Union.
Section 2 - Neutrality
To underscore the Company's commitment in this matter, it agrees to adopt
a position of neutrality in the event that the Union seeks to represent any
non-represented employees of the Company.
Neutrality means that, except as explicitly provided herein, the Company
will not in any way, directly or indirectly, involve itself in efforts by the
Union to represent its employees, or efforts by its employees to investigate or
pursue unionization.
The Company's commitments to remain neutral as outlined above shall cease
if the Company demonstrates to an Arbitrator under Section 11 herein that during
the course of an organizing campaign, the Union or its agents is intentionally
or repeatedly (after having the matter called to the Union's attention)
materially misrepresenting to the employees the facts surrounding their
employment or is conducting a campaign demeaning the integrity or character of
the Company or its representatives.
Section 3 - Notice Posting
Upon written notification by the Union that an organizing campaign is in
progress, the Company shall post on all bulletin boards where notices are
customarily posted a notice which shall read as follows:
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"NOTICE TO EMPLOYEES
We have been formally advised that the United Steelworkers of
America is conducting an organizing campaign among certain of our
employees. This is to advise you that:
1. The Company does not oppose collective bargaining or the
unionization of our employees.
2. The choice of whether or not to be represented by a union is
yours alone to make.
3. We will not interfere in any way with your exercise of that
choice."
Section 4 - Hiring
(A) For all hiring in a Covered Workplace in any unit(s) appropriate for
bargaining (prior to the existence of a collective bargaining
agreement), the Company shall treat any job opportunities in the
unrepresented unit(s) at such facility as though they were permanent
vacancies under the Agreement and fill them in accordance with the
principles embodied in the Agreement's Seniority Article.
(B) In determining whether to hire any applicant at a Covered Workplace
(whether or not such applicant is an employee covered by this Labor
Agreement), the Company shall refrain from using any selection
procedure which has the effect of disadvantaging applicants based on
their attitudes or behavior toward unions or collective bargaining.
Section 5 - Scope of the Unit
As soon as practicable after notification by the Union that it intends to
seek recognition at a Covered Workplace, the parties will meet to attempt to
reach an agreement on the appropriate unit. In the event that the Company and
the Union are
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unable to agree on an appropriate unit, either party may refer the
matter to the Dispute Resolution Procedure contained in Section 11 of this
Article.
Section 6 - Access to Company Facilities
Upon written request, the Company shall grant access to its facilities to
the Union for the purpose of distributing literature and meeting with
unrepresented Company employees. Distribution of Union literature shall not
compromise safety or production. Distribution of Union literature inside Company
facilities and meetings with unrepresented Company employees inside Company
facilities shall be limited to non-work areas during non-work time.
Section 7 - Access to Employee List
Upon written request, the Company shall immediately provide the Union with
a complete list of all of its employees who are eligible for union
representation. Such list shall include each employee's name and their home
address. Thereafter, the Company will provide updated lists monthly.
Section 8 - Union Recognition
(A) If, at any time following the existence at a Covered Workplace of a
representative complement of employees in any unit appropriate for
collective bargaining, the Union demands recognition, the parties
will request that a mutually agreeable third party, or the American
Arbitration Association ("AAA") if no agreement on a neutral can be
reached, conduct a card check within five days of the making of the
request. The neutral shall compare the authorization cards submitted
by the Union against original handwriting exemplars of the entire
bargaining unit furnished by the Company and shall determine if a
simple majority of eligible employees has signed cards. The list of
eligible employees shall be jointly prepared by the Union and the
Company.
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(B) If the Union secures a simple majority of authorization cards of the
employees in an appropriate bargaining unit, the Company shall
recognize the Union as the exclusive representative of such
employees without a secret ballot election conducted by the National
Labor Relations Board. The authorization cards must unambiguously
state that the signing employees desire to designate the Union as
their exclusive representative for collective bargaining purposes.
Section 9 - Scope of This Agreement
(A) Rules with Respect to Affiliates and Parent Companies
For purposes of this agreement, the Company also includes (in
addition to the Company): (i) any entity which directly or
indirectly controls the Board of Directors of the Company (a "Parent
Company"); (ii) any Affiliate of either the Company or a Parent
Company; and the obligations and commitments in this Agreement which
are applicable to the Company, are applicable to them.
For purposes of this Article, Affiliate means any business entity in
which the Company directly or indirectly: (i) owns more than 50% of
the voting power or (ii) exercises de facto control, meaning the
power to direct the management and policies of such business entity.
(B) Rules with Respect to a New Parent Company
The Company agrees that it will not consummate a transaction, the
result of which would cause the Company to come under the control of
another Company (a New Parent Company) without first ensuring that
said New Parent Company, any Affiliate of said New Parent Company
and any entity with which said New Parent Company has a Covered
Relationship agrees to be bound by this Article.
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(C) Rules with Respect to Other Covered Entities
(1) For purposes of this Article, an Other Covered Entity means
any business entity (not an Affiliate within the meaning of
Section 9(A) above): (i) which is engaged in: (a) the mining,
refining, production or transportation of raw materials used
in the making of steel; (b) the making, finishing, processing
or fabricating of steel; or (c) other similar businesses; and
(ii) in which the Company either: (a) currently has a material
interest; or (b) in the future acquires a material interest.
It is understood that the relationship between the Company and
any Other Covered Entity shall be a Covered Relationship.
(2) The Company shall not enter into a Covered Relationship
without first ensuring that the Other Covered Entity adopts
this Article.
(3) With respect to any entity with which the Company currently
has a Covered Relationship, the Company shall cause the Other
Covered Entity to become a party to this Article and achieve
compliance with its provisions.
(D) Covered Workplace
For purposes of this Article a Covered Workplace shall mean any
workplace which: (i) is controlled by either the Company or an Other
Covered Entity; and (ii) employs or intends to employ employees who
are eligible to become represented by a labor organization.
Section 10 - Bargaining In Newly-Organized Units
Where the Company recognizes the Union pursuant to the above procedures,
the collective bargaining agreement applicable to the new bargaining unit will
be determined as follows:
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(A) Substantially Similar Unit: If the facility in which the bargaining
unit is located is engaged in operations substantially similar to
any of those already covered by the Agreement, the new bargaining
unit shall become part of the bargaining unit covered by such
agreement, and the terms and conditions of that agreement shall be
extended to it.
(B) Other Units
(1) Where the newly-recognized unit is at a facility not
substantially similar to any operation already covered by such
agreement, the parties shall negotiate a new collective
bargaining agreement covering the new bargaining unit, bearing
in mind the wages, benefits, and working conditions in the
most comparable operations of the Company and those of
USWA-represented competitors to the facility in which the
newly-recognized unit is located.
(2) If, after thirty days from the commencement of such
negotiations, the parties are unable to reach agreement, the
matter shall be submitted to interest arbitration in
accordance with procedures to be developed by the parties. In
any such proceeding, the arbitrator shall be governed by the
standard described in this Section.
Section 11 - Dispute Resolution
Any alleged violation or dispute involving the terms of this Article may
be brought to a joint committee of one representative of each of the Company and
the Union by either party. If the alleged violation or dispute cannot be
satisfactorily resolved by the parties, either party may request that an
Arbitrator resolve such dispute. A hearing shall be held within ten (10) days of
the making of the request and the Arbitrator shall issue a decision within five
days thereafter. Such decision shall be in writing but need only succinctly
explain the basis for the findings. All decisions by an Arbitrator pursuant to
this Article shall be based on the terms of this Article and the applicable
provisions of the law. The Arbitrator's remedial authority shall include the
power to issue an order requiring the Company to recognize the Union where, in
all the circumstances, such an order would be appropriate.
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The Arbitrator's award shall be final and binding on the parties and all
employees covered by this provision. Each party expressly waives its right to
seek judicial review of said award, by any court of competent jurisdiction.
ARTICLE X
SUCCESSORSHIP
The Company agrees that it will not sell, convey, assign or otherwise
transfer any plant or significant part thereof covered by the then existing
Basic Labor Agreement between the Company and the Union to any other party
(hereinafter referred to as "Buyer") who intends to continue to operate the
business as the Company had, unless the following conditions have been satisfied
prior to the closing date of the sale:
(A) the Buyer shall have entered into an agreement with the Union
recognizing it as the bargaining representative for the employees
within the then existing bargaining units,
(B) the Buyer shall have entered into an agreement with the Union
establishing the terms and conditions of employment to be effective
as of the closing date, and
(C) if requested by the Company, the Union will enter into negotiations
with the Company on the subject of releasing and discharging the
Company from any obligations, responsibilities and liabilities to
the Union and the Employees and/or applicable individuals, except as
the parties otherwise mutually agree.
This Article is not intended to apply to any transactions solely between
the Company and any of its subsidiaries or affiliates, or its parent company
including any of its subsidiaries or affiliates; nor is it intended to apply to
transactions involving the sale of stock of the Company or a merger of the
Company, except if a plant or operation or significant part thereof, which is
covered by such Labor Agreement(s), is sold to a third party pursuant to a
transaction involving the sale of stock of a subsidiary of the Company. This
provision shall not apply to a public offering of registered securities.
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ARTICLE XI
CONTRACTING OUT
Section 1
The parties have existing rights and contractual understandings with
respect to contracting out. These include the existing rights and obligations of
the parties which arose before the parties included specific language in their
collective bargaining agreement, the arbitration precedents which have been
established before and since the parties included specific provisions addressing
contracting out in their collective bargaining agreement. In addition, the
following provisions shall be applicable to all new contracting out issues
arising on or after the effective date of this Agreement.
(A) Basic Prohibition
The parties acknowledge the guiding principle that work capable of
being performed by bargaining unit employees shall be performed by such
employees. Accordingly, the Company will not contract out any work for
performance inside or outside the plant unless it demonstrates that such
work meets one of the following exceptions.
(B) Exceptions
(1) Work in the Plant
(a) Production, service, all maintenance and repair work, all
installation, replacement and reconstruction of equipment and
productive facilities, other than that listed in Subparagraph
B-1-b below, all within a Plant, may be contracted out if (a)
the consistent practice has been to have such work performed
by employees of contractors and (b) it is more reasonable
(within the meaning of paragraph C below) for the Company to
contract out such work than to use its own employees.
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(b) Major new construction, including major installation,
major replacement and major reconstruction of equipment and
productive facilities, at any plant may be contracted out
subject to any rights and obligations of the parties which, as
the beginning of the period commencing August 1, 1963, are
applicable at that plant in the case of any plant which was in
operation on or before August 1, 1958. With respect to any
other plant, the period commencing date shall be the date five
years after the date on which the plant started operations.
No project shall be deemed to be "major" so as to fall
within the scope of this exception, unless the Company proves
that the project is of so large or grand a scale, measured in
man hours, that bargaining unit employees could not reasonably
be expected to perform the work in question. The scale and
type of this project shall be considered in relation to the
scale and type of projects which bargaining unit employees
have completed in the past at the same location. In addition,
man hours for the project at issue shall be considered in
comparison to other projects performed by bargaining unit
forces. Total cost of the project shall be of no relevance
whatsoever.
As regards the term "new construction" above, except for
work done on equipment or systems pursuant to a manufacturer's
warranty, work that is of a peripheral nature to major new
construction, including major installation, major replacement
and major reconstruction of equipment and productive
facilities and which does not concern the main component of
work shall be assigned to employees within the bargaining unit
unless it is more reasonable to contract out such work taking
into consideration the factors set forth in paragraph (C) or
it is otherwise mutually agreed. For purposes of this
provision, the term "work of a peripheral nature" shall
include but not be limited to demolition, site preparation,
road building, utility hook-ups, pipe lines and any work which
is not integral to the main component.
(2) Work Outside the Plant
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(a) Should the Company contend that maintenance or repair work
to be performed outside the plant or work associated with the
fabricating of goods, materials or equipment purchased or
leased from a vendor or supplier should be excepted from the
prohibitions of this Section, the Company must demonstrate
that it is more reasonable (within the meaning of paragraph C
below) for the company to contract for such work (including
the purchase or lease of the item) than to use its own
employees to perform the work or to fabricate the item.
Notwithstanding the above, the Union recognizes that as
part of the Company's normal business, it may purchase
standard components or parts or supply items, produced for
sale generally ("shelf items"). No item shall be deemed a
standard component or part or supply item if:
(i) its fabrication requires the use of prints, sketches
or detailed manufacturing instructions supplied by the
Company or another company engaged in producing or
finishing steel or producing iron ore or supplied at the
Company's behest or it is otherwise made according to
detailed Company specifications or those of another
company engaged in producing or finishing steel or
producing iron ore;
(ii) it involves a unit exchange;
(iii) it involves the purchase of motors, transmissions,
convertors or other items under a core exchange,
replacement or trade-in transaction (whether or not
title to the unit passes to the vendor/purchaser as part
of the transaction).
It is further provided that the performance of work in
connection with the purchase of a shelf item including, but
not limited to, cutting to length, cable splicing, attaching
fixtures and making adjustments in the size or shape of the
item shall be deemed, for purposes of this Section, to be
maintenance, repair or fabrication
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work performed outside the plant and such work shall not fall
within the meaning of "shelf item."
With respect to shelf items, the Company may purchase
goods, materials, and equipment, where the design of
manufacturing expertise involved is supplied by the vendor as
part of the sale.
(b) Production work may be performed outside the plant only
where the Company demonstrates that is unable because of lack
of capital to invest in necessary equipment or facilities, and
that it has a continuing commitment to the steel-making
business. In determining whether there is capital to invest in
particular equipment or facilities, the Company is entitled to
make reasonable judgments about the allocation of scarce
capital resources among its plants represented by the Union
and their supporting facilities.
(3) Mutual Agreement
Work contracted out by mutual agreement of the parties
pursuant to paragraph F below.
(4) Work contracted out, whether inside or outside of the
Plant, may be contracted out provided the contractor employer
is a signatory to this Agreement.
(C) Reasonableness
In determining whether it is more reasonable for the Company
to contract out work than use its own employees the following
factors shall be considered:
(1) Impact on the bargaining unit.
(2) The necessity for hiring new employees shall not be deemed a
negative factor except for work of a temporary nature.
(3) Desirability of recalling employees on layoff.
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(4) Availability of qualified employees (whether active or on
layoff) for a duration long enough to complete the work.
(5) Availability of adequate qualified supervision.
(6) Availability of required equipment either on hand or by lease or
purchase, provided that either the capital outlay for the purchase
of such equipment, or the expense of leasing such equipment, is not
an unreasonable expenditure in all the circumstances at the time the
proposed decision is made.
(7) The expected duration of the work and the time constraints
associated with the work.
(8) Whether the decision to contract out the work is made to avoid
any obligation under the collective bargaining agreement or benefits
agreements associated therewith.
(9) Whether the work is covered by a warranty necessary to protect
the Company's investment. For purposes of this subparagraph,
warranties are intended to include work performed for the limited
time necessary to make effective the following seller guarantees:
(a) Manufacturer guarantees that new or rehabilitated
equipment or systems will perform at stated levels of performance
and/or efficiency subsequent to installation.
(b) Manufacturer guarantees that new or rehabilitated
equipment or systems will perform at stated levels of performance
and/or efficiency subsequent to installation.
Warranties are commitments associated with a particular
product or service in order to assure that seller representations
will be honored at no additional cost to the Company. Long term
service contracts are not warranties for the purposes of this
subparagraph.
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(10) In the case of work associated with leased equipment, whether
such equipment is available without a commitment to use the
employees of outside contractors or lessors for its operation and
maintenance.
(11) Whether, in connection with the subject work or generally, the
local union is willing to waive or has waived restrictive working
conditions, practices or jurisdictional rules (all within the
meaning of "local working conditions" and the authority provided by
this Agreement).
(D) Contracting Out Committee
(1) At each plant a regularly constituted committee consisting of
not more than four persons (except that the committee may be
enlarged to six persons by local agreement), half of whom shall be
members of the bargaining unit and designated by the Union in
writing to the Plant management and other half designated in writing
to the Union by the Plant management, shall attempt to resolve
problems in connection with the operation, application and
administration of the foregoing provisions.
(2) In addition to the requirements of paragraph E below, such
committee may discuss any other current problems with respect to
contracting out brought to the attention of the committee.
(3) Such committee shall meet at least one time each month, unless
mutually agreed otherwise.
(E) Notice and Information
Before the Company finally decides to contract out an item of work
as to which it claims the right to contract out, the Union committee
members will be notified. Except as provided in paragraph I below (Shelf
Item Procedure), or in certain cases of production work, such notice will
be given in sufficient time to permit the Union to invoke the Expedited
Procedure described in paragraph H below, unless emergency situations
prevent it. Such notice shall be in writing and shall be sufficient to
advise the Union members of the committee of the location, type, scope,
duration and timetable of the work to be performed so that the Union
members of the committee can adequately form an opinion as to the reasons
for
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such contracting out. Such notice shall generally contain the information
set forth below:
(1) Location of work.
(2) Type of work:
(a) Service
(b) Maintenance
(c) Major Rebuilds
(d) New Construction
(e) Production
(3) Detailed description of the work.
(4) Crafts or occupations involved.
(5) Estimated duration of work.
(6) Anticipated utilization of bargaining unit forces during the
period.
(7) Effect on operations if work not completed in timely fashion.
Either the Union members of the committee or the Company members of
the committee may convene a prompt meeting of the committee. Should the
Union committee members believe discussion to be necessary, they shall so
request the Company members in writing within five (5) days (excluding
Saturdays, Sundays and holidays) after receipt of such notice and such a
discussion shall be held within three (3) days (excluding Saturdays,
Sundays and holidays) thereafter. When insufficient time is available to
meet the time limits above, either party may request a meeting to discuss
the issues in an attempt to resolve them. The Union members of the
committee may include in the meeting the Union representative from the
area in which the problem arises. At such meeting, the parties should
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review in detail the plans for the work to be performed and the reasons
for contracting out such work. Upon their request, the Union members of
the committee will be provided any and all information in the Company's
possession relating to the reasonableness factors set forth in Paragraph C
above. Included among the information to be made available to the
committee shall be the opportunity to review copies of any relevant
proposed contracts with the outside contractor. The Management members of
the committee shall give full consideration to any comments or suggestions
by the Union members of the committee and to any alternate plans proposed
by Union members for the performance of the work by bargaining unit
personnel. Except in emergency situations, such discussions, if requested,
shall take place before any final decision is made as to whether or not
such work will be contracted out.
Should the Company committee members fail to give notice as provided
above, then not later than thirty (30) days from the date of the
commencement of the work a grievance relating to such matter may be filed
under the grievance and arbitration procedure. Should it be found in the
arbitration of a grievance alleging a failure of the Company to provide
the notice or information required under this paragraph E that such notice
or information was not provided, that the failure was not due to an
emergency requirement, and that such failure deprived the Union of a
reasonable opportunity to suggest and discuss practicable alternatives to
contracting out, the Arbitrator shall have the authority to fashion a
remedy, at the Arbitrator's discretion, that the Arbitrator deems
appropriate to the circumstances of the particular case. Such remedy, if
afforded, may include earnings to grievants who would have performed the
work, if they can be reasonably identified.
(F) Remedy for Repeated Notice Violations
Notwithstanding any other provision of this Agreement, where, at a
particular location, it is found that the Company (i) committed violations
of paragraph E on more than three occasions in any period of three
consecutive years or (ii) violated a cease and desist order previously
issued by the Arbitrator in connection with a violation of paragraph E,
the Arbitrator's remedy shall include the following:
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(1) earnings and benefits to employees who would have performed the
work if they can reasonably be identified and, if not, then to employees
who might arguably have performed the work; and
(2) an award of costs to the Union, including but not limited to,
reasonable attorney's fees, if any lost time expenses reasonably incurred
by the Union in preparing and presenting the case, the Union's share of
the Arbitrator's fees, the Union's transcript expenses, if any; and
(3) where a cease and desist order had previously issued, a contempt
charge of sufficient amount, in the Arbitrator's judgment, to bring the
Company into compliance with the Arbitrator's order.
(G) Mutual Agreement and Disputes
The committee may resolve the matter by mutually agreeing that the
work in question either shall or shall not be contracted out. Any such
resolution shall be final and binding but only as to the matter under
consideration and shall not affect future determinations under this
Section.
If the matter is not resolved, or if no discussion is held, the
dispute may be processed further in accordance with either of the
following:
(1) By filing, within thirty (30) days of receipt of the Company's
notice, a grievance relating to such matter under the grievance and
arbitration procedure.
(2) By submitting the matter to the Expedited Procedure set out in
paragraph H below.
(H) Expedited Procedure
In the event that either the Union or Company members of the
committee request an expedited resolution of any dispute arising under
this Section, except paragraph I (Shelf Item Procedure), it shall be
submitted to the Expedited Procedure in accordance with the following:
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(1) In all cases except those involving day-to-day maintenance and
repair work and service, the Expedited Procedure shall be implemented
prior to letting a binding contract.
(2) Within three (3) days (excluding Saturdays, Sundays and
holidays) after either the Union or Company members of the committee
determine that the committee cannot resolve the dispute, either party
(chairman of the grievance committee in the case of the local union and
the manager of labor relations in the case of the Company) may advise the
other in writing that it is invoking this expedited procedure.
(3) An expedited arbitration must be scheduled within three (3) days
(excluding Saturdays, Sundays and holidays) of such notice and heard at a
hearing commencing within five (5) days (excluding Saturdays, Sundays and
holidays) thereafter. The Arbitrator shall hear the dispute and, if no
Arbitrator is available to hear the dispute within five (5) days, another
arbitrator shall be selected by mutual agreement of the District Director
of the Union and the Vice President Human Resources of the Company.
(4) The arbitrator must render a decision within forty-eight (48)
hours (excluding Saturdays, Sundays and holidays) of the conclusion of the
hearing. Such decision shall not be cited as a precedent by either party
in any future contracting out disputes.
(5) Notwithstanding any provision of this Agreement, any case heard
in the Expedited Procedure before the work in dispute was performed may be
reopened by the Union in accordance with this paragraph if such work, as
actually performed, varied in any material respect from the description
presented in arbitration. The request to reopen the case must be submitted
within 7 days of the date on which the Union learned of the variance and
shall contain a summary of the ways in which the work as actually
performed differed from the description presented in arbitration. Upon
receipt of a request to reopen, the Arbitrator shall schedule a hearing in
accordance with these procedures. In a case reopened pursuant to this
paragraph, the Arbitrator shall determine whether the work in dispute, as
it actually was performed, violated the provisions of this Article and, if
so, the remedy. No prior decision in the matter shall be given any weight.
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(I) Shelf Item Procedure
(1) No later than June 1, 1999, and except as provided herein,
annually thereafter, the Company shall provide the Union members of the
committee with a list and description of anticipated ongoing purchases of
each item which the Company asserts to be a shelf item within the meaning
of paragraph B-2-a above. If the Union members of the committee so
request, the list shall not include any item included on a previous list
where the status of that item as a shelf item has been expressly resolved.
Within sixty (60) days of the submission of the list, either the Union
members or the Company members may convene a meeting of the committee to
discuss and review the list of items and, if requested, the facts
underlying the Company's assertion that such items are shelf items.
(2) The committee may resolve the matter by mutually agreeing that
the item in question either is or is not a shelf item. With respect to any
item as to which the Union members of the committee agree with the
Company's claim that it is a shelf item, the Company shall be relieved of
any obligation to furnish a contracting out notice until the May 1 next
following such agreement.
(3) If the matter is not resolved, any dispute may be processed
further by filing, within thirty ( 30) days of the date of the last
discussion, a grievance in Step 2 of the complaint and grievance
procedure. Such a grievance shall include all items in dispute. However,
where a number of items raise the same or similar issues, those items may
be grouped in a single class or category.
(4) An item which the Company claims to be a shelf item, but which
was not included on the list referred to above because no purchase was
anticipated, shall be listed and described on a contracting out notice
provided to the Union not later than the regularly scheduled meeting of
the contracting out committee next following purchase of the item.
Thereafter, the parties shall follow the procedures set forth in
paragraphs 2 and 3 above.
(5) The Union may file a grievance in accordance with paragraphs F
or G of this Article with respect to any item of maintenance, repair work
or work associated with the fabrication of goods, material or equipment
performed outside the plant notwithstanding the inclusion of such item on
the shelf item list previously furnished to the Union by the Company.
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(J) Annual Review
Commencing on or before October 1 of each year the Company Committee
members shall meet with the Union Committee members for the purpose of (i)
reviewing all work whether inside or outside the plant which the Company
anticipates may be performed by outside contractors or vendors at some
time during the following calendar year, (ii) determining such work which
should be performed by bargaining unit employees and (iii) identifying
situations where the elimination of restrictive practices would promote
the performance of any such work by bargaining unit employees. The Union
Committee members shall be entitled in conducting this study to review any
current or proposed contracts concerning items of work performed for the
company by outside contractors and vendors and shall keep such information
confidential.
By no later than November 1 of each year these Local Union and
Company Committee members shall jointly submit a written report to the
Co-Chairmen of the Negotiating Committee or their designees describing the
results of this review. Specifically, the report should list (a) all items
of work which the parties agree will be performed by bargaining unit
employees during the following year, (b) all items of work which the
parties agree should be performed by outside contractors and vendors, and
(c) those items on which the parties disagree. If the parties disagree,
the report will state the reason for such disagreements.
As to individual items of work, the Co-Chairmen of the Negotiating
Committee may (a) affirm the plant recommendation, (b) disagree with
respect to the plant recommendation as to specific items and either (i)
refer their dispute to arbitration under a procedure to be established by
the parties and the Arbitrator or (ii) refer the matters back to the plant
without resolution in which event the specific disputes will be handled
under the provisions of this section at the time they may arise.
The Union agrees that during the term of this Agreement, the Company
may purchase billets, blooms, bars, ingots and rods, provided the purchase
of such materials/products is for sound business reasons, and/or the
Company cannot produce such materials/products or cannot produce such
product at acceptable levels of quality.
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(K) District Director/Vice-President Human Resources
It is the intent of the parties that the members of the joint plant
contracting out committee shall engage in discussions of the problem
involved in this field in a good-faith effort to arrive at mutual
understanding so that disputes and grievances can be avoided. If either
the Company or the Union members of the committee feel that this is not
being done, they may appeal to the District Director of the Union who has
jurisdiction of the plant in questions and the appropriate representative
of the company headquarters for review of the complaint about the failure
of the committee to properly function. Such appeal shall result in a
prompt investigation by the District Director or his designated
representative and the Company's Vice President of Human Resources or his
designated representative for such review. This provision should in no way
affect the rights of the parties in connection with the processing of any
grievance relating to the subject of contracting out.
(L) No testimony offered by an outside contractor may be considered in any
proceeding alleging a violation of this Article unless:
(1) The party calling the contractor provides the other party with a
copy of each contractor document to be offered at least forty-eight
(48) hours (excluding Saturdays, Sundays and holidays) before the
commencement of the hearing; and
(2) The party calling the contractor provides or causes the
contractor to provide the other party, upon request, with copies of
all relevant documents in the contractor's possession.
ARTICLE XII
NEW EMPLOYEE ORIENTATION
The United Steelworkers of America and the Company will develop a joint
New Bargaining Unit Employee Orientation Program which shall entail the
following:
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(1) An introduction of Plant Management officials, International Union
officials, and Local Union Representatives.
(2) Distribution and discussion of the USWA Labor Agreement including
any relevant local agreements, the probationary period, and the
grievance procedure.
(3) Discussion of Safety and Health programs and Safe Working
procedures.
(4) Presentation on and discussion of the history and achievements of
the United Steelworkers of America and the Local Union.
(5) Presentation on and discussion of the structure of the United
Steelworkers of America and the Local Union, and the services that
are provided by the various offices and committees.
(6) Presentation on the history of the Company and plant.
(7) Review of the markets in which the Company participates; the
products produced and the customers serviced.
(8) Discussion of the structure of the Company, the plant organization,
and the functions and services that are provided by the various
departments.
Each new employee, either individually or as part of a small group
shall, within 10 days of their being hired, be given a presentation of the
above Program by Company and Union officials.
At the conclusion of the presentation, Union officials shall be
given an opportunity to meet with the new employee(s) for up to two (2)
hours without the presence of management representatives.
All costs associated with developing this Program, including
lost-time for Union officials who participate in its development, and the
costs, including lost-time for individuals participating in the
presentation, shall be borne by the Company.
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ARTICLE XIII
HIRING PREFERENCE
In all hiring for bargaining unit positions, the Company shall, subject to
its obligations under applicable equal employment laws and regulations and to
the full extent of interest, give first preference to the direct relatives
(children, children-in-law, step-children, spouse, siblings, grandchildren,
nieces and nephews) of bargaining unit employees who have the ability to perform
the job and the aptitude to absorb training reasonably required for and related
to meeting current and future job requirements. Joint guidelines may be
established at each plant by mutual agreement of the Company and the Union.
In all events, such hiring shall conform to applicable lines of
progression, bidding and promotion, and other requirements under this Agreement.
It is understood and agreed by the parties that the Company shall, subject
to these and other applicable provisions, have the final responsibility for
accepting or rejecting a particular applicant for employment.
ARTICLE XIV
BOARD OF DIRECTORS
The International President (the "President") of the United Steelworkers
of America may designate to the CEO of the Company an individual for appointment
as a Director of the Company. The individual so designated will be an individual
with recognized experience and competence in public service, labor, education or
business, who meets the antitrust and conflict of interest requirements
applicable to all Directors. The CEO of the Company shall have the right to
approve the President's designee, such approval to not be unreasonably withheld;
and shall recommend such person (the "Nominee") to the Board. The Board shall
consider the matter at a regularly scheduled meeting within 90 days of the
President's designation of the nominee, and if the Board approves the Nominee as
provided above, the Board shall appoint the Nominee as a Director.
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If for any reason the Nominee is unable or unwilling to serve, or after
appointment becomes unable or unwilling to serve, or in anticipation of the
expiration of a regular term, the President will designate another nominee (or
renominate the current designee) and the same procedures will be followed to
consider such designation. It is understood that an individual who serves as
Director and subsequently, for any reason, ceases to be a Director, shall
thereafter not be eligible to serve as a Director. Only one Nominee so
designated by the President shall serve as a Director at any one time.
Upon appointment, and thereafter, the Nominee shall stand for election as
a Director as do all Directors and shall have all of the responsibilities and
duties of a Director under Delaware law. S/he shall agree in writing to any
reasonable affirmation of his or her fiduciary obligations to the Company,
provided that all directors execute identical affirmations. The Nominee shall
comply with applicable laws governing the ownership and trading in the
securities of the Company, and recommend his or her election by the
Stockholders.
ARTICLE XV
INSTITUTE FOR CAREER DEVELOPMENT
Section 1
In recognition of the worldwide competitive challenges that confront the
Company and the entire workforce, the Union and the Company have agreed to
enroll in a major new venture in training and educating workers -- the
USWA/Company Institute for Career Development (the "Institute").
The purpose of the Institute is to provide resources and support services
for the education, training and personal development of the employees of the
Company, including upgrading the basic skills and educational levels of active
employees in order to enhance their ability to absorb craft and non-craft
training, their ability to progress in the workplace, their ability to perform
their assigned work tasks to the full extent of their potential, and their
knowledge and understanding of the workplace and of new and innovative work
systems. Further purposes will include education, training and counseling which
will enable employees to have more stable and rewarding personal and family
lives, alternative career opportunities in the event that their Steelworker
careers
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are subject to dislocation, and long, secure and meaningful retirements. This
will also enable the USWA and the Company to expand their pioneering efforts, in
conjunction with federal, state and local governments, in support of the victims
of shutdowns, layoff, restructuring, economic policies and unfair trade
practices.
The Institute will be financed by a contribution from the Company,
beginning upon closing, in the amount of 10 cents per actual hour worked by
Steelworker represented employees covered by the Agreement. The parties will, of
course, also seek and use funds from federal, state and local governmental
agencies.
Consistent with this understanding, it would be appropriate for the
Institute to allocate funds to certain programs that may be offered by the
Company and that are consistent with the goals and limitations of this Article.
While the primary goal of the USWA and the Company establishing this
landmark Program in the steel and steel-related sectors of American industry, is
to advance the interest of the Company and its employees, the parties believe
that other employers are similarly interested in upgrading the skills, lives and
career potential of their employees. Accordingly, it is understood that the
proceeds generated by this agreement may be administered by an Institute
sponsored by USWA, the Company, and other employers who agree with the USWA to
join and contribute financially to the goals of the Institute. The Company will
be represented in the policy formulation of the Institute, and its financial
contributions to the Program will be separately tracked.
The Institute will be under the joint supervision of the USWA and
participating employers. The Supervisory Board shall consist of an equal number
of USWA and employer appointees. The Board shall include representation from the
workers who may benefit from the Career Development Program. The Board has
selected a professional directorate which has, in turn, staffed the Institute
and established educational, training, counseling and guidance programs. The
directorate and staff will seek out and make use of the most effective and
modern methods and educational technologies.
Apprenticeship, craft training and training for position-rated jobs are
separately provided for in the collective bargaining agreement. The Company may,
however, contract with the Career Development Program to provide services and
resources in support of such training.
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It is understood by the parties that if for any reason the USWA/ Company
Career Development Program is terminated, or if the scope of the program is
modified to the extent that all existing and committed funds are not required,
the unused contributions and commitments shall be allocated to another employee
benefit designated by the USWA, the choice of employee benefit to be subject to
review with and approval by the Company.
In establishing this Program, the USWA and the Company are implementing a
shared vision that workers must play a significant role in the design and
development of their jobs, their training and education, and their working
environment. In a world economy many changes are unforeseen and unpredictable.
Corporate success, worker security and employee satisfaction all require that
the workforce and individual workers be capable of reacting to change, challenge
and opportunity, which in turn requires ongoing training, education and growth.
Experience has shown that worker growth and development are stunted when
programs are mandated from above, but flourish in an atmosphere of voluntary
participation in self-designed and self-directed training and education. These
shared beliefs shall be the guiding principles of the USWA/ Company Career
Development Program.
The parties recognize that the obligations of the Company to the Career
Development Program will grow to be substantial and continue to climb. When
combined with those of other steel companies participating in the ICD, these
obligations add up to tens of millions of dollars. Given that the source of this
funding is in the deferred wages of employees, the parties agree that the Career
Development Program warrants a set of policies and practices concerning
financial reporting, accountability, and oversight. Accordingly, the Company
shall cooperate with the Union and the ICD in establishing such systems whose
minimum guidelines satisfy at least the following.
Section 2 - Reporting
For each calendar year quarter, and within 30 days of the close of such
quarter, the Company shall account to the ICD for all changes in the financial
condition of its Career Development Program, and such reporting shall include at
least the following information pertaining to such quarter:
(A) The Company's 10 cents per-actual-hour-worked credits;
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(B) With respect to all programs operating in such quarter, a listing of
such programs showing when ICD-approved, the date of such approvals,
and a detailed breakdown of actual program expenditures;
(C) The date on which the program expenditures being reported were
approved by the Local Joint Committee;
(D) The cumulative balance of credits available for still-to-be-approved
Career Development programs, reconciled against the information
described above.
(E) Such reports shall be broken down by plant, local union, and where
possible, by approved program and major vendor. The Company agrees
to make its reports on a form or in a format developed by the ICD
with the approval of its governing board.
The first report of the above information shall be made by the Company to
the ICD no later than January 1, 1999, and shall cover by quarter and year the
period from the date the program was established through December 31, 2003. For
subsequent reporting periods, the Company shall submit quarterly reports to the
ICD showing year-to-date results as well.
Section 3 - Auditing
Upon request of either the Company or Union, an audit of Company ICD
reports and underlying Career Development Program activities shall be made in
accordance with the following guidelines. The Company and Union shall jointly
select an outside, independent auditor (who may include a qualified professional
employed by the ICD, if available). The reasonable fees and expenses of the
auditor shall be borne by the Company. Audits may be on a company-wide,
plant-specific, or other appropriate basis. Absent cause for more frequent
audits, Company-wide Career Development audits shall be conducted no more than
once every three years.
Section 4 - Approval and Oversight
The Company and Union agree that a Local Joint Committee must submit a
proposed training or education program or plan to the ICD and obtain ICD
approval of it before the LJC may incur in connection with that plan or program
any expenditures
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chargeable against the Company's ICD obligations. The Company and Union affirm
their further understanding that a Career Development expenditure may be charged
against the Company's ICD obligations only when that expenditure is actually
made.
In the administration of their Career Development Program, the Company and
Union agree to abide by uniform standards promulgated by the ICD for trainer
certification, bidding processes for vendors, vendor certification, or similar
practices.
The Company and Union agree that, consistent with the foregoing
requirements, an ICD-approved expenditure may be made as soon as a Local Joint
Committee gives its authorization for such expenditure and need not await
compliance with the Company's internal policies concerning purchasing and
procurement.
ARTICLE XVI
MANNING OF NEW OPERATIONS
Section 1
In the manning of jobs in new facilities, the jobs shall be filled by
qualified Employees who apply for such jobs in the order of length of plant
continuous service from the following categories in the following order but
subject to the other provisions of this Section:
(A) Employees displaced from any facility being replaced in the plant by
the new facilities;
(B) Employees being displaced as the result of the installation of the
new facilities;
(C) Employees presently employed on like facilities in the plant;
(D) Employees presently on layoff from like facilities in the plant;
(E) Employees in the plant with two (2) or more years of plant
continuous service, provided that if sufficient qualified applicants
from this source are
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not available, Management shall fill the remaining vacancies as it
deems appropriate.
Section 2
The local parties shall meet to seek agreement on the standards to be used
to determine the qualifications entitling Employees otherwise eligible to be
assigned to the jobs in question. It shall be the objective of such meetings to
reach agreements on manning which reflect the parties' mutual intent to
facilitate efficient manning and preserve job security for longer service
Employees.
Section 3
Should the local parties fail to agree on the standards for determining
qualifications, an applicant otherwise eligible shall have:
(A) The necessary qualifications for performing the job.
(B) The ability to absorb such training for the job as is to be offered
and is necessary to enable the Employee to perform the job
satisfactorily.
(C) The necessary qualifications to progress in the promotional sequence
involved to the next higher job to the extent that Management needs
Employees for such progression. In determining the necessary
qualifications to advance in the promotional sequence involved, the
normal experience acquired by Employees in such sequence shall be
taken into consideration. However, it is recognized that Management
can require that a sufficient number of occupants of each job in a
promotional sequence be available to assure an adequate number of
qualified replacements for the next higher job.
Section 4
An applicant who is disqualified under Section 3 above shall have the
right to apply for another job for which he believes he can qualify.
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Section 5
When new facilities are to be manned pursuant to this Article, the local
parties shall meet and may establish, in appropriate circumstances, rules for
allowing an Employee not placed initially a second opportunity to elect transfer
to the new facility consistent with its efficient operation. In establishing
such rules, the local parties shall consider matters such as:
(A) The job level in the promotional sequence in the new unit up to
which an Employee will be allowed a second opportunity to elect
transfer.
(B) The date on which the second opportunity must be exercised following
start-up of the new facility, but not more than three (3) years
thereafter. (In determining such date, the parties shall give due
consideration to possible Management abandonment of the old facility
or an extended period of its nonuse.)
In lieu of or in addition to the foregoing, the local parties may develop
a method for filling permanent vacancies in the new facility between the time of
initial manning and the final election to transfer.
Section 6
Should Management deem it necessary to assign an Employee to his regular
job on the old facility in order to continue its efficient operation, it may do
so on the basis of establishing such Employee on the new job and temporarily
assigning him to his former job until a suitable replacement can be trained for
the job or its performance is no longer required. In such event, such Employee
shall be entitled to earnings not less than what he would have made had he been
working on the job on which he has been established.
Section 7
Where new facilities replace facilities or more than one plant in the same
general locality, appropriate representatives of the Company and the
International Union shall meet in conjunction with the local parties for the
purpose of seeking an agreement on manning consistent with the parties' mutual
intent to facilitate efficient manning and
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preserve job security for longer service Employees. In such situations, Company
service may be considered in addition to plant service.
Section 8
All applicants shall go through the following selection process:
(A) Drug and Alcohol Test - Any person applying for a position at a new
operation will be required to pass a drug and alcohol test in
accordance with agreed-upon standards.
(B) General Aptitude Test - Any person applying for a position at a new
operation must meet the minimum threshold on an aptitude test,
measuring their ability to work within a team-based work system.
(C) Job Skills Aptitude Test - This test will measure a person's skills
in the areas of production and maintenance, to include the ability
to perform the essential functions of the position including basic
math, reading, etc. The test will consist of both a written
examination and practical or "hands-on" examination.
(D) All Test(s):
(1) shall be fair in their make-up and in their administration;
(2) shall be free of cultural, racial or ethnic bias;
(3) results will be reviewed with employees including an offer to
counsel the employee as how to overcome deficiencies; and
(4) all interview procedures shall be mutually developed and
agreed to by the Company and the Union.
(E) Interview - Each qualified applicant shall be interviewed for a
position at a new operation. Based on their composite score on (b)
through (d) above,
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each applicant meeting the minimum threshold shall be considered for
a position at a new operation.
Section 9
Employees at new operations shall be multi-skilled and multi-functional.
Job responsibilities at new operations shall encompass duties which include
operator and maintenance duties. The Workforce Flexibility provisions of the
Agreement shall be applicable to all new operations.
ARTICLE XVII
RIGHT TO BID
Section 1
Should (a) the Company decide (a "Company Decision") or (b) be presented
with an offer (an "Unsolicited Offer") to sell or otherwise transfer (other than
a sale lease-back transaction conducted purely as a financing transaction and
involving an unrelated third party): (i) a controlling interest in the corporate
entity which owns its assets (a "Controlling Interest"); or (ii) all or a
portion of its facilities ("Facilities"), (either or both, the "Assets") it will
so advise the USWA in writing and grant to the USWA the right to organize a
transaction to purchase the Assets (a "Transaction").
Section 2
The Company will provide the USWA with any information needed to determine
whether it wishes to pursue a Transaction. All such information shall be subject
to an executed Confidentiality Agreement.
Section 3
The Company shall notify the USWA of the schedule and/or timetable for
consideration by the Company of any possible transaction. In case of an
Unsolicited Offer or if the Company is considering a possible sale or
transaction, the Company will provide the USWA with the greater of (i) thirty
days and (ii) the time provided by the
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schedule and/or timetable given to any other interested party to submit an offer
for the Assets. In the case of a Company Decision, the USWA will be provided
with the same time as that given to any other interested party.
Section 4
During the period described in Section 3 above, the Company will not enter
into any contract regarding the Assets with another party.
Section 5
In the event that the USWA submits an offer pursuant to the above, the
Company shall not be under any obligation to accept such offer. However, the
Company shall be entitled to enter into an agreement with regard to the Assets
with an entity other than the USWA only if that transaction is superior to the
USWA offer. The Company may deem a proposed transaction superior if, in the
reasonable judgment of its Directors, it is more favorable on balance to the
Company and/or its shareholders, taking into consideration price, certainty of
payment (or risk of nonpayment), financial strength of the proposed purchaser,
conditions precedent to closing and other factors affecting the value of the
transaction to the Company and its shareholders.
Section 6
This agreement shall not be deemed to cover any public offering of equity.
Section 7
The rights granted to the USWA herein may be transferred or assigned by
the USWA, but only to an entity a material portion of whose equity is or will be
beneficially owned by employees of the Company.
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ARTICLE XVIII
UNION ROLE IN NEGOTIATION OF BENEFITS
Most wage and benefits programs provided lack any established
administrative practice by which bargaining unit members are informed, at the
time of payment, that such benefits were the result of negotiation between the
Company and Union. In recognition of the Union's role in achieving the goals of
the enterprise, the Company agrees to adopt such a practice in the manner
detailed in this Article.
This understanding shall apply to payments of the following: profit
sharing; retroactivity payments made pursuant to wage increases; lump sum
payments; severance pay; special payments under the pension plan; Pension Plan
payments; Supplemental Unemployment Benefits; Sickness and Accident benefits (in
each of the last two cases, only to the first check in any stream of payments);
and wage increases (provided that, in the case of wage increases, this
understanding shall apply only to the first payroll period following the
effective date of such increase).
In the administration of the wage and benefit programs identified above,
the Company agrees that it shall give recognition to the role of the Union in
negotiating such items as follows:
The form of such recognition will vary depending on whether the Company
makes a communication of its own with or in conjunction with such benefit
payment:
(i) If the Company does not make its own communication, the Union shall
be given a reasonable opportunity to include its own communication
with the payment being provided by the Company;
(ii) If the Company does make such a communication, then the Union shall
be given a reasonable opportunity to insert within the first three
paragraphs of such Company communication a paragraph briefly
reporting the role played by the Union in bargaining such payment or
benefit. If the communication is in other than written form, the
parties shall devise a system consistent with the spirit and intent
of this Article.
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In all events, the following legend shall be included on the check stub or
other similar document for all payments or benefits made by the Company to its
employees or retirees: "This payment is being made pursuant to an agreement
negotiated on your behalf by your Union -- the United Steelworkers of America,
AFL-CIO-CLC." This obligation shall not extend to payments issued by third party
vendors such as Workers' Compensation carriers, health plan administrators, etc.
The understandings set forth herein shall become effective on January 1,
1999.
ARTICLE XIX
PRINTING OF CONTRACTS
Immediately upon ratification of the new Collective Bargaining Agreement,
the parties will create mutually acceptable new Agreements.
Said Agreements shall, at the expense of the Company, be printed (by a
union printer) in a form (size, paper stock, etc.) and distributed in a manner
designated by the Union and approved by the Company (such approval not to be
unreasonably withheld).
Said distribution of the Collective Bargaining Agreement booklet shall
occur within three (3) months of the closing. The distribution of Benefit
booklets shall occur within six (6) months of the closing.
The Company shall provide the Union with electronic versions of all of the
Agreements.
ARTICLE XX
SOAR/PAC
The Company will implement a dues and PAC deduction program for retirees
who are members of the Steelworker Organization of Active Retirees (SOAR) and
who have submitted authorization for such deductions from their pension on a
form acceptable to the Company.
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The Company will implement a PAC deduction program for active employees
who have submitted authorization for such deductions from their wages on a form
acceptable to the Company.
The Union shall indemnify and save the Company harmless against any and
all claims, demands, suits, or other forms of liability that shall arise out of
or by reason of action taken or not taken by the Company for the purpose of
complying with any of the provisions of these understandings, or in reliance on
any list, notice or assignment furnished under any of such provisions.
ARTICLE XXI
FAMILY AND MEDICAL LEAVE ACT
The Company and the Union affirm their compliance with and implementation
of the Family and Medical Leave Act of 1993 (FMLA) and further agree to the
following particulars regarding employee eligibility and entitlement.
Section 1 - General
(A) The FMLA provides for up to 12 weeks of unpaid leave each year for
eligible employees to take care of a serious health condition of
certain family members or of employees themselves, and for the
birth, adoption or foster placement of a child. The law also
requires the continuation of certain benefits under certain
conditions while on leave, and includes certain notice requirements
in order to obtain the leave.
(B) A copy of a summary of the law and employee rights thereunder is
available at the Human Resources Office, and will be issued upon
request and at the time any FMLA leave is requested. The required
posting under the FMLA will be maintained by the Company.
(C) FMLA under this Article shall be available to any employee who has
six months or more of continuous service as calculated pursuant to
Seniority Sections of the Agreements.
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(D) This Article shall become effective on August 1, 1998. Any covered
employee then on leave of absence which would otherwise be covered
under the FMLA will be designated on FMLA leave beginning August 1,
1998.
Section 2 - Eligibility And Entitlement
(A) There shall be no hours-worked requirement for the twelve (12)
months preceding the start of the leave.
(B) The twelve (12) weeks unpaid leave entitlement under the FMLA shall
be measured on a calendar year basis.
(C) In the event an employee should exhaust the FMLA entitlement due to
their own serious health condition, such employee shall be entitled
to an additional unpaid leave of up to four (4) weeks in connection
with the birth, adoption or placement of a child, or the need to
care for a family member with a serious health condition, should
such an event occur within the calendar year as defined above.
Section 3 - Intermittent Or Reduced Leave Scheduling
(A) An employee seeking leave in other than continuous weeks must
certify to Management why such schedule is necessary, and must
schedule the time off in the manner least disruptive to the Plant's
operating needs.
(B) Where leave is sought other than in full-day increments, the
employee may agree to assignment by Management to any available
position consistent with the collective bargaining agreement. The
employee will be paid at the rate of the job regularly held or the
assigned job, whichever is higher, for the portion of the shift
actually worked.
(C) Where leave is sought in increments of less than a full work week,
if Management, consistent with the collective bargaining agreement,
is able to accommodate the need for time off by adjusting the
employee's work schedule (including, but not limited to altering the
shift assignment or the scheduled work days), and the employee
agrees to such scheduling, no leave need be provided.
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(D) Where leave is requested other than continuous weeks, and the
employee agrees, the employee may be assigned to an open comparable
position, consistent with the employee's own seniority, for the
period of time during which intermittent leave may be required.
Section 4 - Notice
(A) In the case of unforeseeable leave sought for care of the serious
health condition of the employee or a family member, the Department
Head and Human Resources Office shall be notified as soon as
possible (within forty-eight hours) of learning of the need for
leave, and explain the need, expected duration, and schedule of the
leave.
(1) In the case of such leave, following the initial notice
provided above, a written notice shall be provided as soon as
possible, but in no event more than fifteen (15) calendar days
from the time the need for the leave arises. This notice shall
be accompanied by a certification signed by the attending
physician or other health care provider, and shall include:
(a) the date on which the condition commenced;
(b) the probable duration of the condition;
(c) appropriate medical information regarding diagnosis,
regimen of treatment and need for hospitalization,
sufficient to enable the Company to reasonably review
the request; and
(d) medical information for employee's serious health
condition that he is unable to perform work, or for
family member, why it is necessary for the employee to
provide care to the family member, and an estimate of
the amount of the employee's time which is necessary for
that care.
(2) Where the leave is to be taken in other than a single
continuous period of time, the notice shall also include:
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(a) the dates on which the medical treatment is expected to
be given;
(b) the duration of such treatment;
(c) the medical necessity for leave to be granted on an
intermittent basis;
(d) the expected duration of the need for an intermittent
schedule.
(3) Certification forms can be obtained from the Human Resources
Office.
Section 5 - Pay During FMLA Leave
(A) Employees seeking FMLA leave under this Article may utilize paid
vacation during the FMLA leave time.
(B) Except for the substitution of paid vacation and the utilization of
Sickness and Accident, Sick Leave (O&T employees only), or Workers'
Compensation benefits, all time off provided shall be unpaid. Time
off without pay granted pursuant to the FMLA shall be considered as
time not worked through choice of the employee, and may not be
utilized in connection with a claim by the employee under any
provision of this Agreement for any wages, benefit, or entitlement,
eligibility for which is related to hours worked, unless the
employee otherwise meets the eligibility requirements for such wage,
benefit or entitlement. This exclusion includes, but is not limited
to, such matters as reporting pay, overtime, profit-sharing, rate
retention, guaranteed hours, holiday pay, service bonus, earnings
protection or short week benefit.
Section 6 - Termination of Leave
(A) The anticipated duration of the leave sought shall be established at
the time the leave is granted. Upon termination of a leave, the
employee shall be reinstated to the same or an equivalent position
as that held at the time the leave commenced, consistent with his
seniority, unless there was an
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intervening event including but not limited to a reorganization or
force reduction. In the latter event, the employee shall be
reinstated to the same position or status which would have been held
after the intervening event if leave had not been taken.
(B) An employee who wishes to return from leave prior to the scheduled
return date must give the Department Head and Human Resources Office
five (5) business days notice of his desire to return, unless the
Human Resources Office agrees to a shorter period in a particular
case.
(C) An employee on a leave under this Article is not eligible for
Lay-Off Allowance Payments in the event of a layoff, until following
the termination of the leave, but upon reinstatement to work, shall
be credited for Lay-off allowance purposes for the time on leave.
Section 7 - Continuous Service
Leaves of absence under this program shall not constitute a break in the
employee's length of continuous service, and the period of such leave shall be
included in his length of continuous service under the Labor and Benefit
Agreements.
Section 8 - Benefit Continuation
(A) All employees will continue in benefit coverage during such leave,
provided the employee is otherwise eligible for such coverage under
provisions of the FMLA, and the employee continues making any
normally-required premium or other payments in a manner acceptable
to the Company. In the event the employee fails to make such
payments, all benefit coverage shall not be terminated, and the
Company shall advance any necessary payments which the employee
shall be obligated to repay upon returning to work.
(B) In the event an employee fails to return to work or quits after the
employee's FMLA leave period has been concluded, the Company will
waive its right to seek to recover health insurance premiums for
health insurance coverage provided by the Company during such leave,
notwithstanding the provision of the FMLA which permits recovery of
health insurance premiums under specified circumstances.
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Section 9 - Good Faith Efforts
In the event problems develop in implementing this Article, whether as a
result of changes in the law or regulations or otherwise, the parties
agree to use their best efforts to resolve them in a manner designed to
assure minimal disruption to the operation, minimize absenteeism, and
provide an employee the time necessary to meet family and personal
emergencies and obligations.
ARTICLE XXII
LEAVE OF ABSENCE POLICY FOR UNION EMPLOYEES
Section 1 - Local Union Leave.
Leaves of absence for the purpose of accepting positions with Local Unions
shall be available to a reasonable number of Employees. Adequate notice of
intent to apply for leave shall be afforded local Plant Management to enable
proper provision to be made to fill the job to be vacated.
Leaves of absence for the purpose of accepting an elective office with the
Local Union shall be for a period not in excess of three (3) years and may be
renewed for further periods of three (3) years each.
Section 2 - International Union Leave.
The parties have reached the following agreement with respect to any
person who leaves their employment with the Company to become an employee or
elected official of the International Union:
(A) First becomes an Officer or Director of the International Union
After July 1, 1998, or
(B) Becomes an employee of the International Union and whose
probationary period expires on or after July 1, 1998; or
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(C) Was an Officer or Director or employee of the International Union
prior to August 1, 1996 but was not as of that date accruing service
for Company pension purposes (for time spent as an Officer, Director
or employee of the International Union) pursuant to a valid
agreement providing for such accrual.
An individual described in this Section shall be granted a leave of
absence from the Company concurrent with the period of his permanent employment
with the International Union.
Once an individual described in this Section is made a permanent employee
of the International Union (by completing his probationary period) that person
shall, from that point forward and while he retains his leave of absence status
with the Company, not receive any service credit for Company pension purposes.
Such person shall accumulate continuous service for purposes of recall to
employment and for all other purposes under the Labor Agreement, except
pensions, provided that he shall not be entitled to receive any contractual
benefits during the period of his leave of absence or receive retiree health
care benefits from the Company if he is eligible for coverage in the
International Union health care plan for retirees.
ARTICLE XXIII
GRIEVANCE AND ARBITRATION PROCEDURE
Section 1 - Definition and Procedure
A grievance is a claim by any employee or group of employees, or by the
Union against the Company with respect to the meaning or application of the
terms of this Agreement. Grievances shall be processed in the following manner:
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Step 1. The aggrieved employee and/or the committeeman shall discuss the
matter with his supervisor within fifteen (15) days after the date of the
occurrence giving rise to the grievance or within fifteen (15) days of the date
he should have reasonably known of the incident. Appropriate management people
will be available for the purpose of handling grievances at this Step. Any
grievance settled by the parties at this first Step shall not be a binding
precedent on either party and shall not be admissible as evidence at any
arbitration. The supervisor's oral answer in this Step 1 shall be final unless
the grievance is reduced to writing and presented in the second Step.
Step 2. If the grievance is not settled in Step 1, it may be reduced to
writing on forms furnished by the Company and submitted to the Operating Unit
Manager or his designee within ten (10) working days of the supervisor's oral
response in Step 1. The grievance shall set forth the nature of the dispute, the
provision of the contract violated and relief sought. It shall be signed by the
employee and/or in the case of a grievance brought by the Union, it shall be
signed by a member of the Grievance Committee. A second step meeting shall be
held between the grievant, the grievance committee and an appropriate management
representative within five (5) working days following the day on which the
written grievance is presented to the Operating Unit Manager. Within fifteen
(15) working days after the meeting, the Operating Unit Manager or his designee
shall give a written answer.
Step 3. The Step 2 answer shall be final unless the grievance is submitted
to Step 3 by the Grievance chairman (or his designee) to the Plant General
Manager within five (5) working days after receiving the Operating Unit
Manager's Step 2 answer. A meeting will be scheduled between the International
Staff Representative and appropriate management representative at a mutually
agreed time. Within five (5) working days of said meeting, the Company will
provide the International Staff Representative with a written answer, a copy of
this answer will be given to the Grievance Committee Chairman of the Local
Union.
Step 4. The Step 3 answer shall be final unless the International Staff
Representative, within thirty (30) days of the delivery of the Company's answer
in Step 3, appeals the grievance by a notice in writing delivered to the General
Manager of Human Resources. The parties may mutually agree to the selection of
an arbitrator. If the parties cannot agree on the selection of permanent
arbitrators, either party may request the Federal Mediation and Conciliation
Service to send a panel of seven (7) arbitrators for each case (all of which
must be members of the National Academy of
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Arbitrators). If the parties cannot agree on a selection, a "strike" method of
selection shall be implemented with the last remaining name to be the
arbitrator. The decision of the arbitrator shall be final and binding on both
parties and any costs and expenses of the arbitrator shall be borne equally by
both parties. The arbitrator may consider and decide only the particular issue
presented to him by the grievance and his decision must be based upon an
interpretation of the express language of this Agreement. The arbitrator shall
not have the right to amend, take away, add to or change any of the provisions
of this Agreement.
Section 2 - Union Representation
The number of grievance committeemen at each plant shall be mutually
agreed upon between Management and the Union. The grievance committeemen shall
be selected by the Union from the plant areas they are to represent; however,
there shall be no more than one grievance committeeman selected from any one
plant area. Plant areas, or grievance representation units, for the purposes of
this Section shall be determined by mutual agreement between Management and the
Union, and existing plant areas, or grievance representation units, shall
continue in effect unless Management and the Union otherwise agree.
A grievance committeeman will be permitted to visit departments at
reasonable times for the purpose of transacting legitimate business as a
grievance committeeman, including the presentation, investigation, hearing or
settling of alleged complaints or grievances. If then at work, the grievance
committeeman will be granted time off, without pay, for such purpose after
obtaining permission (which shall not be unreasonably withheld) from his own
department head or his designated representative and reasonable notice to the
head of the department to be visited or his designated representative.
If not at work, the grievance committeeman will be permitted to visit
departments for the purpose as described above after reasonable notice to the
head of the department to be visited or his designated representative.
Departmental Representatives may be designated by the Union at any plant
to aid the Grievance Committee.
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Section 3 - Plant Access
The District Director and the International representative of the Union
who customarily handles grievances at a plant shall have access to the plant,
subject to established rules of the plant, at reasonable times to investigate
grievances with which they are concerned.
The Local Union President/Unit Chairperson will be permitted access to the
plant at reasonable times when necessary to transact legitimate union business
pertaining to the administration of the applicable agreements between the
parties after notice to the Company.
Section 4 - Mini-Arbitration Procedure
Notwithstanding any other provision of this Agreement, the following
mini-arbitration procedure is designed to provide prompt and efficient handling
of routine grievances, including certain grievances concerning discipline of
less than four (4) days, supervisors working and vacation scheduling.
(A) The mini-arbitration procedure shall be implemented in light of the
circumstances existing in each plant, with due regard to the
following:
(1) In accordance with the understanding made by the staff
representative of the Union designated pursuant to this
Agreement and his Company counterpart, the local union and the
local management shall appeal the grievance to an arbitrator
under this mini-arbitration procedure by mutual agreement of
the parties.
(2) The appeal shall be made within ten (10) calendar days of
receipt of the Step 2 minutes.
(3) As soon as it is determined that a grievance is to be
processed under this procedure, the local parties shall notify
the Administrative Secretary of the area panel. The appeal
shall include the date, time and place for the hearing.
Thereafter, the rules of Procedure for Mini-Arbitration shall
apply.
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(B) The hearing shall be conducted in accordance with the following:
(1) The hearing shall be informal.
(2) No briefs shall be filed or transcripts made.
(3) There shall be no formal evidence rules.
(4) Each party's case shall be presented by a previously
designated local representative.
(5) The arbitrator shall have the obligation of assuring that all
necessary facts and considerations are brought before him by
the representatives of the parties. In all respects, he shall
assure that the hearing is a fair one.
(6) If the arbitrator or the parties conclude at the hearing that
the issues involved are of such complexity or significance as
to require further consideration by the parties, the case
shall be referred to Step 3 and it shall be processed as
though appealed on such date.
(C) The arbitrator shall issue a decision no later than 48 hours after
conclusion of the hearing (excluding Saturdays, Sundays and
holidays). His decision shall be based on the records developed by
the parties before and at the hearing and shall include a brief
written explanation of the basis for his conclusion. These decisions
shall not be cited as a precedent in any discussion at any step of
the complaint and grievance or arbitration procedure. The authority
of the arbitrator shall be the same as that provided in Section 1 of
this Article.
ARTICLE XXIV
SUSPENSION AND DISCHARGE
No permanent, full-time employee shall be pre-emptorily discharged. Where
the Company concludes that an employee's conduct may justify suspension or
discharge, he shall be first suspended. Such initial suspension shall be in
writing and for not more
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than five (5) calendar days. A copy of such notice shall be given to the
Grievance Committeeman. During this period of initial suspension the employee
may, if he believes that he has been unjustly dealt with, request a hearing and
a statement of the offense before the General Manager of the plant with or
without his Union Representative present as he may choose. The Union
Representative shall be notified of the hearing in any event. At such hearing
the facts concerning the case shall be made available to both parties. After
such hearing, or if no such hearing is requested, the Company may conclude
whether the suspension shall be converted into a discharge, or, dependent upon
the facts in the case, that such suspension should be extended or revoked. The
suspension may be revoked or modified with or without pay. The Company's answer
shall be made within five (5) calendar days from the date of this Hearing. The
employee, within five (5) calendar days after such disposition, other than by
mutual agreement, may allege a grievance which shall be handled in accordance
with the procedure of the Grievance and Arbitration Procedure Section.
If a grievance is filed, it shall be heard by the Grievance Committeeman
and General Manager of the plant within five (5) calendar days after the
grievance is filed. The Arbitration Hearing on discharge cases must be held
within ninety (90) days of the notice of discharge.
ARTICLE XXV
SAFETY AND HEALTH
Section 1 - General Provisions
The Company shall make reasonable provisions for the safety and health of
its employees at the plants during the hours of their employment. The Company,
the Union and the employees recognize their obligations and/or rights under
existing federal and state laws with respect to safety and health matters.
Where the Company uses toxic materials, it shall inform the affected
employees what hazards, if any, are involved and what precautions shall be taken
to insure the safety and health of the employees. Upon the request of the Union
Co-Chairman of the Joint Safety and Health Committee, the Company shall provide
in writing requested information from material safety data sheets or their
equivalent on toxic substances to which employees are exposed in the work place;
provided that when the information is
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considered proprietary, the Company shall so advise the Union Co-Chairman, and
provide sufficient information for the Union to make further inquiry.
The Company shall provide adequate first aid for all employees during
their working hours.
An employee who, as a result of an industrial accident, is unable to
return to his assigned job for the balance of the shift on which he was injured,
will be paid for any wages lost on that shift.
Protective devices, wearing apparel, and other equipment necessary to
properly protect employees from injury shall be provided by the Company in
accordance with practices now prevailing in each separate plant or as such
practices may be improved from time to time by the Company. Goggles, hard hat,
hearing protection, prescription safety glasses (one pair every twelve months),
face shields, respirators, special purpose gloves, fire retardant, water
resistant or acid resistant protective clothing when necessary and required
shall be provided by the Company without cost, except that the Company may
assess a fair charge to cover loss or willful destruction thereof by the
employees. Where any such equipment or clothing is now provided, the present
practice concerning charge for loss or willful destruction by the employee shall
continue.
Section 2 - Unusual Conditions
If an employee shall believe that there exists an unsafe condition,
changed from the normal hazards inherent in the operation, so that the employee
is in danger of injury, he shall notify his foreman of such danger and of the
facts thereof. Thereafter, unless there shall be a dispute between the Company
and the employee as to the existence of such unsafe condition, the employee
shall have the right, subject to reasonable steps for protecting other employees
and the equipment from injury, to be relieved from duty on the job in respect of
which he has complained and to return to such job when such unsafe condition
shall be remedied.
The Company may, in its discretion, assign such employee to other
available work in the plant. If the existence of such alleged unsafe condition
shall be disputed, the Chairman of the Grievance Committee of the union in the
plant and the Human Resources Manager in the plant, or his representative, shall
immediately investigate such alleged unsafe condition and determine whether it
exists. If they shall not agree and if
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the Chairman of the Grievance Committee is of the opinion that such alleged
unsafe condition exists, the employee shall have the right to present a
grievance in writing in Step 2 of the Grievance and Arbitration procedure and
thereafter to be relieved from duty on the job as stated above. Such grievance
shall be presented without delay directly to an arbitrator under the provisions
of this Agreement, who shall determine whether such employee was justified in
leaving the job because of the existence of such alleged unsafe condition.
Should either the Company or an arbitrator conclude that an unsafe
condition within the meaning of this Section 2 existed and should the employee
not have been assigned to other available equal or higher rated work, he shall
be paid for the earnings he otherwise would have received.
It is recognized that emergency circumstances may exist, and the local
parties are authorized to make mutually satisfactory arrangements for immediate
arbitration to handle such situations in an expeditious manner.
Section 3 - Joint Safety and Health Committee
(A) A joint Safety and Health Committee consisting of not less than
three (3) nor more than ten (10) employees designated by the Union
and an equal number of Company members, if the Company so desires,
designated by the Company shall be established in each plant. The
Union and the Company shall designate their respective Co-Chairmen
and shall certify to each other in writing such Co-Chairmen and
committee members. The committee shall hold monthly meetings at
times determined by the Co-Chairmen who may also agree to hold
special meetings. Prior to such monthly meeting the Co-Chairmen or
their designees shall engage in an inspection of mutually selected
areas of the plant. At the conclusion of the inspection, a written
report shall be prepared by the Company setting forth their
findings. One copy of the report shall be furnished to the Union
Co-Chairman. Time consumed on Joint Committee work by committee
members designated by the Union shall be considered hours worked to
be compensated by the Company. The function of the committee shall
be to advise with plant management concerning safety and health and
to discuss legitimate safety and health matters, but not to handle
complaints or grievances.
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(B) In the event the Company requires an employee to testify at the
formal investigation into the causes of a disabling injury, the
employee may arrange to have the Union Co-Chairman of the joint
Safety and Health Committee or the Union member of such committee
designated by the Union Co-Chairman to act in his absence, present
as an observer at the proceedings for the period of time required to
take the employee's testimony. The Union Co-Chairman will be
furnished with a copy of such record as is made of the employee's
testimony. In addition, in the case of accidents which resulted in
disabling injury or death or accidents which could have resulted in
disabling injury or death and require a fact-finding investigation,
the Company will, as soon as is practicable after such accident,
notify the Union Co-Chairman of the Joint Safety and Health
Committee, or the Union member of such committee designated by the
Union Co-Chairman to act in his absence, who shall have the right to
visit the scene of the accident promptly upon such notification, if
he so desires, accompanied by the Company Co-Chairman or his
designated representative and the Company will add the Union
Co-Chairman of the Joint Safety and Health Committee, or the Union
member of such committee designated by the Union Co-Chairman to act
in his absence, to the notification list for such accidents. After
making its investigation, the Company will supply to the Union
Co-Chairman of the Joint Safety and Health Committee a statement of
the nature of the injury, the circumstances of the accident, and any
recommendations available at that time and will consider any
recommendations he may wish to make regarding the report. In such
cases, when requested by the Union Co-Chairman, the Company
Co-Chairman of the Joint Safety and Health Committee or his
designated representative will review the statement with the Union
Co-Chairman. Also, in such cases, the Company Co-Chairman of the
Joint Safety and Health Committee or his designated representative,
when requested by the Union Co-Chairman, will visit the scene of the
accident with the Union Co-Chairman or, in his absence, his
designated substitute.
(C) The Company will, form a single source at the Company headquarters
level, provide the International Union Safety and Health Department
with prompt notification of any accident resulting in a fatality to
a union member.
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Section 4 - Use of Disciplinary Records
Written records of disciplinary action against the employee involved for
the violation of a safety rule but not involving a penalty of time off will not
be used by the Company in any arbitration proceeding where such action occurred
one or more years prior to the date of the event which is the subject of such
arbitration.
When an employee has completed 36 consecutive months of work without
discipline involving a penalty of time off for violation of a safety rule, prior
disciplinary penalties for such offenses not exceeding four (4) days' suspension
shall not be used for further disciplinary action.
When an unsafe practice report is made involving a violation of a safety
procedure or rule by an employee which does not involve discipline, a copy of
that report will be given to the employee.
Section 5 - Alcoholism and Drug Abuse
Alcoholism and drug abuse are recognized by the parties to be treatable
conditions. Without detracting from the existing rights and obligations of the
parties recognized in the other provisions of this Agreement, the Company and
the Union agree to cooperate at the plant level in encouraging employees
afflicted with alcoholism or drug abuse to undergo a coordinated program
directed to the objective of their rehabilitation.
Section 6 - Safety and Health Training
The Company recognizes the special need to provide appropriate safety and
health training to all employees. The Company presently has safety and health
training that provides either the training described below or the basis for such
training as it relates to the needs of the Company and its various plants.
Training programs shall recognize that there are different needs for
safety and health training for newly hired employees, employees who are
transferred or assigned to a new job and employees who require periodic
retraining. The Joint Safety and Health Committee may make recommendations on
these and other safety education matters.
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The Union Co-Chairman of the Joint Safety and Health Committee and the
International Union Safety and Health Department or a designee shall, upon
request, be afforded the opportunity to review the training program for
employees at the plant level.
The training of employees shall be directed to the hazards of the job or
jobs on which they are required to work. Such training shall include hazard
recognition, safe working procedures, purpose, use and limitations of special
personal protective equipment required and any other appropriate specialized
instruction.
Section 7 - Medical Records
The Company shall maintain the confidentiality of reports of medical
examinations of its employees and shall only furnish such reports to a physician
designated by the employee upon the written authorization of the employee;
provided, that the Company may use or supply medical examination reports of its
employees in response to subpoenas, requests to the Company by any governmental
agency authorized by law to obtain such reports, and in arbitration or
litigation of any claim or action involving the Company. Whenever the company
physician detects a medical condition which, in his judgment, requires further
medical attention, the Company physician shall advise the employee of such
condition or to consult with his personal physician.
ARTICLE XXVI
ALLOWANCE FOR FUNERAL LEAVE
When death occurs to an Employee's legal spouse, mother, father,
mother-in-law, father-in-law, son, daughter, brother, sister, grandparents or
grandchildren (including stepfather, stepmother, stepchildren, stepbrother or
stepsister when they have lived with the Employee in an immediate family
relationship), brother-in-law, sister-in-law, an Employee, upon request, will be
excused and paid for up to a maximum of three (3) scheduled shifts (or for such
fewer shifts as the Employee may be absent) which fall within a seven (7)
consecutive-calendar-day period; beginning with the date of the death and it is
established that the Employee attended the funeral. Payment shall be eight (8)
times his average straight-time hourly earnings (as computed for jury pay). An
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Employee will not receive funeral pay when it duplicates pay received for time
not worked for any other reason. Time thus paid will be counted as hours worked
for purposes of determining overtime or premium pay liability.
ARTICLE XXVII
HOURS OF WORK
Section 1 - Normal Work Week
Normally forty (40) hours of work per week shall constitute a week's work.
While the normal work week is forty (40) hours, the Company may reduce the work
week, with the mutual agreement of the Union, in which event the reduced work
hours shall constitute the normal work week. Nothing in this Section, however,
should be construed as a guarantee of hours of work in excess of forty (40)
hours per week.
Section 2 - Schedules
Schedules showing Employees' workdays will be posted no later than the
last scheduled operating turn, but in any event, no later than Friday, 2:00 p.m.
of the week preceding the calendar week in which the schedule becomes effective.
Should the Company have to change the schedule, the Union Grievance Committeeman
will be notified.
Section 3 - Overtime
This Section provides the basis for the calculation of, and payment for,
overtime.
(A) The normal workday shall be 8 hours of work in a 24-hour period. The
hours of work shall be consecutive. The work week shall consist of
seven (7) consecutive days beginning at 12:01 a.m., Sunday or at the
turn-changing hour nearest to that time.
(B) Overtime at the rate of time and one-half the regular rate of pay
shall be paid for all hours worked in excess of forty (40) hours in
a work week; or for hours worked beyond eight (8) in a work day, for
those Employees
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scheduled to work eight (8) hours, ten (10) hours in a work day for
those Employees scheduled to work ten (10) hours, and twelve (12)
hours in a work day for those Employees who are scheduled to work
twelve (12) hours. Such ten (10) and twelve (12) hour schedules are
subject to the provisions of the Workforce Flexibility Article.
There will be no duplication or pyramiding of overtime.
Section 4 - Hours Paid For Time Not Worked
Hours paid for time not worked in accordance with the express provisions
of this Agreement will be considered as hours worked for purposes of qualifying
for overtime premiums under this Article; however, pay for time not worked will
always be at base rates, adjusted to include average incentive earnings. There
shall be no pyramiding of overtime.
Section 5 - Show Up Time
If an Employee has been regularly scheduled or notified to report for work
and is not thereafter given notice by the Company that work is not available,
and report for work, the Company will guarantee four (4) hours of work, or four
(4) hours of pay at the Employee's base hourly rate for his scheduled work. It
is the responsibility of each Employee to keep the Company advised of his
telephone number.
The foregoing shall not apply in the event of strikes, work stoppages in
connection with labor disputes, failure of utilities beyond the control of
Management, or Acts of God interfering with the work being provided.
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ARTICLE XXVIII
HOLIDAYS
The Company will pay eight (8) hours pay at the individual Employee's base
hourly rate of pay, adjusted to include his average hourly incentive for the
previous quarter, for those Employees who have completed their probationary
period and who are on the regular active payroll at the time of the following
Holidays:
New Year's Day Thanksgiving Day
Good Friday Day after Thanksgiving
Memorial Day Christmas Eve
Independence Day Christmas Day
Labor Day
If one (1) of the above listed Holidays falls on Saturday or Sunday, the
Company, at its option, may celebrate the Holiday on the day on which it falls
or on the preceding Friday or subsequent Monday. In order to be paid for such
Holiday, Employees who are otherwise eligible, must have worked on the last
scheduled work day before and the first scheduled work day following the Holiday
unless their failure to do so is a result of:
(A) absence for which the Employee is paid in accordance with the
express provisions of this Agreement;
(B) a layoff or job-related injury within five (5) work days preceding
the Holiday; or
(C) sickness or other similar good cause.
An eligible Employee who would otherwise be entitled to pay for an
unworked Holiday and who is on a vacation schedule in accordance with the
provisions of this Article when a Holiday occurs shall be paid for the unworked
Holiday in addition to his vacation pay.
Employees scheduled to work on any of the above-named Holidays shall be
paid at one and one-half times their regular rate of pay including applicable
incentive earnings
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for all work performed on such Holiday in addition to their Holiday pay. Any
Employee scheduled to work on one of the foregoing Holidays who fails to report
for work shall not be eligible to receive Holiday pay unless failure to do so is
a result of (A), (B), or (C) above. There shall be no pyramiding of overtime pay
under this or any other Article of the Agreement.
ARTICLE XXIX
VACATION
Section 1 - Amount
An Employee who, on the anniversary date of his most recent employment by
the Company has attained the years of continuous service with the Company as
indicated in the following table and who otherwise qualifies, shall receive
vacation with pay as follows:
Years of Continuous Service Amount of Paid Vacation
--------------------------- -----------------------
One (1) Year One (1) Week
Three (3) Years Two (2) Weeks
Ten (10) Years Three (3) Weeks
Seventeen (17) Years Four (4) Weeks
Twenty-five (25) Years Five (5) Weeks
Section 2 - Eligibility
To be eligible for a vacation in any calendar year during the term of this
Agreement, the Employee must have one year of continuous service credit with the
Company and have been actively employed at the Company for twenty-six (26)
regular work weeks of the preceding fifty-two (52) work weeks.
Section 3 - Computation of Vacation Pay
Pay for the vacation week shall amount to forty (40) times the Employee's
base hourly rate of pay, adjusted to include his average hourly incentive for
the previous quarter, for each full week of vacation or two percent (2%) of the
Employee's previous
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year's W-2 form earnings, whichever is highest. Vacation will be taken in weekly
(seven (7) consecutive calendar days) increments only. Provided vacation is
scheduled and approved at least thirty (30) days in advance, vacation pay will
be paid no later than the last work day prior to the Employee's vacation.
Section 4 - Scheduling
The date allotted to an Employee for a vacation shall be established by
the Company so as to cause a minimum of interference with the Company's
operations. The Company reserves the right to schedule either a one (1) or two
(2) week(s) vacation shutdown, or schedule staggered vacations.
In the event the Company decides on a vacation shutdown, it shall notify
the Union in writing, at least sixty (60) days prior to such shutdown, Vacation
period requests by Employees will be indicated by written application of each
Employee during the month of December. (Applications will be provided by the
Company.) Either a vacation schedule or a vacation shutdown notice will be
posted after the end of December. To the extent practicable, Employees shall be
given preference for the desired vacation periods in accordance with their
seniority subject to the right of the Company to determine the number of
Employees from any Operating Unit or Wage Group, to be on vacation at any one
time and to schedule vacations so as to minimize interference with the Company's
operations.
Section 5 - Accumulation of Vacation
Vacations may not be accumulated.
ARTICLE XXX
JURY DUTY
An Employee who is on active payroll of the Company, who is summoned for
jury service or subpoenaed as a witness shall be excused from work on the days
on which he is called for service, and he shall receive for each such day on
which he was regularly scheduled to work the difference between eight (8) times
his base hourly rate of pay
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including applicable incentive earnings, not to exceed forty (40) hours per
week, and the payment he receives for such jury or witness service. The employee
will present proof of service and of the amount of pay received therefore.
ARTICLE XXXI
EMPLOYEES IN MILITARY SERVICE
Section 1 - Reemployment
The Company shall accord to each Employee who applies for reemployment
after conclusion of his military service with the United States such
reemployment rights as he shall be entitled to under then existing statutes.
Section 2 - Training Programs
Reasonable programs of training shall be employed in the event Employees
do not qualify to perform the work on the job which they might have attained
except for absence in the military service.
Section 3 - Leave of Absence
Any Employee entitled to reinstatement under this Article shall be
granted, upon request, a leave of absence without pay not to exceed sixty (60)
days before he shall be required to return to work.
Section 4 - Disabled Veterans
Any Employee entitled to reinstatement under this Article who returns with
service-connected disability incurred during the course of his service shall be
assigned to any vacancy which shall be suitable to such impaired condition
during the continuance of such disability irrespective of seniority; provided,
however, that such impairment is of such a nature as to render the veteran's
returning to his own job or department onerous or impossible; and provided,
further, that the veteran meets the minimum physical requirements for the job
available or for the job as Management may be able to adjust it to meet the
veteran's impairment.
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Section 5 - Vacation
(A) An Employee who at the time of leaving active employment to enter
military service of the United States has qualified for a vacation
in the year of such entrance and who has not received a vacation or
vacation allowance shall be granted such allowance.
(B) Any Employee reemployed under the terms of this Article and who,
under the terms of the Vacation Article of this Agreement, except
for his absence due to such military service, would have been
entitled to receive a vacation or vacation allowance, shall receive
such vacation or vacation allowance for the calendar year in which
he is reemployed, without regard to any requirement other than an
adequate record of continuous service.
Section 6 - Military Encampment Allowance
An Employee with one (1) or more years of continuous service who is
required to attend an encampment of the Reserve of the Armed Forces or the
National Guard shall be paid, for a period not to exceed two (2) weeks in any
calendar year, the difference between the amount paid by the Government (not
including travel, subsistence and quarters allowance) and the amount calculated
by the Company in accordance with the following formula. Such pay shall be based
on the number of days such Employee would have worked had he not been attending
such encampment during such two weeks (plus any holiday in such two (2) weeks
which he would not have worked) and the pay for each such day shall be eight (8)
times his average straight-time hourly rate of earnings (including applicable
incentive earnings but excluding shift differentials and Sunday and overtime
premiums) during the last pay period worked prior to the encampment. If the
period of such encampment exceeds two weeks in any calendar year, the period on
which such pay shall be based shall be the first two weeks he would have worked
during such period.
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ARTICLE XXXII
SAVINGS CLAUSE
If any provision of this Agreement is in conflict with applicable law or
regulation, such provision shall become null and void and no longer be
effective; however, the remainder of this Agreement shall not be affected
thereby and will continue in full force and effect. In the event any provision
of this Agreement is rendered ineffective, due to a conflict with applicable
law, either party, upon the request of the other, shall meet and negotiate on
the limited subject of the provision rendered ineffective by applicable law.
However, the No Strike - No Lockout provisions of this Agreement shall continue
in full force and effect regardless of whether the parties are able to reach
Agreement.
ARTICLE XXXIII
SENIORITY
Section 1 - Factors Affecting
Except where a local seniority agreement provides for some greater measure
of service length than Plant continuous service, Plant continuous service shall
be used for all purposes in which a measure of continuous service is utilized.
In the promotion of Employees to non-supervisory positions and for the
purpose of demotions, or layoffs in connection with the decreasing of the
working force and of the recalling to work of Employees so laid off, the
following factors shall be considered, and if factors (B) and (C) are relatively
equal, length of continuous service shall govern:
(A) Length of continuous service;
(B) Ability to perform the work; and
(C) Physical fitness.
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Section 2 - Continuous Service Record
The continuous service record of any Employee shall be determined as
follows:
(A) Each Employee shall have such continuous service record as is shown
on the employment records of the Company for such Employee, and he
shall accumulate additional continuous service in accordance with
Subparagraph (C) below, until his continuous service record shall be
broken in which event his continuous service record shall end and be
canceled.
(B) Each new Employee and each person rehired after the cancellation of
his continuous service record shall accumulate continuous service
from the date of such hiring or rehiring, until his continuous
service record is broken, in which event his continuous service
record shall end and be canceled.
(C) The continuous service record of an Employee shall be considered to
be broken so that no prior period or periods of employment shall be
counted and his seniority shall cease in the following instances:
(1) Employee voluntarily quits employment;
(2) Employee is discharged;
(3) Employee fails to return to work upon expiration of an
approved leave of absence where forty-eight (48) hour notice
to return has been given by the Company to the Employee and to
the Union;
(4) Employee is absent due to either layoff or disability or both
which continues for more than two (2) years (however; (i) for
three (3) years thereafter, upon written medical certification
to the Company of his fitness to return to duty, the Employee
will be eligible for recall to any position for which he is
qualified which is not filled pursuant to Section 4, Paragraph
(A) based on his previously accumulated service; and (ii)
Employees unable to work due to an on-duty injury shall
accumulate credit for continuous service until the end of the
period for which statutory Workers' Compensation is payable,
plus thirty (30) days;
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(5) Unauthorized absence from scheduled work for three (3)
consecutive working days;
(6) Employee fails to report for and begin work within seven (7)
calendar days after receipt by Employee of notice of recall
from layoff. Employees who are employed elsewhere will, upon a
request made to the Company within this period and with
reasonable proof of such employment, be given an additional
seven (7) calendar days to report for and begin work, to allow
the Employee to give reasonable notice to his current
employer.
Section 3 - Probationary Employees
New Employees and those hired after a break in continuous of service will
be regarded as probationary Employees for the first five hundred twenty (520)
hours of actual work and will receive no continuous service credit during such
period. Probationary Employees may initiate complaints under this Agreement but
may be laid off or discharged as exclusively determined by Management; provided
that this will not be used for purposes of discrimination because of race,
color, religious creed, national origin, sex, age or disability as defined under
the ADA of 1990, or because of membership in the Union. Probationary Employees
continued in the service of the Company subsequent to the first five hundred
twenty (520) hours of actual work shall receive full continuous service credit
from date of original hiring.
Section 4 - Promotion
(A) Posting
When the Company decides that a position needs to be filled, a
notice to that effect will be posted by the Company for seven (7) working
days in the Plant having the open position. Employees who apply will be
considered in the following category order:
(1) the department where the vacancy exists;
(2) the Plant where the vacancy exists;
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provided, however, if there is no qualified Employee applicant, the
Company may hire a new employee.
(B) Selection
The primary criteria for selecting among Employees who apply under
Paragraph (A) above will be the Company's assessment of an Employee's
qualifications. Length of continuous service will be considered only in
the event the Company finds that two (2) or more applicants possess
substantially the same qualifications for the job to be filled. All
promotions are subject to a ninety (90) day qualification period in the
new job. Employees selected for a new job will be entitled to return to
their previous job in the event the Company determines their performance
during the qualification period is not satisfactory, subject to the
dispute resolution procedure.
(C) Period Between Promotions
To promote efficient and economical operations, the parties agree
that continuity for a period of time in a position is important.
Therefore, the following limitations shall apply to Employees applying for
new jobs or vacancies:
(1) Employees who apply for a position may strike their name from
the posting at any time during the seven (7) working day
period that the position is posted. If an Employee leaves his
name in consideration and is selected for a position but
refuses to take it, he cannot apply for another position for
six (6) months after the date on which he was selected for the
position.
(2) If an Employee applies, is selected, and then works in the
position, he cannot apply for another position for six (6)
months after the date he begins working in that position,
following any training period.
Section 5 - Temporary Vacancies
Temporary vacancies will be filled at the Company's discretion. If two (2)
Employees are equally qualified to do the work, the Company will take seniority
into consideration.
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Section 6 - Temporary Transfers
In the event an employee is temporarily transferred to a higher rated job,
the employee shall receive the higher rate. If an employee is temporarily
transferred to a lower rated job, the employee shall continue to receive the
employee's regular rate.
Section 7 - Union Officers
When Management decides that the workforce in any seniority unit in any
plant is to be reduced, the member of the plant Grievance Committee, if any, in
that unit shall, if the reduction in force continues to the point at which he
would otherwise be laid off, be retained at work and for such hours per week as
may be scheduled in the work area in which he is employed, provided he can
perform the work of the job to which he must be demoted. The intent of this
provision is to retain in active employment the plant grievance committeemen for
the purpose of continuity in the administration of the labor agreement in the
interest of Employees so long as a workforce is at work; provided that no
grievance committeeman shall be retained in employment unless work which he can
perform is available to him in the designated work area which he represents. The
Local Union shall designate and advise the Company of such area of
representation.
This provision shall apply also to Employees who hold any of the following
offices in the Local Union or Unions in which the Employees of the plant are
members: President, General Grievance Committeeman, Unit Chairperson, Vice
President, Recording Secretary, Financial Secretary, and Treasurer unless
legally prohibited.
Section 8 - Continuous Service Lists
The Company shall make available to the Local Union concerned lists
showing the relative continuous service of each Employee in each seniority unit.
Such lists shall be revised by the Company from time to time, as necessary, but
at least every six (6) months, to keep them reasonably up to date. The seniority
right of individual Employees shall in no way be prejudiced by errors,
inaccuracies, or omission in such lists.
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ARTICLE XXXIV
SEVERANCE ALLOWANCE
Section 1 - Permanent Closing
When, in the sole judgment of the Company and subject to the provisions of
the Employment Security Plan, it decides to close permanently a plant or
discontinue permanently a department of a plant or substantial portion thereof
and terminate the employment of individuals, an Employee whose employment is
terminated either directly or indirectly as a result thereof because he was not
entitled to other employment with the Company under the provisions of the
Seniority Article of this Agreement and Section 3 of this Article, shall be
entitled to a severance allowance in accordance with and subject to the
provisions hereinafter set forth in this Article.
Before the Company shall finally decide to close permanently a plant or
discontinue permanently a department of a plant or substantial portion thereof,
it shall give the Union advance written notification of its intention. Such
notification shall be given at least ninety (90) days prior to the proposed
closure date. Along with it, the Company shall provide the Union with a detailed
statement of the reasons for the proposed action and the information on which it
is based. Without limiting the information to be provided under this paragraph,
the Company shall furnish the Union, where available, and on a confidential
basis, profit and loss statements for the operations that are the subject of the
proposed action for the last twenty-four (24) months of operations preceding it,
any studies or evaluations assessing the feasibility of continuing the
operations, and a detailed breakdown of the costs of maintaining the operations.
Thereafter, the Company will meet with appropriate Union representatives in
order to provide them with an opportunity to discuss the Company's proposed
course of action and to provide information to the Company and suggest
alternative courses. Upon conclusion of such meetings, which in no event shall
be less than thirty (30) days prior to the proposed closure or partial closure
date, the Company shall advise the Union of its final decision. The final
closure decision shall be the exclusive function of the Company. This
notification provision shall not be interpreted to offset the Company's right to
lay off or in any other way reduce or increase the working force in accordance
with its presently existing rights as set forth in the Management Rights Article
of this Agreement.
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Section 2 - Eligibility
An Employee, to be eligible for a severance allowance, must have
accumulated three (3) or more years of continuous Company service as computed in
accordance with the Seniority Article of this Agreement.
Section 3 - Other Job
In lieu of severance allowance the Company may offer an eligible Employee
a job in the same job class for which he is qualified, in the same general
locality. The Employee shall have the option of either accepting such new
employment or requesting his severance allowance. If an Employee accepts such
other employment, his continuous service record shall be as provided in the
Seniority Article of this Agreement, except that for the purpose of severance
pay under this Article and for the purposes of the Vacation Article of this
Agreement, his previous continuous service record shall be maintained and not be
deemed to have been broken by the transfer.
Section 4 - Transfer
As an exception to Section 3 of this Article, an Employee otherwise
eligible for severance pay who is entitled under the Seniority Article of this
Agreement to a job in the same job class in another part of the same plant shall
not be entitled to severance pay whether he accepts or rejects the transfer. If
such transfer results directly in the permanent displacement of some other
Employee, the latter shall be eligible for severance pay provided he otherwise
qualifies under the terms of this Article.
Section 5 - Benefits
An eligible individual shall receive severance allowance based upon the
following weeks for the corresponding continuous Company service:
Weeks of Severance
Continuous Company Service Allowance
- -------------------------- ---------
3 years but less than 5 years 4
5 years but less than 7 years 6
7 years but less than 10 years 7
10 years or more 8
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A week's severance allowance shall be determined in accordance with the
provisions for calculation of vacation allowance as set forth in the Vacation
Article of this Agreement.
Section 6 - Duplication
Severance allowance shall not be duplicated for the same severance,
whether the other obligation arises by reason of contract, law, any ERB or VSP
if applicable under this Agreement, or otherwise. If an individual is or shall
become entitled to any discharge, liquidation, severance or dismissal allowance
or payment of similar kind by reason of any law of the United States of America
or any of the states, districts, or territories thereof subject to its
jurisdiction, the total amount of such payments shall be deducted from the
severance allowance to which the individual may be entitled under this Article,
or any payment made by the Company under this Article may be offset against such
payments. Statutory unemployment payments shall be excluded from the
non-duplication provisions of this Section.
Section 7 - Election Concerning Layoff Status
Notwithstanding any other provision of this Agreement, an Employee who
could otherwise have been terminated in accordance with the applicable
provisions of this Agreement and under the circumstances specified in Section 1
of this Article may, at such time, elect to be placed on layoff status for
thirty (30) days or to continue on layoff status for an additional thirty (30)
days if he had already been on layoff status. At the end of such thirty (30) day
period he may elect to continue on layoff status or be terminated and receive
severance allowance if he is eligible for any such allowance under the
provisions of this Article; provided, however, if he elects to continue on
layoff status after the thirty (30) day period specified above and is unable to
secure employment with the Company within an additional sixty (60) day period,
at the conclusion of such additional sixty (60) day period he may elect to be
terminated and receive severance allowance if he is eligible for such allowance.
Any Supplemental Unemployment Benefit payment received by him for any period
after the end of such thirty (30) day period shall be deducted from any such
initial severance allowance to which he would have been otherwise eligible at
the beginning of such thirty (30) day period.
If an Employee elects to continue on layoff status, he shall continue to
be in such status notwithstanding the expiration or termination of this
Agreement.
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In the event of a strike, nothing in this Agreement shall be interpreted
as extending the benefits beyond the term otherwise provided for in the
Agreement.
Section 8 - Payment of Allowance
Payment shall be made in a lump sum at the time of termination. Acceptance
of severance allowance shall terminate employment and continuous service for all
purposes under this Agreement.
ARTICLE XXXV
SUBSTANCE ABUSE
Section 1 - General Statement
The Company recognizes its obligation to provide all Employees with a safe
healthful work environment, free from the risks created by Employee alcohol and
drug abuse. The Company prohibits using, possessing, or being under the
influence of drugs or alcohol while Employees are providing service to the
company. To that end, the Company will provide for substance abuse testing of
all job applicants and, where appropriate, existing Employees. The Company is
committed to take all necessary steps to exclude alcohol and drugs from its
workplace.
The Company maintains the right to conduct drug and/or alcohol testing for
cause. In addition, Employees will be tested for drugs and/or alcohol under any
of the following circumstances: (1) where it is required by law, or (2) where an
Employee has a work-related injury where there is cause to believe that an
Employee is under the influence of drugs and/or alcohol on Company property or
on Company business. A refusal to submit to drug or alcohol testing under any of
the foregoing circumstances or a positive test result may be proper cause for
discipline. Any testing shall be in accordance with the USWA drug and alcohol
testing policy.
Section 2 - Substance Abuse Testing of Employees
The Company may require Employees to submit to a substance abuse screen
under the following circumstances:
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(A) As part of all physical examinations when Employees are recalled
following a layoff in excess of sixty (60) calendar days.
(B) Where there is reason to believe, based on observable facts, that an
Employee may be under the influence of drugs and/or alcohol, and
this observation has been verified and documented by the Company.
(C) When an Employee is involved in or has contributed to an unsafe
practice, accident, or injury and there is a reasonable basis, based
upon the Employee's behavior or physical condition or on the
specific nature and circumstances of the unsafe practice, accident
or injury to suspect that the unsafe practice, accident, or injury
may have resulted from or been contributed to by the Employee being
impaired by alcohol or drugs.
(D) Where an Employee has tested positive for the presence of drugs or
alcohol within the prior twelve (12) month period.
(E) Where there exists, in the opinion of the Company's physician or
similarly designated representative, a condition or situation based
on verifiable medical documentation that an Employee may not be
immediately fit to return to work, a substance abuse drug screen may
be required as part of the return-to-work physical examination.
(F) The Company will use the following procedure for the drug, alcohol
screen:
(1) Drug Screen - A urine specimen will be collected. If the drug
screen reveals a positive result, a test from the original
specimen will automatically be verified through a second more
detailed test. All tests shall be performed under the
supervision of trained personnel. All test samples shall be
kept secure. Portions of all positive test samples shall be
maintained and shall be available to the tested Employee for a
period of six (6) months following the date of the initial
test.
(2) Alcohol Screen - A breath alcohol test will be administered.
The positive result of 0.04 percent or greater for alcohol
from a breath alcohol test will constitute impairment. An
Employee may avoid a
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finding of impairment by voluntarily providing a blood sample
within one (1) hour of the time the breath alcohol test sample
is collected. If a blood sample is provided within one (1)
hour and proven negative or below the 0.04 percent level, that
will be sufficient to overcome a finding of impairment from a
positive breath alcohol test. Employees found to have tested
0.04 percent or greater for alcohol through the breath alcohol
test and who have not voluntarily provided a blood sample
within one (1) hour of that breath alcohol test will be
considered to have violated the Substance Abuse Policy.
Section 3 - Rehabilitation
The purpose of this Article is to eliminate the presence of alcohol and
illegal drugs at the Company in order to make it a satisfactory and safe
environment for all Employees. In connection with this purpose, it is the
Company's goal to rehabilitate, if reasonably possible, all substance abusers.
Therefore, the first time any Employee tests positively for the presence of
alcohol or illegal or illicit drugs, or otherwise is found to be in violation of
this Policy, he shall be given the opportunity to participate in a
rehabilitation program. An Employee participating in rehabilitation shall be
given an unpaid leave of absence by the Company for a reasonable period of time;
the fact that it is unpaid leave shall not be construed to affect any coverage
that may exist pursuant to sickness and accident or other Employee benefit
coverage. All Employees who wish to be rehabilitated are encouraged to
voluntarily participate in rehabilitation by making a confidential request to a
designated representative of the Company. Participation in the rehabilitation
program will be confidential. Requesting help through the rehabilitation program
shall neither cause nor prevent discipline for reported violations of this
Policy, nor shall it relieve the Employee from job expectation requirements. If
an Employee successfully completes rehabilitation, he/she will be offered the
opportunity to return to work at the Company with the understanding that: (i)
any future violations of this Policy shall subject the Employee to immediate
discharge without additional opportunity for rehabilitation; and (ii) he/she
shall be subject to random testing for a period of one(1) year following his/her
return to work.
Section 5 - Legal Drugs or Medication
The foregoing provisions on substance abuse testing do not apply to the
use of controlled substances taken as legally prescribed by a licensed
physician. These
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provisions will apply to any abuse of prescription drugs. Any Employee on such
medication (or an over-the-counter medication that they believe may affect their
job performance or present a safety risk to themselves or others) must, however,
immediately report such use to their supervisor. Company officials will
determine whether the Employee can remain at work and/or whether work
restrictions are necessary.
Section 6 - Additional Prohibitions Relating to Alcohol and Drugs
In addition to these provisions on substance abuse testing, the following
Employee conduct is strictly prohibited:
(A) The use or possession of alcohol or illegal drugs in any amount or
in any manner on company premises or in Company-owned or leased
vehicles at any time. This provision will not apply to the
possession of unopened alcohol containers in private vehicles.
(B) The transfer or trafficking of alcohol or drugs in any amount or in
any manner on Company premises or in Company-owned or leased
vehicles at any time.
(C) The use in any way of Company property or the Employee's position
within the Company to make or traffic alcohol or drugs.
Employees who engage in such conduct will be subject to discipline, up to
and including discharge. The Company further reserves the right to notify
appropriate law enforcement officials regarding Employees who engage in such
conduct.
Section 7 - Violations
Employees who violate any provision of this Article are subject to
appropriate disciplinary action up to and including discharge from employment.
Nothing in this Article shall be construed so as to limit or in any way detract
from the Company's pre-existing right to suspend or discharge Employees.
The violations identified in this Article are not meant to be all
inclusive of various offenses that could lead to discipline under this Article.
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Section 8 - Application to Non-Employees
Vendors, contractors, and visitors shall be expected to observe the
provisions of this Article with regard to an alcohol and drug free workplace
while on Company property, in Company offices, and in Company-owned or leased
vehicles and/or on Company assignment. Failure to observe the provisions of this
Article may result in, but is not limited to, eviction and banning from Company
property and offices.
Section 9 - Legal and Contractual Obligations
All legal and contractual obligations, where applicable, shall be adhered
to in the administration of this Article. This Article may be revised and/or
modified to include the substance abuse screening of safety sensitive positions
as basic steel companies implement such policy. The Company reserves the right
to modify the program and/or testing to comply with any future governmental
regulations. The Company must notify in advance and discuss with the Union any
change to comply with government regulations. If the Union believes that the
Company exceeded what was required to comply with government regulations, the
Union shall have the right to pursue the issue through the grievance procedure.
ARTICLE XXXVI
Wages
Section 1 - Standard Hourly Wage Scales
(A) The standard hourly wage scales of rates for the respective job
classes and the effective date thereof shall be those set forth in
Appendix A of this Agreement.
(2) As of the effective date of any increases made in the job class
increments in the standard hourly wage scale rates, the cumulative
amount in each job class resulting from any increased increment
shall be used, in whole or in part, as the case may be, to reduce or
eliminate any out-of-line differentials identified with specific
Employees on specific jobs in each job class.
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Section 2
In the event that an Employee who receives such an out-of-line
differential is promoted within a defined seniority unit for regular assignment
to a job of higher job class, or is transferred within an established line of
progression to a job of equal job class, and the standard hourly wage scale rate
in Appendix A of the Master Agreement plus the Employee's out-of-line
differential on the job from which promoted or transferred, a new differential
shall be determined and applied as follows:
(A) The new out-of-line differential shall equal: (i) the standard
hourly wage scale rate in Appendix A of the Master Agreement of the
job from which promoted or transferred plus the Employee's
out-of-line differential on such job; minus (ii) the standard hourly
wage scale rate in Appendix A of the Master Agreement, of the job to
which promoted or transferred.
(B) Such new out-of-line differential shall be identified with the
Employee and apply only to such Employee while on such job, and
continue in effect, subject to adjustment in accordance with the
above, until the expiration of this Agreement or until terminated by
the parties to this Agreement.
(C) The new out-of-line differential multiplied by hours paid for on the
job shall be added to earnings of the Employee.
Section 3 - Correction of Errors
Notwithstanding any provisions of this Article XXXVI of the Master Wage
Agreement, errors in application of rates of pay shall be corrected.
Section 4 - Shift Differentials
(A) For hours worked on the afternoon shift there shall be paid a
premium rate of 20 cents per hour. For hours worked on the night
shift there shall be paid a premium rate of 30 cents per hour.
(B) Shifts shall be identified as follows:
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(i) Day shift includes all shifts scheduled to commence between
6:00 a.m. and 8:00 a.m., inclusive;
(ii) Afternoon shift includes all shifts scheduled to commence
between 2:00 p.m. and 4:00 p.m., inclusive;
(iii) Night shift includes all shifts scheduled to commence between
10:00 p.m. and 12:00 midnight, inclusive.
(C) Any hours worked by an Employee on a shift which commences at a time
not provided for in Subsection B of this Section 4 shall be paid as
follows:
(i) For hours worked which would fall in the prevailing day shift
of the department no shift differential shall be paid;
(ii) For hours worked which would fall in the prevailing afternoon
shift of the department the afternoon shift differential shall
be paid;
(iii) For hours worked which would fall in the prevailing night
shift of the department the night shift differential shall be
paid.
(D) Shift differential shall be included in the calculation of overtime
compensation. Shift differential shall not be included in the
calculation of incentive earnings but shall be computed by
multiplying the hours worked by the applicable differential and the
amount so determined added to earnings.
(E) Shift differential shall be paid for allowed time or reporting time
provided for in the Hours of Work Section of this Agreement when the
hours for which payment is made would have called for a shift
differential if worked.
Section 5 - Sunday Premium
All hours worked by an Employee on Sunday, which are not paid for on an
overtime basis, shall be paid for at 12 times the Employee's regular rate.
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For purpose of this provision. Sunday shall be deemed to be the 24 hours
beginning with the turn-changing hour nearest to 12:01 a.m. Sunday.
Sunday premium based on the standard hourly wage scale rate shall be paid
for reporting allowance hours.
ARTICLE XXXVII
Termination Date
Section 1. Except as otherwise-provided below, this Agreement shall
terminate at the expiration of sixty (60) days after either party shall be given
written notice of termination to the other party but in any event shall not
terminate earlier than October 31, 2003, at 11:59 P.M.
Section 2. If either party gives such notice, the parties shall meet
within thirty (30) days thereafter to negotiate. If the parties shall not agree
with respect to such matters by the end of sixty (60) days after the giving of
such notice, either party may; thereafter resort to strike or lockout as the
case may be in support of its position.
Section 3. Any notice to be given under this Agreement shall be given by
registered mail; to be completed by and at the time of mailing; and, if by the
Company, be addressed to: United Steelworkers of America, 5 Gateway Center,
Pittsburgh, Pennsylvania, 15222 and if by the Union addressed to RES Acquisition
Corporation [address]. Either party may, by like written notice, change the
address to which registered mail notice to it shall be given.
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APPENDIX B
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Corporate Structure of NuBar
Dear Director Vickers:
As part of our discussions, Blackstone Management Partners II, L.L.C.
("Blackstone") has informed the USWA that its proposed acquisition of RESI by a
company formed by Blackstone would consist of (i) a fully financed agreement to
acquire for cash 100% of RESI's outstanding common shares (the "RESI purchase
financing") followed by (ii) a fully financed merger of RESI and BarTech (the
"takeout financing") (the company resulting from such financings, "NuBar").
Blackstone also has informed the USWA that it intends to be the lead
investor in the RESI purchase financing and the takeout financing, meaning that
it will own at least a majority of the stock of NuBar upon closing of the
takeout financing and will control NuBar's Board of Directors. For purposes of
this Settlement Agreement, Blackstone includes entities affiliated with or
controlled by Blackstone or its Partners/Principals/Managing Directors.
Blackstone agrees that prior to the commencement of the RESI acquisition
it will provide the USWA with a description of the intended RESI purchase
financing and takeout financing (the "Proposed Structure") and afford the USWA
the right to approve such Proposed Structure, such approval not to be
unreasonably withheld.
In the event that the actual structure of the RESI purchase financing or
the takeout financing (the "Closing Structure") involves materially less equity
that the amount in the Proposed Structure and/or Blackstone is not the lead
investor in such financings, then the USWA shall be given the right to approve
the Closing Structure, such approval not to be unreasonably withheld.
In addition, Blackstone agrees to retain at least 80% of its original
investment until (i) in the case of a private sale of Blackstone's investment,
the earlier of (a) three years from the closing of the takeout financing or (b)
such time as at least 70% of the aggregate amounts of capital expenditures
provided for in the "NuBar Steel Company-Five Year Operations Capital Plan" (the
CapEx Schedule") have been spent or irrevocably committed to be spent, and (ii)
in the case of a public sale of Blackstone's
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investment in a secondary public offering, the earlier of (a) two years from the
closing of the takeout financing or (b) such time as at least 50% of the
aggregate amounts of capital expenditures provided for in the CapEx Schedule
have been spent or irrevocably committed to be spent.
In addition, in the event NuBar engages in an initial public offering
within three years from the closing of the takeout financing, Blackstone will
not voluntarily relinquish control of the NuBar Board of Directors until the
earlier of (i) three years from the closing of the takeout financing or (ii)
such time as Blackstone is permitted to sell its investment under either clause
(i) or (ii) of the preceding paragraph.
Sincerely yours,
David A. Stockman
Senior Managing Director
Blackstone Management Partners II, L.L.C.
by ________________________________
Agreed:_____________________________
Frank Vickers, Director
USWA, District 1
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APPENDIX C
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Employment Security
Dear Director Vickers:
This will confirm our understanding reached in the 1998 negotiations on
the above topic.
Notwithstanding anything to the contrary contained in the 1998 NuBar BLA,
the Company may lay off up to forty (40) Lackawanna Bargaining Unit employees
for the period ending on April 1, 2000, provided that the Company will provide
SUB for any employees who are in fact laid off.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: _______________________
Frank Vickers, Director
USWA District 1
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APPENDIX D
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Gary Dunes and 7th Avenue Plants
Dear Director Vickers:
This will confirm our understanding concerning the Gary Dunes and 7th
Avenue Plants of RESI. Effective with 1998 NuBar BLA the subject Plants will be
merged for all purposes relative to the BLA.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: _______________________
Frank Vickers, Director
USWA District 1
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APPENDIX E
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Interest Arbitration Award - 1997
Dear Director Vickers:
This will confirm the understanding reached during our 1998 negotiations
with regard to the status of arbitrator Valtin's 1997 RESI Interest Arbitration
Award ("Award"). Based upon the wage and benefit agreement contained in the 1998
NuBar BLA, those aspects of the Award that have not been implemented as if the
date of this letter will not be implemented and will become null and void.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: _______________________
Frank Vickers, Director
USWA District 1
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APPENDIX F
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Merger of RESI DCP & DBP
Dear Director Vickers:
This will confirm our understanding that the Union agrees that the
existing account balances attributable to Company contributions under the
defined contribution plan and the existing defined benefit plan may be converted
into a single plan.
In the event that the Company subsequently elects to merge the defined
contribution and defined benefit components of the single plan, the Union will
provide its full assistance and cooperation to accomplish such merger.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: _______________________
Frank Vickers, Director
USWA District 1
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APPENDIX G
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Neutrality
Dear Director Vickers:
This will confirm our understanding that, notwithstanding the provisions
of the Neutrality Article of the Master Agreement,
(i) the provisions of said Article shall not be applicable to currently
unrepresented eligible office, technical and professional employees until
two (2) years from the Closing; and
(ii) the provisions of said Article shall not become applicable at all for a
maximum of fifty (50) employees employed at NuBar's corporate
headquarters, such number to be exclusive of all employees who would not
be eligible for representation under the Act.
(iii) the provisions of said Article shall not be applicable to Blackstone,
Veritas, other private equity funds, or their respective successor(s)
in-interest and their respective existing or future affiliates (any of the
foregoing, an "Excluded Entity"); provided, however, that, in the event
that an Excluded Entity directly or indirectly either: (i) currently owns
or controls; or (ii) in the future acquires, establishes, or gains control
of any operations(s) that produces products either currently or in the
future produced by any NuBar facility, then such operations(s) shall be
subject to the provisions of this Article.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: _______________________
Frank Vickers, Director
USWA District 1
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APPENDIX H
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane, Suite J
Columbus, OH 43085
RE: NuBar Share Purchase
Dear Director Vickers:
This will confirm our understanding that each employee covered by the
NuBar BLA will be offered the option to purchase shares of NuBar common stock
("Employee Shares") following the business combination of RESI and BarTech (the
"Transaction").
The purchase price per Employee Share will be the same price per share
attributable to the NuBar common stock directly and indirectly acquired by the
Blackstone Investors in connection with the Transaction.
A maximum of $15 million worth of Employee Shares will be offered in the
aggregate (with oversubscriptions to be reduced on a pro rata basis). Such
offering, subject to applicable requirements under the Federal and state
securities laws, will occur no later than six months after the closing of the
Transaction.
Employee Shares will be transferable upon the earlier of: (i) an initial
underwritten public offering of NuBar, and (ii) the sale by the Blackstone
Investors of at least 80% of their NuBar shares, except that employees will be
given the right, prior to such initial public offering, upon their retirement,
to put their shares to the Company for fair value.
Holders of Employee Shares will be granted "piggyback" registration rights
entitling them to registration of their shares under the Security Act in an
underwritten initial public offering of NuBar, subject to customary provisions
that, among other things, permitted the managing underwriter of such offering to
cut back the number of Employee Shares registered if in the underwriter's
opinion the number of shares requested to be registered in such offering by
shareholders of NuBar exceeds the number which can be sold without having an
adverse effect on the price per share received by NuBar in such offering;
provided that the Employee Shares registered in such offering shall in no event
be cut back more than on a pro rata basis with shares requested to be registered
in such offering by the Blackstone Investors.
Sincerely,
Agreed: _______________________
Frank Vickers, Director Thomas N. Tyrrell
USWA, District 1 CEO, NuBar
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<PAGE>
APPENDIX I
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
Re: Ratification Process in Negotiations in Year 2003
Dear Director Vickers:
This will confirm an understanding reached in our 1998 negotiations.
In return for NuBar's agreement to a single bargaining unit and master
agreement, the Union agrees with respect to contract negotiations in the year
2003 that any required membership ratification will be conducted by pooling all
bargaining unit members' votes into a single overall count. This commitment by
the Union shall not be in derogation of any other ratification requirements
(approval by USWA President, Executive Board, etc.).
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: _______________________
Frank Vickers, Director
USWA District 1
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<PAGE>
APPENDIX J
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Reimbursement to Local Unions for Negotiations
Dear Director Vickers:
This will confirm our understanding reached in the 1998 negotiations
concerning the above referenced topic.
Irrespective of whether or not the parties are able to reach agreement for
a 1998 BLA; the company will instruct each employer to reimburse up to a maximum
of two (2) Local Union Representatives who participated in the discussions from
each Plant covered by the NuBar BLA. The Local Union President (or where
appropriate the Unit President/Chairperson) will select the individual Local
Union Negotiating Committee Representatives and the employer will reimburse the
Local Union for lost time, travel and hotel expenses and a maximum of $45.00
per/day for per diem.
This arrangement will be applicable for the 1998 BLA negotiations and its
Successor Agreement.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:________________________
Frank Vickers, Director
USWA District 1
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<PAGE>
APPENDIX K
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: RESI Share Sale
Dear Director Vickers:
This will confirm our understanding that in the proposed transaction
pursuant to which the shares of RESI are acquired, the same price per share will
be paid for all RESI shares, regardless of whether the holder is an ESOP or a
non-ESOP holder. Additionally, in recognition of the 1998 NuBar BLA, the share
of special preferred stock will be canceled.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:________________________
Frank Vickers, Director
USWA District 1
-107-
<PAGE>
APPENDIX L
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
Re: Successorship - Cold Finished Plants
Dear Director Vickers:
This will confirm our understanding reached in the 1998 negotiations on
the above topic.
Notwithstanding anything to the contrary contained in the 1998 NuBar BLA,
the following understandings on Successorship shall apply in the event a cold
finished plant covered by the NuBar BLA is transferred.
The Company agrees that it will not sell, convey, assign or otherwise
transfer any cold-finished plant(s) or substantial portion thereof covered by
the then existing basic labor agreement between the Company and the Union to any
other party (hereinafter referred to as "Buyer") who intends to continue to
operate the business as the Company had, unless the following conditions have
been satisfied prior to the closing date of the sale:
1. The Buyer shall have entered into an agreement with the Union
recognizing it as the bargaining representative for the employees
within the then existing bargaining unit;
2. The Buyer shall have assumed the basic labor agreement (as it may be
amended pursuant to paragraph 3 below) and all benefits agreements
applying at the plant to be sold;
3. In the event that the date of sale precedes the expiration date of
the basic labor agreement ("original expiration date") by less than
three years, the Union may, at its sole option, extend the original
expiration date to fall three years from the date of sale and,
during each year or partial year that the basic labor agreement is
so extended, there shall be a wage increase(s) equal to the
increase(s) in the year preceding the original expiration date;
4. In the event of a sale pursuant to the conditions described above,
and in the further event of a subsequent permanent shutdown of the
plant so
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<PAGE>
sold within five (5) years of such a sale, the Company shall
guarantee that each former Company employee at the plant so sold
will receive from the purchaser, the Company, the PBGC, and/or the
Company's pension and welfare benefit plans, the same severance pay,
pension (including supplement), special pension payment, and retiree
health and life insurance that would have been received had the
plant so sold been shut down as of the date of sale.
Sincerely yours,
Thomas N. Tyrrell
CEO, NuBar
Agreed:___________________
Frank Vickers, Director
USWA District 1
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<PAGE>
APPENDIX M
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Retiree Healthcare Costs
Dear Director Vickers:
This will confirm our understanding reached during 1998 NuBar BLA
negotiations concerning the above referenced subject.
The Company shall maintain its program of medical benefits for post
Closing retirees and surviving spouses provided that the per capita costs of
benefits paid for by the Company under the program for periods after April 30,
2004 shall be limited to the per capita cost occurring during the 12 month
period ending April 30, 2004. When appropriate, a separate per capita cost will
be determined for medicare eligible retirees an ineligible medicare retirees.
In the event that the average per capita Company contribution for any
subgroup exceeds the amount established above in any calendar year, the excess
shall be allotted to and paid by each covered person on a pro rata basis. The
group of covered persons includes those who retired or otherwise became eligible
for benefits after Closing. Notwithstanding the forgoing, no covered person
shall be required, solely by reason of this limitation, to make any additional
contribution toward the costs of the program coverage until May 1, 2004.
The parties agree that any dispute over such limitation shall be a
mandatory subject of bargaining in any future negotiations.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:_______________________
Frank Vickers, Director
USWA District 1
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<PAGE>
APPENDIX N
Frank Vickers, Director
District 1
United Steel Workers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: C&BL Railroad
Dear Director Vickers:
In the event the Company seeks to acquire the C&BL Railroad, which is not
contemplated at this time, the Union agrees to give due consideration and put
forth its best efforts to combine the C&BL bargaining unit into NuBar's overall
production and maintenance unit and to cover the C&BL production and maintenance
employees under the 1998 Master Agreement.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:_____________________________
Frank Vickers, Director
USWA District 1
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<PAGE>
APPENDIX O
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: BarTech Employee Equity Interest
Dear Director Vickers:
This will confirm our understanding that each present active BarTech
employee will be entitled to a lump sum payment in exchange for the union's
agreement to eliminate and in complete satisfaction of the Employee Equity
Interest Commitment made by BarTech during the 1994 Collective Bargaining
Agreement negotiations and in a letter commitment dated March 28, 1996.
NuBar will establish a 1.6 million dollar fund ("the fund"). Within thirty
(30) days of the effective date of the 1998 NuBar BLA with respect to BarTech,
each active employee with at least six (6) months of continuous service will
receive a minimum of $1,000.00 from the fund.
In addition, the remainder of the fund ("the pool") will be distributed by
dividing the total value of the pool by the total number of months worked
(partial months being counted as a full month for this purpose) by all employees
who have had or have six (6) months of continuous service at BarTech ("a
Share"). Each individual employee's payment will then be determined by
multiplying his/her individual months worked at BarTech by the value of a Share.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:________________________
Frank Vickers, Director
USWA District 1
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<PAGE>
APPENDIX P
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Incentive Plan Redevelopment
Dear Director Vickers:
This will confirm our understanding reached during the 1998 negotiations
on the above topic.
The Company and the Union have committed to redesign current incentive
plans to more accurately relate to the demands of customers (whether internal or
external) and market conditions. Such design efforts may include the conversion
of individual incentive plans to group plans, and to change determinants
including customer service, quality and productivity to meet key performance
objectives.
The parties agree that the earnings opportunity obligations of the new
redesigned incentive plans shall be in accordance with the August 1, 1969
Incentive Arbitration Award.
Where production based incentive plans do not exist, the parties have
agreed to design and implement such plans in accordance with this letter and the
harmonization sections of the 1998 RES Acquisition Corporation Settlement
Agreement.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed:
Frank Vickers, Director
USWA District 1
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<PAGE>
APPENDIX Q
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Job Classification Consolidation
Dear Director Vickers:
This will confirm our understanding reached during the 1998 negotiations
on the above topic.
The parties have agreed to consolidate the various job classifications
within the former RESI and B&L facilities into five (5) new Labor Grades. Such
consolidation shall be implemented within thirty days of the ratification of the
1998 Basic Labor Agreement.
Within the Hot Rolled facilities the consolidated Labor Grades shall be:
--------------------------------------------------------------------------
Job Classes Labor Grade upon Ratification
--------------------------------------------------------------------------
1 thru 4 1 $12.09
--------------------------------------------------------------------------
5 thru 10 2 $12.98
--------------------------------------------------------------------------
11 thru 17 3 $14.02
--------------------------------------------------------------------------
18 thru 25 4 $15.22
--------------------------------------------------------------------------
26 thru 34 5 $16.56
--------------------------------------------------------------------------
Within the Cold Finished facilities the consolidated Labor Grades shall
be:
--------------------------------------------------------------------------
Job Classes Labor Grade upon Ratification
--------------------------------------------------------------------------
1 thru 5 1 $12.23
--------------------------------------------------------------------------
6 thru 13 2 $13.43
--------------------------------------------------------------------------
14 thru 21 3 $14.62
--------------------------------------------------------------------------
22 thru 30 4 $15.96
--------------------------------------------------------------------------
31 thru 34 5 $16.56
--------------------------------------------------------------------------
The parties have agreed that any employee whose present rate is above the
agreed to rates will maintain the same relationship between the present rates
and any future wage increases. In addition, the
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<PAGE>
parties have agreed that a job classification review (review) of all Labor
Grades will occur within six (6) months of the effective date of the BLA. Such
review will compare the job assignments and job duties of the various Labor
Grades at all the Company's USWA represented facilities (including the former
BarTech facilities). This review process is intended to provide equity among the
Labor Grades across the Company at similar facilities for employees who are
performing like functions. As a result of the review, the Labor Grades for a
particular job may be increased or decreased utilizing mutually agreeable
criteria for purposes of determining job equity. If a particular job's Labor
Grade is increased as a result of the review, such increase shall be retroactive
to the effective date of the BLA. In the event the review results in the
decrease of a particular job's Labor Grade the decrease will be effective upon
the conclusion of the review, however no employee will be negatively impacted as
a result of the review.
Any disputes which arise under this provision may be processed through the
Grievance and Arbitration Article of the Master Agreement.
Attached to this letter are the applicable wage rates for the former RESI,
BarTech, and B&L Harvey facilities.
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: _________________________
Frank Vickers, Director
USWA District 1
-115-
<PAGE>
Appendix A
(Applicable at former Hot Rolled RESI Facilities)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
JC Present At Ratification 11/1/99 11/1/00 11/1/01 11/1/02 ICR
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2 $11.53
3 $11.69
4 $11.84 $12.09 $12.34 $12.84 $13.34 $14.09 $4.838
- -------------------------------------------------------------------------------------
5 $11.98
6 $12.13
7 $12.28
8 $12.43
9 $12.58
10 $12.73 $12.98 $13.23 $13.73 $14.23 $14.98 $5.552
- -------------------------------------------------------------------------------------
11 $12.88
12 $13.03
13 $13.18
14 $13.33
15 $13.48
16 $13.62
17 $13.77 $14.02 $14.27 $14.77 $15.27 $16.02 $6.385
- -------------------------------------------------------------------------------------
18 $13.92
19 $14.07
20 $14.22
21 $14.37
22 $14.52
23 $14.68
24 $14.82
25 $14.97 $15.22 $15.47 $15.97 $16.47 $17.22 $7.337
- -------------------------------------------------------------------------------------
26 $15.11
27 $15.27
28 $15.41
29 $15.56
30 $15.71
31 $15.86
32 $16.01
33 $16.16
34 $16.31 $16.56 $16.81 $17.31 $17.81 $18.56 $8.408
- -------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
Appendix A
(Applicable at former Cold Finished RESI Facilities)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
JC Present At Ratification 11/1/99 11/1/00 11/1/01 11/1/02 ICR
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1/2 $11.53
3 $11.69
4 $11.84
5 $11.98 $12.23 $12.48 $12.73 $12.98 $13.23 $4.957
- ---------------------------------------------------------------------------------------------
6 $12.13
7 $12.28
8 $12.43
9 $12.58
10 $12.73
11 $12.88
12 $13.03
13 $13.18 $13.43 $13.68 $13.93 $14.15 $14.43 $5.909
- ---------------------------------------------------------------------------------------------
14 $13.33
15 $13.48
16 $13.62
17 $13.77
18 $13.92
19 $14.07
20 $14.22
21 $14.37 $14.62 $14.87 $15.12 $15.37 $15.62 $6.861
- ---------------------------------------------------------------------------------------------
22 $14.52
23 $14.68
24 $14.82
25 $14.97
26 $15.11
27 $15.27
28 $15.41
29 $15.56
30 $15.71 $15.96 $16.21 $16.46 $16.71 $16.96 $7.932
- ---------------------------------------------------------------------------------------------
31 $15.86
32 $16.01
33 $16.16
34 $16.31 $16.56 $16.81 $17.06 $17.31 $17.56 $8.408
- ---------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
Appendix A
(Applicable at former BarTech Facilities)
--------------------------------------------------------------------------
Labor Grade Present 3/1/99 3/1/00 3/1/01 11/1/02 ICR
--------------------------------------------------------------------------
1 $8.70 $11.65 $12.60 $12.84* $14.09** $4.838
--------------------------------------------------------------------------
2 $9.95 $12.90 $13.85 $13.73* $14.98** $5.552
--------------------------------------------------------------------------
3 $11.20 $14.15 $15.10 $14.77* $16.02** $6.385
--------------------------------------------------------------------------
4 $12.20 $15.15 $16.10 $15.97* $17.22** $7.337
--------------------------------------------------------------------------
5 $12.95 $15.90 $16.85 $17.31* $18.56** $8.408
--------------------------------------------------------------------------
*On 3/1/01 a production based BarTech Incentive Plan (BIP) will be
developed and installed. The BIP will have an earnings opportunity of $2.16
per/hour with a guarantee of the difference (if any) between the rates in effect
on 3/1/00 and the rates in effect on 3/1/01 plus $.25 per/hour.
**The earnings opportunity of the BIP will be increased to $2.80 per/hour
with a guarantee of $.75 per/hour.
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<PAGE>
Appendix A
(Applicable at B&L Harvey Facility)
- ---------------------------------------------------------------------------
JC Present 12/1/98 11/1/99 11/1/00 11/1/01 11/1/02 ICR
- ---------------------------------------------------------------------------
2 $13.16
3 $13.30
4 $13.43
5 $13.56
6 $13.69 $12.23* $12.48* $12.73* $12.98* $13.23* $4.957
- ---------------------------------------------------------------------------
7 $13.82
8 $13.95
9 $14.08 $13.43* $13.68* $13.93* $14.15 $14.43 $5.909
- ---------------------------------------------------------------------------
10 $14.21
11 $14.34
12 $14.47 $14.62* $14.87 $15.12 $15.37 $15.62 $6.861
- ---------------------------------------------------------------------------
13 $14.60
14 $14.73
15 $14.86
16 $14.99
17 $15.12 $15.96* $16.21 $16.46 $16.71 $16.96 $7.932
- ---------------------------------------------------------------------------
18 $15.25
19 $15.38
20 $15.51 $16.56* $16.81 $17.06 $17.31 $17.56 $8.408
- ---------------------------------------------------------------------------
*On 12/1/98 a production based Harvey Incentive Plan (HIP) will be developed and
installed. The HIP will have an earnings opportunity of $2.29 per/hour (adjusted
for straight line harmonization) with a guarantee of the difference (if any) of
the present rate and the applicable rate.
-119-
<PAGE>
APPENDIX R
Frank Vickers, Director
District 1
United Steelworkers of America
777 Dearborn Park Lane
Suite J
Columbus, OH 43085
RE: Deletions from the RESI Predecessor Labor Agreement
Dear Director Vickers:
This will confirm our understanding reached during the 1998 negotiations
on the above topic.
The Company and the Union have agreed that the following Appendices and
agreements from the RESI Predecessor Labor Agreement shall be deleted from the
1998 BLA:
Appendix B Employee Stock Programs
Appendix C Neutrality Agreement (superseded)
Appendix F Memorandum of Understandings on Miscellaneous Matters
Section 6 only.
Appendix I Memorandum of Understandings on Contracting Out Matters
Appendix J Memorandum of Understanding on Profit Sharing
(Superseded)
Appendix M New Target 60 Program
Appendix N Functional Analysis
Appendix P Pre tax Income Pool
Appendix U Termination Incentive Payments
Appendix V Letter Agreement on Worker Ownership Institute
Appendix W Preferred Stock Repurchase
Appendix Z Implementation of RESI/USWA Partnership
-120-
<PAGE>
Appendix BB Family and Medical Leave (Superseded)
Appendix HH Memorandum of Understanding on Bargaining Unit
Crew Chiefs for Production and Service Units
Appendix LL Memorandum of Understanding Stark County Area
Appendix MM Letter Agreement on Shape ups
Appendix QQ Letter Agreement on Best and NBU Trusts
Appendix TT Letter Agreement on Reversion of the BEST
Appendix TT-1 Financial Restructuring Bonus
Pioneer Collective Bargaining Agreement
Sincerely,
Thomas N. Tyrrell
CEO, NuBar
Agreed: _________________________
Frank Vickers, Director
USWA District 1
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<PAGE>
1999 SETTLEMENT AGREEMENT
Between
UNITED STEELWORKERS OF AMERICA, AFL-CIO
On behalf of its Local 2354
And
BarTech, RESI, and RTI
WHEREAS, on August 2, 1998, Bar Technologies Inc. ("BarTech") and RES
Acquisition Corporation entered into the 1998 Settlement Agreement, which
included the Master Labor Agreement (the "Master Agreement") and the
plant-specific agreements, setting forth the obligations of BarTech and
Republic Engineered Steels, Inc. ("RESI") at all of their USWA-represented
facilities (such agreements, collectively with the benefit agreements entered
into in connection therewith, the "1998 BLA"); and
WHEREAS, Republic Technologies International, LLC ("RTI") wishes to
adopt the 1998 BLA for all USWA-represented facilities other than those of
Canadian Drawn Steel Company, which will be covered by a separate collective
bargaining agreement; and
WHEREAS, pursuant to a Master Restructuring Agreement (the "MRA"),
affiliates of Blackstone Management Partners L.P. ("Blackstone"), USX
Corporation ("USX") and Kobe Steel, Ltd. ("Kobe") propose to combine the bar
steel businesses of BarTech, RESI and USS/Kobe Steel Company (other than its
tubular steel business to be separately held) ("USS/Kobe") into RTI, a
newly-formed entity to be controlled by BarTech, in a transaction expected to
be consummated in the third calendar quarter of 1999 (the "Transaction"); and
WHEREAS, in the event that the Transaction is completed, the combined
RTI entity would own the following plants represented by the United
Steelworkers of America (the "USWA" or "Union"): from BarTech, the plants in
Johnstown, Pennsylvania, and Lackawanna, New York; from BarTech's subsidiaries
Bliss & Laughlin Steel Company and Canadian Drawn Steel Company, the plants in
Harvey, Illinois, and Hamilton, Ontario (Canada) respectively; from RESI,
Massillon Cold Finish, Massillon Hot Roll, Special Metals (Massillon), all in
Massillon, Ohio, and Canton Eighth Street in Canton, Ohio, the plant in
Chicago, Illinois, the cold-
Settlement Agreement USWA Local 2354 July 7, 1999 1
<PAGE>
finished plants in Beaver Falls, Pennsylvania, Willimantic, Connecticut,
Seventh Avenue and Dunes Highway, both in Gary, Indiana, and a stainless plant
in Baltimore, Maryland; and from USS/Kobe, the plant in Lorain, Ohio. In
addition, RTI would own B&L's cold-finished plant in Cartersville, Georgia
(non-union); and
WHEREAS, if the Transaction is consummated, RTI anticipates
permanently closing one of the existing two blast furnaces, shutting down the
billet caster operation, investing capital in the billet yard and rolling
facilities resulting in headcount reductions, consolidating administrative and
support functions at the corporate headquarters, and building a new processing
center in Ohio to be manned by USWA represented employees. Overall, a decline
in the net hourly headcount of about 575 is expected during the three (3) years
of transition/consolidation after the consummation of the Transaction; and
WHEREAS, the Union has emphasized its objectives of, among other
things, providing a decent and humane set of retirement options for employees
affected by headcount reductions, and assuring that any RTI transaction
preserves as many bargaining units jobs as possible; and
WHEREAS, BarTech, RESI, USX and Kobe have endeavored to satisfy such
objectives on the terms described herein and have indicated that they will not
close the Transaction unless this Settlement Agreement has first been enter
into by the Union and unless the Master Agreement and Lorain Plant
Specific-Agreement (as defined below) have first been ratified by the Union's
members at USS/Kobe's Lorain, Ohio facilities affected thereby; the
effectiveness of this Settlement Agreement being conditional upon the closing
of the Transaction for those employees currently employed by USS/Kobe in its
bar steel business; and
NOW THEREFORE IT IS AGREED that:
The parties to this Settlement Agreement shall be BarTech, RESI, RTI,
and the Union. This Settlement Agreement adopts the 1998 BLA with respect to
the USWA-represented facilities of BarTech and RESI to be transferred to RTI
pursuant to the MRA and adopts the Master Agreement and the Lorain
Plant-Specific Agreement with respect to Union employees of USS/Kobe in its bar
steel business. This Settlement Agreement, the 1998 BLA (with respect to RTI)
and the Lorain Plant-Specific Agreement shall only become effective upon the
closing of the Transaction.
Settlement Agreement USWA Local 2354 July 7, 1999 2
<PAGE>
The parties enter into this Settlement Agreement as of July 7, 1999.
I. Bargaining Structure/Single Agreement/Expiration Date
A. RTI shall be obligated to the Union under the 1998 BLA applicable to
all USWA-represented facilities of RTI other than Canadian Drawn Steel
which shall be covered by a separate collective bargaining agreement
which shall be coterminous with the agreement covering the other
plants. The 1998 BLA shall address certain subjects on a "Master
Agreement" basis and other issues on the basis of the former corporate
identity of the plants in question or a plant-specific basis
(hereinafter "Plant-Specific Agreement").
The current labor agreement (exclusive of their benefits agreements)
between USS/Kobe and the Union ("Predecessor Labor Agreement" or
"PLA") shall be replaced by the Master and the Plant-Specific
Agreement as well as this Settlement Agreement.
The benefits agreements associated with the PLA shall continue in
effect until merged or harmonized together pursuant to the RTI
benefits agreements to be adopted by the parties in accordance with
this Settlement Agreement and the Master and Plant-Specific Agreement.
The formerly separate USS/Kobe Office & Technical bargaining unit
under the PLA shall remain in a single RTI bargaining unit. The
termination date previously established by the PLA shall be amended
and extended to give the BLA a termination date of October 31, 2003.
Wherever this Settlement Agreement sets forth an understanding not
described as plant-specific, such understanding shall be included in
the Master portions of the 1998 BLA. Any language in the
Plant-Specific Agreement which conflicts with the Master portion of
the 1998 BLA shall displace the Master provisions of the 1998 BLA.
B. In the negotiation of a successor agreement to the 1998 BLA,
bargaining shall begin with plant-level representatives negotiating
over the topics covered in the agreement on plant-specific issues.
After an appropriate interval of such
Settlement Agreement USWA Local 2354 July 7, 1999 3
<PAGE>
bargaining, Master bargaining shall commence, and all issues still
unresolved in the plant-specific bargaining shall be referred to the
Master bargaining for resolution.
II. RTI Profit Sharing Plan
RTI bargaining unit employees who were formerly employed by USS/Kobe
shall be included in the RTI Profit Sharing Plan and for purposes of
distribution shall be included in the BarTech Pool as set forth in the
1998 Settlement Agreement.
III. RTI Pension Program (As Defined in Pension Term Sheet)
A. The benefits described below will be applicable to former USS/KOBE
employees employed by USS/KOBE immediately prior to the effective date
of this Agreement, through the adoption of Pension Agreements
containing provisions identical to those in the current USS/KOBE
Pension Agreement except as modified below.
B. The regular monthly pension benefit shall be the greater of (1) or (2)
multiplied by all years of continuous service both before and after
the Transaction Date (including all years of service recognized under
the present USS/KOBE Pension Agreement):
1. $35.00 ($46.00 for retirements on and after May 1, 2003)
2. The snapshot Benefit.
The Snapshot Benefit for each participant equals the benefit under the
percent pension formula, calculated as of the Transaction Date,
divided by the participant's years of continuous service as of the
Transaction Date.
C. For employees retiring after age 55 with at least 30 years of service,
the 30-Year Minimum Benefit will be available.
Settlement Agreement USWA Local 2354 July 7, 1999 4
<PAGE>
D. For 30-year retirements, the Increased Pension shall be the current
$400/$1,500 benefit payment until eligible for 80% of full Social
Security Benefit. For employees who retire under this provision during
the term of this BLA, the Company shall waive the earnings offset
during their retirement period.
E. The Early Retirement Buyout benefit provisions under the current RESI
Pension Agreement shall be applicable with the reduced pension benefit
calculated under Paragraph B above.
F. Modify the Increased Pension provisions for Permanent Incapacity,
70/80 and Rule-of-65 Retirements to provide for continuation of
payments until eligible for 80% of full Social Security Benefits.
G. Change the Automatic Five-year Term Certain to provide the benefit in
the event of a death prior to retirement if the participant was
eligible for immediate retirement.
H. Eliminate the charge for Pre-Retirement Survivor Annuity Coverage in
the same manner as RESI under the RTI Plan.
I. Modify the Automatic 50% Spouse Option to provide for benefit payments
to pop-up in the event of the death of the spouse before the
participant or in the event of a divorce. This option shall be made
cost neutral to the Plan by mutually agreed to actuarial assumptions.
J. Modify the Surviving Spouse's Benefit provisions so they are the same
as those under the current RESI Pension Agreement.
K. Include appropriate provisions regarding crediting of continuous
service and the calculation of benefits (including any offsets) for
employees who transfer between RTI and USS/KOBE after the Transaction
Date.
L. Under the Rule of 65 Retirement, the parties have agreed to include
the former USS/Kobe Plant in Group II for purpose of Suitable Long
Term Agreement (SLTE) as set forth in the 1998 Settlement Agreement.
Settlement Agreement USWA Local 2354 July 7, 1999 5
<PAGE>
M. The Pension Agreement will remain in effect for five (5) months after
the termination of the BLA.
IV Lorain Economic Modifications
The Lorain Plant Specific Agreement shall provide for the following Economic
provisions for the former USS/Kobe bar and steelmaking facilities:
A. Wages
1. Roll-up and Harmonization Schedule:
<TABLE>
<CAPTION>
Current USS/Kobe New Effective Date
Classifications Labor Grade Of Agreement 3/1/00 11/1/01 11/1/02
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1-8 1 Standard Bi- 1292 1368 1388 1408
Weekly Wage Scale
Equiv. Hr. Rate 16.15 17.10 17.35 17.60
9 and above 2 Standard Bi- 1372 1448 1468 1488
Weekly Wage Scale
Equiv. Hr. Rate 17.15 18.10 18.35 18.60
</TABLE>
2. Signing Bonus for all employees accruing continuous service on the
effective date of this Agreement:
$1,000 (Paid within 30 days from the effective Date of this Agreement)
3. Shift Premium - Harmonize to RTI October 31, 2003.
4. Sunday Premium - Harmonized to RTI January 1, 2003.
B. Sickness & Accident - Harmonize to RTI, January 1, 2001.
RTI S&A Weekly
Insurance Classification Benefit
- ------------------------ --------------
Labor Grade 1 $285
Labor Grade 2 $298
Settlement Agreement USWA Local 2354 July 7, 1999 6
<PAGE>
C. Life Insurance - Harmonize to RTI, January 1, 2001.
Insurance Classification RTI Life Insurance
- ------------------------ ------------------
Labor Grade 1 $16,500
Labor Grade 2 $17,000
Employee 15+ yrs. $50,000
*Grandfather current employees under 15 years service at $20,000.
V. Early Retirement Buyout Package ("ERB") and Voluntary Severance
Plan ("VSP")
A. The Company and Union agree that a significant reduction in the manning
level at the former USS/Kobe facility is essential to enable RTI to become
competitive and thereby improve job security. In order to lessen the
impact on employees, the parties have agreed to include former USS/Kobe
RTI employees in the ERB and VSP programs set forth in the 1998 Settlement
Agreement.
The Company's business plan calls for a reduction in the net number of
bargaining unit jobs at former USS/Kobe Bar and Steelmaking facilities by
approximately five hundred and seventy-five (575) during the approximately
three (3) years of the transition/consolidation. This net reduction in
bargaining unit jobs will be accomplished through the shutdown of plant(s)
(or departments or subdivisions thereof), capital investments and
productivity improvements due to work rule and job classification
improvements.
B. RTI Office & Technical bargaining unit employees who were formerly
employed by USS/KOBE shall participate in the Early Retirement Buyout
Package (ERB) and Voluntary Severance Program (VSP) as set forth in the
1998 Settlement Agreement and the "Adaptation and Interpretation of ERB"
letters from Thomas N. Tyrrell to David R. McCall dated July 1, 1999.
C. The first one hundred (100) ERB's offered at the former USS/KOBE facility
Settlement Agreement USWA Local 2354 July 7, 1999 7
<PAGE>
(Bar, Steelmaking, and Tube) shall be offered to Lorain employees at RTI
(Bar and Steelmaking) and USS/KOBE (Tube) on a combined plant-wide
continuous service basis. Thereafter, ERB's offered by RTI will be made
available only to RTI employees.
VI The parties hereby adopt the following:
A. The Master Agreement set forth in Appendix A
B. The Lorain Office & Technical Plant Specific Agreement set
forth in Appendix B
VII. Termination
The termination date of the new agreement shall be October 31, 2003.
The termination date of the benefits agreements shall be extended to
expire on February 28, 2004.
Executed this _____ day of July, 1999.
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By: Republic Technologies International Holdings, LLC, its Managing Member
By: Bar Technologies Inc., its Managing Member
- ------------------------------------------
Name: Thomas N. Tyrrell
Title: CEO, Bar Technologies Inc.
United Steelworkers of America AFL-CIO
- ----------------------------------
- ----------------------------------
- ----------------------------------
Settlement Agreement USWA Local 2354 July 7, 1999 8
<PAGE>
1999 SETTLEMENT AGREEMENT
Between
UNITED STEELWORKERS OF AMERICA, AFL-CIO
On behalf of its Local 1104
And
BarTech, RESI and RTI
WHEREAS, on August 2, 1998, Bar Technologies Inc. ("BarTech") and RES
Acquisition Corporation entered into the 1998 Settlement Agreement, which
included the Master Labor Agreement (the "Master Agreement") and the
plant-specific agreements, setting forth the obligations of BarTech and
Republic Engineered Steels, Inc. ("RESI") at all of their USWA-represented
facilities (such agreements, collectively with the benefit agreements entered
into in connection therewith, the "1998 BLA"); and
WHEREAS, Republic Technologies International, LLC ("RTI") wishes to
adopt the 1998 BLA for all USWA-represented facilities other than those of
Canadian Drawn Steel Company, which will be covered by a separate collective
bargaining agreement; and
WHEREAS, pursuant to a Master Restructuring Agreement (the "MRA"),
affiliates of Blackstone Management Partners L.P. ("Blackstone"), USX
Corporation ("USX") and Kobe Steel, Ltd. ("Kobe") propose to combine the bar
steel businesses of BarTech, RESI and USS/Kobe Steel Company (other than its
tubular steel business to be separately held) ("USS/Kobe") into RTI, a
newly-formed entity to be controlled by BarTech, in a transaction expected to
be consummated in the third calendar quarter of 1999 (the "Transaction"); and
WHEREAS, in the event that the Transaction is completed, the combined
RTI entity would own the following plants represented by the United
Steelworkers of America (the "USWA" or "Union"): from BarTech, the plants in
Johnstown, Pennsylvania, and Lackawanna, New York; from BarTech's subsidiaries
Bliss & Laughlin Steel Company and Canadian Drawn Steel Company, the plants in
Harvey, Illinois, and Hamilton, Ontario (Canada) respectively; from RESI,
Massillon Cold Finish, Massillon Hot Roll, Special Metals (Massillon), all in
Massillon, Ohio, and
Settlement Agreement USWA Local 1104 July 7, 1999 1
<PAGE>
Canton Eighth Street in Canton, Ohio, the plant in Chicago, Illinois, the
cold-finished plants in Beaver Falls, Pennsylvania, Willimantic, Connecticut,
Seventh Avenue and Dunes Highway, both in Gary, Indiana, and a stainless plant
in Baltimore, Maryland; and from USS/Kobe, the plant in Lorain, Ohio. In
addition, RTI would own B&L's cold-finished plant in Cartersville, Georgia
(non-union); and
WHEREAS, if the Transaction is consummated, RTI anticipates
permanently closing one of the existing two blast furnaces, shutting down the
billet caster operation, investing capital in the billet yard and rolling
facilities resulting in headcount reductions, consolidating administrative and
support functions at the corporate headquarters, and building a new processing
center in Ohio to be manned by USWA represented employees. Overall, a decline
in the net hourly headcount of about 575 is expected during the three (3) years
of transition/consolidation after the consummation of the Transaction; and
WHEREAS, the Union has emphasized its objectives of, among other
things, providing a decent and humane set of retirement options for employees
affected by headcount reductions, and assuring that any RTI transaction
preserves as many bargaining units jobs as possible; and
WHEREAS, BarTech, RESI, USX and Kobe have endeavored to satisfy such
objectives on the terms described herein and have indicated that they will not
close the Transaction unless this Settlement Agreement has first been enter
into by the Union and unless the Master Agreement and Lorain Plant
Specific-Agreement (as defined below) have first been ratified by the Union's
members at USS/Kobe's Lorain, Ohio facilities affected thereby; the
effectiveness of this Settlement Agreement being conditional upon the closing
of the Transaction for those employees currently employed by USS/Kobe in its
bar steel business; and
NOW THEREFORE IT IS AGREED that:
The parties to this Settlement Agreement shall be BarTech, RESI, RTI,
and the Union. This Settlement Agreement adopts the 1998 BLA with respect to
the USWA-represented facilities of BarTech and RESI to be transferred to RTI
pursuant to the MRA and adopts the Master Agreement and the Lorain
Plant-Specific Agreement with respect to Union employees of USS/Kobe in its bar
steel business. This
Settlement Agreement USWA Local 1104 July 7, 1999 2
<PAGE>
Settlement Agreement, the 1998 BLA (with respect to RTI) and the Lorain
Plant-Specific Agreement shall only become effective upon the closing of the
Transaction. The parties enter into this Settlement Agreement as of July 7,
1999.
I. Bargaining Structure/Single Agreement/Expiration Date
A. RTI shall be obligated to the Union under the 1998 BLA applicable to
all USWA-represented facilities of RTI other than Canadian Drawn Steel
which shall be covered by a separate collective bargaining agreement
which shall be coterminous with the agreement covering the other
plants. The 1998 BLA shall address certain subjects on a "Master
Agreement" basis and other issues on the basis of the former corporate
identity of the plants in question or a plant-specific basis
(hereinafter "Plant-Specific Agreement").
The current labor agreement (exclusive of their benefits agreements)
between USS/Kobe and the Union ("Predecessor Labor Agreement" or
"PLA") shall be replaced by the Master and the Lorain Plant-Specific
Agreement as well as this Settlement Agreement upon the closing of the
Transaction.
The benefits agreements associated with the PLA shall continue in
effect until merged or harmonized together pursuant to the RTI
benefits agreements to be adopted by the parties in accordance with
this Settlement Agreement and the Master and Plant-Specific Agreement.
The formerly separate USS/Kobe bargaining unit under the PLA shall be
merged into the single RTI bargaining unit. The termination date
previously established by the PLA shall be amended and extended to
give the BLA a termination date of October 31, 2003.
Wherever this Settlement Agreement sets forth an understanding not
described as plant-specific, such understanding shall be included in
the Master portions of the 1998 BLA. Any language in the
Plant-Specific Agreement which conflicts with the Master portion of
the 1998 BLA shall displace the Master provisions of the 1998 BLA.
Settlement Agreement USWA Local 1104 July 7, 1999 3
<PAGE>
B. In the negotiation of a successor agreement to the 1998 BLA,
bargaining shall begin with plant-level representatives negotiating
over the topics covered in the agreement on plant-specific issues.
After an appropriate interval of such bargaining, Master bargaining
shall commence, and all issues still unresolved in the plant-specific
bargaining shall be referred to the Master bargaining for resolution.
II. RTI Profit Sharing Plan
RTI bargaining unit employees who were formerly employed by USS/Kobe
shall be included in the RTI Profit Sharing Plan and for purposes of
distribution shall be included in the BarTech Pool as set forth in the
1998 Settlement Agreement.
III. RTI Pension Program (As Defined in Pension Term Sheet)
A. The benefits described below will be applicable to former USS/KOBE
employees employed by USS/KOBE immediately prior to the effective date
of this Agreement, through the adoption of Pension Agreements
containing provisions identical to those in the current USS/KOBE
Pension Agreement except as modified below.
B. The regular monthly pension benefit shall be the greater of (1) or (2)
multiplied by all years of continuous service both before and after
the Transaction Date (including all years of service recognized under
the present USS/KOBE Pension Agreement):
1. $35.00 ($46.00 for retirements on and after May 1, 2003)
2. The snapshot Benefit.
The Snapshot Benefit for each participant equals the benefit under the
percent pension formula, calculated as of the Transaction Date,
divided by the participant's years of continuous service as of the
Transaction Date.
Settlement Agreement USWA Local 1104 July 7, 1999 4
<PAGE>
C. For employees retiring after age 55 with at least 30 years of service,
the 30-Year Minimum Benefit will be available.
D. For 30-year retirements, the Increased Pension shall be the current
$400/$1,500 benefit payment until eligible for 80% of full Social
Security Benefit. For employees who retire under this provision during
the term of this BLA, the Company shall waive the earnings offset
during their retirement period.
E. The Early Retirement Buyout benefit provisions under the current RESI
Pension Agreement shall be applicable with the reduced pension benefit
calculated under Paragraph B above.
F. Modify the Increased Pension provisions for Permanent Incapacity,
70/80 and Rule-of-65 Retirements to provide for continuation of
payments until eligible for 80% of full Social Security Benefits.
G. Change the Automatic Five-year Term Certain to provide the benefit in
the event of a death prior to retirement if the participant was
eligible for immediate retirement.
H. Eliminate the charge for Pre-Retirement Survivor Annuity Coverage in
the same manner as RESI under the RTI Plan.
I. Modify the Automatic 50% Spouse Option to provide for benefit payments
to pop-up in the event of the death of the spouse before the
participant or in the event of a divorce. This option shall be made
cost neutral to the Plan by mutually agreed to actuarial assumptions.
J. Modify the Surviving Spouse's Benefit provisions so they are the same
as those under the current RESI Pension Agreement.
K. Include appropriate provisions regarding crediting of continuous
service and the calculation of benefits (including any offsets) for
employees who transfer between RTI and USS/KOBE after the Transaction
Date.
Settlement Agreement USWA Local 1104 July 7, 1999 5
<PAGE>
L. Under the Rule of 65 Retirement, the parties have agreed to include
the former USS/Kobe Plant in Group II for purpose of Suitable Long
Term Agreement (SLTE) as set forth in the 1998 Settlement Agreement.
M. The Pension Agreement will remain in effect for five (5) months after
the termination of the BLA.
IV. Lorain Economic Modifications
The Lorain Plant Specific Agreement shall provide for the following Economic
provisions for the former USS/Kobe bar and steelmaking facilities:
A. Wages
1. Roll-up and Harmonization Schedule:
<TABLE>
<CAPTION>
Current
USS/KOBE New Effective Wage INC Wage INC Wage INC
Classification Labor Grade Date 11/1/00 11/1/00 11/1/01 11/1/01 11/1/02 11/1/02
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1-8 1 13.734 13.98 0.250 14.09 0.106 14.09 0.000
9-12 2 14.450 14.70 0.250 14.95 0.250 14.98 0.030
13-16 3 15.166 15.42 0.250 15.67 0.250 16.02 0.354
17-23 4 16.419 16.67 0.250 16.92 0.250 17.22 0.301
24-28 5 17.314 17.56 0.250 17.81 0.250 18.56 0.746
</TABLE>
2. Lump sum bonuses for all employees accruing continuous service on the
effective date of the following payments:
$500 November 1, 2001
$500 November 1, 2002
3. Signing Bonus for all employees accruing continuous service on the effective
date of this Agreement:
$1,000 (Paid within 30 days from the effective Date of this Agreement)
4. Shift Premium - Harmonize to RTI October 31, 2003.
Settlement Agreement USWA Local 1104 July 7, 1999 6
<PAGE>
5. Sunday Premium - Harmonized to RTI January 1, 2003.
6. Plant-wide Incentive Redevelopment letter contained in the Lorain Plant
Specific Agreement.
B. Sickness & Accident - Harmonize to RTI, January 1, 2001.
Insurance Classification RTI S&A Weekly Benefit
- ------------------------ ----------------------
Labor Grade 1 $246
Labor Grade 2 $259
Labor Grade 3 $272
Labor Grade 4 $285
Labor Grade 5 $298
C. Life Insurance - Harmonize to RTI, January 1, 2001.
Insurance Classification RTI Life Insurance*
- ------------------------ -------------------
Labor Grade 1 $15,000
Labor Grade 2 $15,500
Labor Grade 3 $16,000
Labor Grade 4 $16,500
Labor Grade 5 $17,000
Employee 15+ yrs. $50,000
*Grandfather current employees under 15 years service at $20,000.
V. Early Retirement Buyout Package ("ERB") and Voluntary Severance
Plan ("VSP")
A. The Company and Union agree that a significant reduction in the
manning level at the former USS/Kobe facility is essential to enable
RTI to become
Settlement Agreement USWA Local 1104 July 7, 1999 6
<PAGE>
competitive and thereby improve job security. In order to lessen the
impact on employees, the parties have agreed to include former
USS/Kobe RTI employees in the ERB and VSP programs set forth in the
1998 Settlement Agreement.
The Company's business plan calls for a reduction in the net number of
bargaining unit jobs at former USS/Kobe Bar and Steelmaking facilities
by approximately five hundred and seventy-five (575) during the
approximately three (3) years of the transition/consolidation. This
net reduction in bargaining unit jobs will be accomplished through the
shutdown of plant(s) (or departments or subdivisions thereof), capital
investments and productivity improvements due to work rule and job
classification improvements.
B. RTI production and maintenance bargaining unit employees who were
formerly employed by USS/KOBE shall participate in the Early
Retirement Buyout Package (ERB) and Voluntary Severance Program (VSP)
as set forth in the 1998 Settlement Agreement and the "Adaptation and
Interpretation of ERB" letters from Thomas N.
Tyrrell to David R. McCall dated July 1, 1999.
C. The first one hundred (100) ERB's offered at the former USS/KOBE
facility (Bar, Steelmaking, and Tube) shall be offered to Lorain
employees at RTI (Bar and Steelmaking) and USS/KOBE (Tube) on a
combined plant-wide continuous service basis. Thereafter, ERB's
offered by RTI will be made available only to RTI employees.
VI. The parties hereby adopt the following:
A. The Master Agreement set forth in Appendix A
B. The Lorain Production & Maintenance Plant Specific Agreement
set forth in Appendix B
VI. Termination
The termination date of the new agreement shall be October 31, 2003.
The termination date of the benefits agreements shall be extended to
expire on
Settlement Agreement USWA Local 1104 July 7, 1999 8
<PAGE>
February 28, 2004.
Executed this _____ day of July, 1999.
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By: Republic Technologies International Holdings, LLC, its Managing Member
By: Bar Technologies Inc., its Managing Member
- ------------------------------------------
Name: Thomas N. Tyrrell
Title: CEO, Bar Technologies Inc.
United Steelworkers of America AFL-CIO
- ------------------------------------------
- ------------------------------------------
- ------------------------------------------
- ------------------------------------------
Settlement Agreement USWA Local 1104 July 7, 1999 9
<PAGE>
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into by and
between the Pension Benefit Guaranty Corporation ("PBGC"), a United States
government corporation, and RES Holding Corporation ("RES"), a Delaware
Corporation, and is effective as of November 2, 1998 (the "Effective Date").
WITNESSETH
WHEREAS, RES has acquired the common stock of Republic
Engineered Steels, Inc. ("RESI"), which maintains one or more defined benefit
pension plans (the "RESI Plans"), including the RESI USWA Defined Benefit Plan
(the "USWA Plan"), which are covered by Title IV of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and
WHEREAS, PBGC asserts that RESI may be liable for unfunded
benefit liabilities of the RESI Plans within the meaning of 29 U.S.C. Sections
130l(a)(18) and 1362(b), determined on the basis of assumptions prescribed by
PBGC regulations, 29 C.F.R. pt. 4044, in the event of the termination of one or
all of the RESI Plans; and
WHEREAS, RES is considering combining RES and RESI under a
common Ultimate Parent corporation with the operating assets of entities
including Bar Technologies, Inc. ("BarTech"); and
WHEREAS, BarTech maintains one or more defined benefit pension
plans (the "BarTech Plans"), which are covered by Title IV of ERISA; and
WHEREAS, the parties hereto differ as to the effect of the
Transaction (as defined herein), the Combination (as defined herein), and the
Permitted Closures (as defined herein) on the RESI Plans, and
<PAGE>
2
WHEREAS, representatives of RESI initiated contact with PBGC
in an effort to explore and resolve these differences; and
WHEREAS, PBGC and RES have entered into a Memorandum of
Understanding dated November 2, 1998 (the "MOU"), which sets forth the
substantive terms of their agreement regarding the RESI Plans and BarTech Plan;
and
WHEREAS, PBGC and RES, pursuant to the terms of the MOU, wish
to enter into a definitive agreement covering such matters;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
Section I
DEFINITIONS
As used in this Agreement, the following terms shall have the
meaning set forth below:
"BarTech" shall mean Bar Technologies, Inc., a Delaware
corporation.
"BarTech Plan" shall mean any defined benefit pension plan to
which BarTech contributes on behalf of its employees.
"Benefit Liabilities"' shall have the meaning ascribed thereto
in 29 U.S.C. Section 130l(a)(16).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Combination" shall mean the combination of RES and RESI under
a common Ultimate Parent corporation with the operating assets of BarTech
(whether by merger or
<PAGE>
3
otherwise), including any financings or refinancings by RES, RESI, BarTech
and/or their affiliates in connection therewith or resulting therefrom.
"Confidential Memorandum" shall mean the memorandum setting
forth the Permitted Closures attached hereto and incorporated herein Attachment
A.
"Contribution Dates" shall mean the dates of the Required
Contributions set forth in Section IV(b) and IV(c) of this Agreement.
"Controlled Group" shall have the meaning ascribed thereto in
29 U.S.C. Section 130l(a)(14).
"Effective Date" shall mean November 2, 1998.
"ERBs" shall mean early retirement benefit packages.
"ER1SA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, 29 U.S.C. Sections 1001-1461 (1994 and Supp. II 1996).
"Holdings" shall mean, from the Effective Date of this
Agreement until the consummation of the Combination, RES, and at all times
thereafter, the Ultimate Parent.
"L/C" shall mean the letter(s) of credit held as security by
PBGC for the benefit of the RESI Plans for the Required Contributions due in
January and July of 1999.
"Merger" shall mean the merger of RES Acquisition Corporation
with and into RESI.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, a
wholly-owned United States government corporation.
"Permitted Closure" shall mean the plant closings and/or
discontinuations identified in the Confidential Memorandum identified as
Attachment A hereto.
"Plan Year" shall mean January 1 to December 31 of each year.
<PAGE>
4
"Required Contributions" shall mean the cash contributions
required by Section IV of this Agreement.
"Required Credit Balance" shall mean the credit balance
required to be maintained for the USWA Plan by Section VI of this Agreement.
"RES" shall mean RES Holding Corporation, a Delaware
corporation.
"RES Acquisition" shall mean RES Acquisition Corporation, a
Delaware corporation, and a wholly-owned subsidiary of RES.
"RESI" shall mean Republic Engineered Steels, Inc., a Delaware
corporation, and a wholly-owned subsidiary of RES Acquisition Corporation.
"RESI Plans" shall mean the defined benefit pension plans
sponsored by RESI, including the USWA Plan.
"Responsible Entity or Entities" shall mean the entities
described in Section VII of this Agreement that are jointly and severally liable
for each Required Contribution.
"Tender Offer" shall mean the acquisition of RESI by RES
pursuant to a tender offer by RES Acquisition.
"Transaction" shall mean, collectively, the Tender Offer and
Merger.
"Ultimate Parent" shall mean parent corporation of the
Combination of RES and RESI with the operating assets of entities including
BarTech.
"USWA" shall mean the United Steel Workers of America.
"USWA Plan" shall mean the Republic Engineered Steels, Inc.
USWA Defined Benefit Plan.
<PAGE>
5
Section II
PBGC OBLIGATIONS
In consideration of the RES obligations described in Section
III of this Agreement, PBGC will forebear from instituting proceedings to
terminate the USWA Plan, or any single employer defined benefit pension plan of
BarTech or its affiliates under ER1SA Section 4042(a)(4), as a result of (i) the
Transaction, (ii) the subsequent Combination and/or (iii) the Permitted
Closures.
Section III
RES OBLIGATIONS
RES shall cause RESI to comply with the requirements hereof.
Section IV
RESI OBLIGATIONS
(a) RESI will make a Required Contribution to the USWA Plan in
the amount of $27 million within five (5) business days after January 1, 1999.
Such Required Contribution will be in addition to the $3.2 million paid in
January 1998.
(b) All other Required Contributions, in the amounts and on
the Contribution Dates set forth below will be made by one or more of the
Responsible Entities. If on any Contribution Date the minimum funding
contributions to the USWA Plan required by Code Section 412 exceed the amount of
the Required Contribution, the minimum funding contributions required under Code
Section 412 shall be made in lieu of the Required Contribution. The Required
Contributions shall be made in cash. The amounts of Required Contributions under
this Agreement are based on projections that include the assumption that no
shutdown benefits will be granted and that certain liabilities will arise from
granting 1,000 ERBs to USWA Plan participants.
<PAGE>
6
Contribution Date Amount ($mill)
no later than 7/1/99 $20.0
no later than 10/1/99 7.5
no later than 1/1/00 7.5
no later than 4/1/00 7.5
no later than 7/1/00 7.5
no later than 10/1/00 7.625
no later than 1/1/01 7.625
no later than 4/1/01 7.625
no later than 7/1/01 7.625
no later than 10/1/01 9.075
no later than 1/1/02 9.075
no later than 4/1/02 9.075
no later than 7/1/02 9.075
no later than 10/1/02 8.475
no later than 1/1/03 8.475
no later than 4/1/03 8.475
no later than 7/1/03 8.475
(c) Notwithstanding the provisions of Section III(b), in the
event BarTech's employees are not participants in the USWA Plan on any
Contribution Date listed above, BarTech will make its minimum tending
contribution required under Code Section 412 to the defined benefit plan in
which BarTech's employees participate on such Contribution Date. If BarTech's
employees are not participants in the USWA Plan, the Required Contributions
shall be as follows:
<PAGE>
7
Contribution Date Amount ($mill)
no later than 7/1/99 $20.0
no later than 10/1/99 7.5
no later than 1/1/00 7.5
no later than 4/1/00 7.5
no later than 7/1/00 7.5
no later than 10/1/00 7.5
no later than 1/1/01 7.5
no later than 4/1/01 7.5
no later than 7/1/01 7.5
no later than 10/1/01 7.55
no later than 1/1/02 7.55
no later than 4/1/02 7.55
no later than 7/1/02 7.55
no later than 10/1/02 7.55
no later than 1/1/03 7.55
no later than 4/1/03 7.55
no later than 7/1/03 7.55
(d) The Responsible Entities shall not be obligated to make
the portion of any Required Contribution under this Agreement that would not be
deductible under Code Section 404 for the Plan Year. The amount of maximum
deductible contributions will be determined with the current liability computed
using the interest rate that represents the lowest end of the permissible range
as prescribed by Code Section 412(1)(7)(C). If any portion of a Required
Contribution is not made because it is not tax deductible, RES will provide PBGC
with evidence, on the date the Required Contribution is due, that such portion
of the Required Contribution is not being made because it is not tax deductible.
This evidence will be subject to PBGC's review.
Section V
LETTER OF CREDIT
The portions of the Required Contribution due no later than
(a) five (5) business days after January 1, 1999, and (b) July 1, 1999,
respectively (the "Due Dates"), will be backed by a $47 million L/C which was
put in place on November 4, 1998. The L/C provides, by reference to this
Agreement, that in the event a Responsible Entity (or Entities) fails to make
the
<PAGE>
8
Required Contribution due by the applicable Contribution Date, then PBGC may
draw down on the L/C for the benefit of the USWA Plan in an amount equal to the
missed payment. If a Responsible Entity (or Entities) does make the applicable
portion of the Required Contribution on or before a Contribution Date, the
amount of the L/C will be reduced to the remaining unpaid amounts due on any
applicable Contribution Date.
Section Vi
REQUIRED CREDIT BALANCE
(a) At the end of each Plan Year of the USWA Plan beginning
with January 1, 2004 through the end of this Agreements the USWA Plan's Required
Credit Balance shall be the sum of:
(i) the USWA Plan's December 31, 2003 funding
standard account credit balance, plus
(ii) interest on (i) to the end of the Plan Year, at
the funding standard account rate.
(b)For each Plan Year beginning with January 1, 2004 through
the end of this Agreement, cash contributions must be made to the USWA Plan
during the Plan Year so that the USWA Plan's funding standard account credit
balance at the end of the Plan Year is at least equal to the Required Credit
Balance; provided, however, that nothing herein shall require any contribution
to be made to the extent any such contribution is not tax deductible in
accordance with the terms of Section IV(d) of this Agreement.
Section VII
JOINT AND SEVERAL LIABILITY
From the Elective Date until the consummation of the
Combination, Holdings, and each entity that is a member of the Holdings
Controlled Group on a particular Contribution Date is a Responsible Entity and
shall be jointly and severally liable for the Required
<PAGE>
9
Contribution due on such Contribution Date; provided, however, that (i) such
member shall not be so liable if it is acquired by Holdings or a member of the
Holdings Controlled Group subsequent to the consummation of the Combination and
all of its financing in excess of $500,000, whether equity or debt, is
non-recourse to, and not guaranteed or contributed by, Holdings or any other
member at the Holdings Controlled Group; and (ii) no stockholder of Holdings
will be liable for any portion of the Required Contribution. This provision does
not apply to required minimum funding contributions under Code Section 412 or to
controlled group liability under ER1SA upon termination of the USWA Plan.
Section VIII
EXPIRATION OF THE AGREEMENT
This Agreement will terminate upon the earliest to occur of
(a), (b), (c), or (d) below but in the case of (a), (b), or (c), no earlier than
September 15, 2003.
(a) The date on which Ultimate Parent obtains ratings on
its unsecured debt from Standard & Poor's and Moody's
of at least BBB- and Baa3, respectively;
(b) The date on which Ultimate Parent demonstrates to
PBGC that the USWA Plan has no amount of unfunded
benefit liabilities as determined under ERISA
Section 4001 (a)(18) as of the last day of the Plan
Year for any two consecutive Plan Years (the last
day of the Plan Year in the second consecutive year
being the measurement date);
(c) In the event there is no rating as provided in
section (a) above, the date on which the Ultimate
Parent obtains a private rating on a hypothetical
issue of unsecured debt at the rating level from S&P
and Moody's of at least BBB- and Baa3, respectively.
For purposes of obtaining such private ratings, the
amount of the hypothetical debt issue will equal at
least $100 million; and
(d) The date on which PBGC receives a Post Distribution
Certification for the USWA Plan pursuant to ERISA
Section 4041(b)(3)(B) and 29 C.F.R. Section 4041.29
indicating that the USWA Plan has been successfully
terminated in a standard termination under ER1SA
Section 4041(b).
<PAGE>
10
Section IX
INFORMATION REQUIREMENTS
The Ultimate Parent shall provide PBGC the following:
(a) Form 5500 when filed with the Internal Revenue
Service and Actuarial Valuation Report no later than
September 30 of the current Plan Year, for the USWA
Plan.
(b) By July 1 of each Plan Year beginning with 1999.
(i) a statement showing, as of May 31 of the
current Plan Year: (x) the total number of
ERBs offered and the total number of ERBs
accepted during the term of this Agreement
and (y) the market value of USWA Plan
assets; and
(ii) a statement and detailed supporting
schedules, certified by the USWA Plan's
enrolled actuary, showing the following
present values as of September 30 of the
current Plan Year:
(A) benefits of the USWA Plan that are
guaranteed by PBGC ("guaranteed
benefits");
(B) guaranteed benefits phased in under
ERISA since the prior September 30;
(C) benefits that would be guaranteed
benefits but are not yet phased in
under ERISA, and the phase-in dates
for such benefits;
(D) total benefit liabilities, as
defined in ERISA Section
400l(a)(16) of ERISA, of the USWA
Plan; and
(E) beginning in 2003, non-guaranteed
benefits payable in Priority
Category 3 pursuant to ERISA
Section 4044.
The present values will be calculated based
on participant data as of January 1 of the
current Plan Year (adjusted for any
significant events that have occurred or are
expected to occur) and PBGC plan termination
assumptions as of March 31 of the current
Plan Year.
(iii) The present values in Section IX(b) may be
calculated using approximation techniques
similar to those employed by the USWA Plan's
enrolled actuary in the estimation of
benefit liabilities used by the parties in
negotiating the Memorandum of Understanding
and outlined in a side letter appended
hereto as Attachment B. PBGC shall have the
right to receive actual calculations if the
approximation techniques described in
Attachment B have not been used.
<PAGE>
11
(c) Certification from the USWA Plan's enrolled actuary
that individual employee data is in sufficient detail
to calculate participant benefits in each Priority
Category at the current January 1 valuation date is
being maintained, and that such data will be supplied
to PBGC if requested.
(d) By December 31 of each Plan Year beginning with the
2003 Plan Year, a certified actuarial statement, plus
supporting calculations, that specifies the USWA
Plan's Required Credit Balance and the amount of the
contribution tor that Plan year that is necessary to
maintain the USWA Plan's Required Credit Balance.
(e) Written notice of failure to make any portion of the
Required Contribution within five (5) business days
after the applicable Contribution Date.
(f) Written notice thirty (30) days prior to any change
in any of the USWA Plan's actuarial assumptions or
methods for the purpose of the minimum funding
standard of Code Section 412, which change shall be
subject to PBGC's consent in advance, such consent
not to be unreasonably withheld.
(g) Written notice sixty (60) days prior to any USWA Plan
merger and/or any transfers of liabilities or assets
described in Code Section 414(1) to or from the USWA
Plan (other than mergers or transfers involving
amounts less than 3% of assets or liabilities in any
Plan Year).
(h) Written notice thirty (30) days prior to any
transaction that would have the effect of
transferring sponsorship of any of the USWA Plan
outside of the Ultimate Parent's Controlled Group.
(i) Written notice of any USWA Plan amendment on the
earlier of (a) 30 days prior to adoption or (b) at
the same time the proposed amendment is sent for
ratification to members of the USWA; provided,
however, that in the case of an amendment to the USWA
Plan that is required by law, written notice within
10 days after adoption of the amendment.
(j) Written notice within thirty (30) days after any
Permitted Closures.
(k) Written notice within thirty (30) days after delivery
or receipt of any notice of default under any debt
instrument of RES or its subsidiaries where the
outstanding balance of such debt instrument exceeds
$10 million.
(l) Written notice thirty (30) days prior to any sale,
transfer or other disposition of assets of any member
of the RES Controlled Group where such entity's
assets (i) represent 20% or more of the book value of
the assets of the RES Controlled Group on a
consolidated basis, or
<PAGE>
12
(ii) generated 20% or more of the consolidated
revenues or operating income of the RES Controlled
Group.
(m) Annual audited consolidated financial statements and
quarterly financial statements.
(n) A copy of any reportable event notice filed with PBGC
pursuant to ERISA Section 4043(b) to the Director of
PBGC's Corporate Finance and Negotiations Department
at the same time such notice is filed.
(o) A concurrent copy of the notice delivered to the USWA
as stated in Article XXXIV Section I of the 1998
Settlement Agreement (or any successor notice
obligation) regarding a Company decision to "close
permanently a plant or discontinue permanently a
department of a plant or substantial portion thereof"
other than a Permitted Closure.
Section X
PRESS RELEASE
Before either party to this Agreement issues a press release
concerning this Agreement or its terms, that party shall provide the other party
to the Agreement with a copy of that press release and 24 hours to comment on
it.
Section XI
REPRESENTATIONS AND WARRANTIES
(a) RES represents and warrants as to itself as follows:
(i) that it has full power and authority to
enter into this Agreement and that this
Agreement constitutes a legal, valid and
binding obligation, enforceable against it
in accordance with its terms; and
(ii) that the person executing this Agreement on
its behalf has been duly authorized and
empowered to execute and deliver this
Agreement on its behalf.
(b) PBGC represents and warrants as to itself as follows:
(i) that it has full power and authority to
enter into this Agreement and that this
Agreement constitutes a legal, valid and
binding obligation, enforceable against it
in accordance with its terms; and
<PAGE>
13
(ii) that the person executing this Agreement on
its behalf has been duly authorized and
empowered to execute and deliver this
Agreement on its behalf.
Section XII
MISCELLANEOUS
(a) Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall, except to the extent preempted by
federal law, be governed by and construed in accordance with the laws of the
State of Delaware without giving effect to its conflict of laws principles.
(b) Enforceability. This Agreement may be enforced only by the
parties hereto. This Agreement is solely for the benefit of the parties hereto
and is not intended to confer upon any person except the parties hereto any
rights or remedies hereunder.
(c) Entire Agreement; Amendments. This Agreement constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof, and merge and supersede all previous agreements, negotiations,
commitments, representations, writings and discussions between them concerning
such subject matter. This Agreement cannot be changed or terminated orally and
can be modified only upon the written consent of all the parties to be bound by
such modification.
(d) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of each
of the parties thereto. No party may, without the written consent of the parties
affected, assign any of its rights or obligations under this Agreement, directly
or indirectly, whether by operation of law or otherwise.
(e) Notices. All notices and other communications hereunder
shall be in writing and shall be delivered to the intended recipient at the
address so specified below or at
<PAGE>
14
such other address as shall be designated by any of them in a notice to each
other party set forth therein. Notices shall be effective three (3) days after
mailing by certified mail and when received if sent by any other means.
Addresses for Notices:
RES Holding Corporation:
Republic Technologies International, Inc.
3770 Embassy Parkway
Akron, Ohio 44333-8367
Attn: Thomas Tyrrell
Fax: (320) 670-3020
With a copy to:
The Blackstone Group
345 Park Avenue
New York, NY 10154
Attn: Robert L. Frudman
Fax: (212) 583-5704
PBGC
Pension Benefit Guaranty Corporation
1200 K Street, N.W.
Washington, DC 20005
Attn: Director, Corporate Finance and
Negotiations Department
Fax: (202) 842-2643
With a copy to:
Pension Benefit Guaranty Corporation
1200 K Street, N.W.
Washington, DC 20005
Attn: General Counsel
Office of General Counsel
Fax: (202) 326-4112
<PAGE>
15
(f) Headings. The titles and headings of the sections of this
Agreement are for convenience of reference only and will not control or affect
in any way the scope, intent or interpretation of any of the provisions of this
Agreement.
(g) Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year first set forth above.
PENSION BENEFIT GUARANTY CORPORATION
By:
----------------------------------
Name: Andrea Schneider
Title: Director, Corporate Finance and
Negotiations Department
RES HOLDING CORPORATION
By:
---------------------------------
Name:
Title:
<PAGE>
EXECUTION COPY
TRANSACTION AND MONITORING FEE AGREEMENT
This Transaction and Monitoring Fee Agreement is entered into as of
August 13, 1999, among Republic Technologies International, LLC, a Delaware
limited liability company (including its successors and assigns, the "Company"),
Blackstone Management Partners L.P., a Delaware limited partnership ("BMP"),
Veritas Capital Management, L.L.C., a Delaware limited liability company
("Veritas"), USX Corporation, a Delaware corporation ("USX"), Kobe Steel USA
Holdings, Inc., a Delaware corporation ("Kobe Steel"), and Kobe Delaware, Inc.,
a Delaware corporation ("Kobe Delaware").
WHEREAS, Bar Technologies Inc., to be renamed Republic Technologies
International, Inc. ("BarTech"), RES Holding Corporation, Republic Engineered
Steels, Inc., RTI Holdings, the Company, Blackstone Capital Partners II Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners II L.P., Blackstone
Family Investment Partnership II L.P., The Veritas Capital Fund, L.P., HVR
Holdings, L.L.C., USX, Kobe, USX Holdings, Kobe Holdings, USX RTI Holdings,
Inc., Kobe RTI Holdings, Inc., Kobe Delaware Inc., Lorain Tubular Company, LLC
and USS/Kobe Steel Company have entered into the Master Restructuring Agreement
dated as of August 13, 1999 (the "Master Restructuring Agreement" and the
transactions contemplated therein, the "Transactions"). Capitalized terms used
and not defined herein shall have the meanings assigned to them in the Master
Restructuring Agreement;
WHEREAS, each of BMP, Veritas, USX and Kobe Steel has undertaken to
facilitate the Transactions (in such capacity, the "Transaction Advisors"),
through each of the Transaction Advisor's provision of the financial and
structural analysis, due diligence investigations and negotiation assistance
necessary for such transactions to be consummated;
WHEREAS, BMP, Veritas, USX and Kobe Delaware, by and through
themselves, their respective affiliates and their respective officers, employees
and representatives, have expertise in the areas of finance, strategy,
investment and acquisitions relating to the business of the Company, and the
Company desires to avail itself, for the term of this Agreement, of the
expertise of BMP, Veritas, USX and Kobe Delaware in the aforesaid areas and BMP,
Veritas, USX and Kobe Delaware wish to provide the services to the Company as
herein set forth (in such capacity, the "Monitoring Parties");
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions contained herein, the parties hereto agree as follows:
<PAGE>
2
SECTION 1
TRANSACTION FEE
Section 1.1 Transaction Fee. In consideration of each of BMP,
Veritas, USX and Kobe Steel undertaking the financial and structural analysis,
due diligence investigations and negotiation assistance necessary in order to
enable the Company to engage in the Transactions, the Company agrees to pay,
immediately upon consummation of the Transactions, a transaction fee in the
amount of (a) $2,100,000 to BMP, (b) $700,000 to Veritas, (c) $600,000 to USX
and (d) $600,000 to Kobe Steel.
Section 1.2 Reimbursements. In addition to the fees payable pursuant
to this Agreement, the Company, shall pay directly or reimburse each of the
Transaction Advisors and its affiliates for the out-of-pocket costs and expenses
incurred by such Transaction Advisor or its affiliates in connection with the
Transactions.
SECTION 2
MONITORING SERVICES AND FEE
Section 2.1 Appointment. The Company hereby appoints each of the
Monitoring Parties to render the advisory and consulting services described in
Section 2.2 hereof for the term of this Agreement.
Section 2.2 Services. Each of the Monitoring Parties hereby agrees
that during the term of this Agreement it shall render to the Company, by and
through itself, its affiliates, and their respective officers, employees and
representatives as each Monitoring Party in its sole discretion shall designate
from time to time, advisory and consulting services in relation to the affairs
of the Company and its subsidiaries, including, without limitation, (i) advice
in designing financing structures and advice regarding relationships with the
Company's and its subsidiaries' lenders and bankers; (ii) advice regarding the
structure and timing of public offerings of debt and equity securities of the
Company and its subsidiaries; (iii) advice regarding property dispositions or
acquisitions; and (iv) such other advice directly related or ancillary to the
above financial advisory services as may be reasonably requested by the Company
(the "Monitoring Services"). It is expressly agreed that the Monitoring Services
shall not include investment banking or other financial advisory services
rendered by each Monitoring Party or its affiliates to the Company in connection
with any specific acquisition, divestiture, refinancing or recapitalization by
the Company or any of its subsidiaries. Each Monitoring Party may be entitled to
receive additional compensation for providing services of the type specified in
the preceding sentence by mutual agreement of the Company or such subsidiary and
such Monitoring Party, subject to Section 2.2(b) and (c) of the Equityholders
Agreement.
Section 2.3 Monitoring Fees. (a) In consideration of the Monitoring
Services, for the term of this Agreement, the Company and its successors, agree
to pay an annual fee (the "Monitoring Fee") of $4.0 million per year to the
Monitoring Parties, (i) $1.5 million of which shall be payable to BMP quarterly
in advance on the first day of each quarter commencing
<PAGE>
3
on the Closing through the date (the "Blackstone Termination Date") on which
affiliates of BMP hold beneficial ownership of less than 66-2/3% of the number
of shares of Common Stock held by them as of the Closing, on a fully-diluted
basis (whether such holdings are represented by shares of Common Stock or common
stock of a successor or acquiring entity into which such shares are converted or
exchanged) (the "Minimum Blackstone Ownership"), or such earlier date as the
Company and BMP shall agree, (ii) $500,000 of which shall be payable to Veritas
quarterly in advance on the first day of each quarter commencing on the Closing
through the date (the AVeritas Termination Date") on which affiliates of Veritas
hold beneficial ownership of less than 66 2/3% of the number of shares of Common
Stock held by them as of the Closing, on a fully-diluted basis (whether such
holdings are represented by shares of Common Stock or common stock of a
successor or acquiring entity into which such shares are converted or exchanged)
(the "Minimum Veritas Ownership"), or such earlier date as the Company and
Veritas shall agree, (iii) $1.0 million of which shall be payable to USX
quarterly in advance on the first day of each quarter commencing on the Closing
through the date (the AUSX Termination Date") on which USX or affiliates of USX
hold beneficial ownership of less than 66 2/3% of the number of shares of Common
Stock (calculated as if the USX Exchange Event had occurred with respect to RTI
Holdings Units held by USX) held by them as of the Closing, on a fully-diluted
basis (whether such holdings are represented by shares of Common Stock or common
stock of a successor or acquiring entity into which such shares are converted or
exchanged) (the "Minimum USX Ownership"), or such earlier date as the Company
and USX shall agree, and (iv) $1.0 million of which shall be payable to Kobe
Delaware quarterly in advance on the first day of each quarter commencing on the
Closing through the date (the "Kobe Termination Date") on which Kobe Delaware or
affiliates of Kobe Delaware hold beneficial ownership of less than 66 2/3% of
the number of shares of Common Stock (calculated as if the Kobe Exchange Event
had occurred with respect to RTI Holdings Units held by Kobe) held by them as of
the Closing, on a fully-diluted basis (whether such holdings are represented by
shares of Common Stock or common stock of a successor or acquiring entity into
which such shares are converted or exchanged) (the "Minimum Kobe Ownership"), or
such earlier date as the Company and Kobe shall agree. With respect to any
Monitoring Party, any Monitoring Fee for the first or last calendar year of this
Agreement shall be prorated for the period of such year commencing on the
Closing through the date of termination. Notwithstanding anything herein to the
contrary, in no event shall the Monitoring Fee accrue and be payable to any of
the Monitoring Parties beyond the sixth anniversary of the Closing Date,
provided, this shall not affect the obligation of the Company to pay Monitoring
Fees accrued through such sixth anniversary that remain unpaid.
(b) In the event that any Monitoring Fees (other than those provided
for in Section 2.3(a) hereof) are paid to BMP or Veritas or their respective
affiliates, a Monitoring Fee equal to 50% of the combined Monitoring Fee paid to
BMP and Veritas and their respective affiliates shall be paid to each of USX and
Kobe Delaware; provided, however, that the foregoing shall not apply to the
provision of financial advisory services by BMP or Veritas or their respective
affiliates on terms that are no less favorable than those that could have been
obtained in a comparable transaction on an arms length basis from a person
unaffiliated with BMP or Veritas or any of their respective affiliates, if
consented to by USX and Kobe in accordance with Section 2.2(b) or (c), as
applicable, of the Equityholders Agreement.
<PAGE>
4
(c) To the extent required by any debt financing of the Company or
its subsidiaries, payment (but not accrual) of the Monitoring Fee shall be
deferred until the earlier of (i) dissolution of the Company, and (ii) the date
payment of such deferred Monitoring Fees is permitted under such debt financing.
Any deferred and unpaid Monitoring Fees shall bear interest at a rate of ten
percent (10%) per annum, compounded annually, from the date deferred until paid.
Section 2.4 Reimbursements. In addition to the fees payable pursuant
to this Agreement, for so long as a Monitoring Party is entitled to a Monitoring
Fee hereunder, the Company shall pay directly or reimburse such Monitoring Party
for its Out-of-Pocket Expenses (as defined below). Promptly following the
Company's request therefor, a Monitoring Party will provide written back-up
relating to any Out-of-Pocket Expenses to be paid or reimbursed by the Company
pursuant to this Agreement. For the purposes of this Agreement, the term
AOut-of-Pocket Expenses" shall mean the out-of-pocket costs and expenses
incurred by a Monitoring Party or its affiliates in connection with the
Monitoring Services, including, without limitation, (i) fees and disbursements
of any independent professionals and organizations, including independent
accountants, outside legal counsel or consultants, (ii) costs of any outside
services or independent contractors such as financial printers, couriers,
business publications, on-line financial services or similar services and (iii)
transportation, per diem costs, word processing expenses or any similar expense
not associated with its ordinary operations; provided, however, that no expenses
of an affiliate of a Monitoring Party will be Out-of-Pocket Expenses for
purposes of this Agreement unless agreed to in writing by the other Monitoring
Parties. All reimbursements for Out-of-Pocket Expenses shall be made promptly
upon or as soon as practicable after presentation by a Monitoring Party to the
Company of a written statement thereof.
SECTION 3
INDEMNIFICATION
Section 3.1 BMP Indemnification. The Company will indemnify and hold
harmless BMP, its affiliates and their respective partners (both general and
limited), members (both managing and otherwise), officers, directors, employees,
agents and representatives (each such person being a ABlackstone Indemnified
Party") from and against any and all losses, claims, damages and liabilities,
whether joint or several (the ALiabilities"), related to, arising out of or in
connection with the advisory and consulting services contemplated by this
Agreement or the engagement of BMP pursuant to, and the performance by BMP of
the services contemplated by, this Agreement, whether or not pending or
threatened, whether or not a Blackstone Indemnified Party is a party, whether or
not resulting in any liability and whether or not such action, claim, suit,
investigation or proceeding is initiated or brought by the Company. The Company
will reimburse any Blackstone Indemnified Party for all reasonable costs and
expenses (including reasonable attorneys' fees and expenses) as they are
incurred in connection with investigating, preparing, pursuing, defending or
assisting in the defense of any action, claim, suit, investigation or proceeding
for which the Blackstone Indemnified Party would be entitled to indemnification
under the terms of the previous sentence, or any action or proceeding arising
therefrom, whether or not such Blackstone Indemnified Party is a party thereto.
The Company
<PAGE>
5
will not be liable under the foregoing indemnification provision with respect to
any Blackstone Indemnified Party, to the extent that any loss, claim, damage,
liability, cost or expense is determined by a court, in a final judgment from
which no further appeal may be taken, to have resulted primarily from the gross
negligence or willful misconduct of BMP. If a Blackstone Indemnified Party is
reimbursed hereunder for any expenses, such reimbursement of expenses shall be
refunded to the extent it is finally judicially determined that the Liabilities
in question resulted primarily from the gross negligence or willful misconduct
of BMP.
Section 3.2 Veritas Indemnification. The Company will indemnify and
hold harmless Veritas, its affiliates and their respective partners (both
general and limited), members (both managing and otherwise), officers,
directors, employees, agents and representatives (each such person being a
"Veritas Indemnified Party") from and against any and all Liabilities, related
to, arising out of or in connection with the advisory and consulting services
contemplated by this Agreement or the engagement of Veritas pursuant to, and the
performance by Veritas of the services contemplated by, this Agreement, whether
or not pending or threatened, whether or not a Veritas Indemnified Party is a
party, whether or not resulting in any liability and whether or not such action,
claim, suit, investigation or proceeding is initiated or brought by the Company.
The Company will reimburse any Veritas Indemnified Party for all reasonable
costs and expenses (including reasonable attorneys' fees and expenses) as they
are incurred in connection with investigating, preparing, pursuing, defending or
assisting in the defense of any action, claim, suit, investigation or proceeding
for which the Veritas Indemnified Party would be entitled to indemnification
under the terms of the previous sentence, or any action or proceeding arising
therefrom, whether or not such Veritas Indemnified Party is a party thereto. The
Company will not be liable under the foregoing indemnification provision with
respect to any Veritas Indemnified Party, to the extent that any loss, claim,
damage, liability, cost or expense is determined by a court, in a final judgment
from which no further appeal may be taken, to have resulted primarily from the
gross negligence or willful misconduct of Veritas. If a Veritas Indemnified
Party is reimbursed hereunder for any expenses, such reimbursement of expenses
shall be refunded to the extent it is finally judicially determined that the
Liabilities in question resulted primarily from the gross negligence or willful
misconduct of Veritas.
Section 3.3 USX Indemnification. The Company will indemnify and hold
harmless USX, its affiliates and their respective partners (both general and
limited), members (both managing and otherwise), officers, directors, employees,
agents and representatives (each such person being an "USX Indemnified Party")
from and against any and all Liabilities, related to, arising out of or in
connection with the advisory and consulting services contemplated by this
Agreement or the engagement of USX pursuant to, and the performance by USX of
the services contemplated by, this Agreement, whether or not pending or
threatened, whether or not a USX Indemnified Party is a party, whether or not
resulting in any liability and whether or not such action, claim, suit,
investigation or proceeding is initiated or brought by the Company. The Company
will reimburse any USX Indemnified Party for all reasonable costs and expenses
(including reasonable attorneys' fees and expenses) as they are incurred in
connection with investigating, preparing, pursuing, defending or assisting in
the defense of any action, claim, suit, investigation or proceeding for which
the USX Indemnified Party would be entitled to indemnification under the terms
of the previous sentence, or any action or proceeding arising therefrom, whether
or not such USX Indemnified Party is a party thereto. The Company will not be
liable under the foregoing indemnification provision with respect to any USX
Indemnified
<PAGE>
6
Party, to the extent that any loss, claim, damage, liability, cost or expense is
determined by a court, in a final judgment from which no further appeal may be
taken, to have resulted primarily from the gross negligence or willful
misconduct of USX. If a USX Indemnified Party is reimbursed hereunder for any
expenses, such reimbursement of expenses shall be refunded to the extent it is
finally judicially determined that the Liabilities in question resulted
primarily from the gross negligence or willful misconduct of USX.
Section 3.4 Kobe Delaware Indemnification. The Company will
indemnify and hold harmless Kobe Delaware, its affiliates and their respective
partners (both general and limited), members (both managing and otherwise),
officers, directors, employees, agents and representatives (each such person
being a "Kobe Indemnified Party") from and against any and all Liabilities,
related to, arising out of or in connection with the advisory and consulting
services contemplated by this Agreement or the engagement of Kobe Delaware
pursuant to, and the performance by Kobe Delaware of the services contemplated
by, this Agreement, whether or not pending or threatened, whether or not a Kobe
Indemnified Party is a party, whether or not resulting in any liability and
whether or not such action, claim, suit, investigation or proceeding is
initiated or brought by the Company. The Company will reimburse any Kobe
Indemnified Party for all reasonable costs and expenses (including reasonable
attorneys' fees and expenses) as they are incurred in connection with
investigating, preparing, pursuing, defending or assisting in the defense of any
action, claim, suit, investigation or proceeding for which the Kobe Indemnified
Party would be entitled to indemnification under the terms of the previous
sentence, or any action or proceeding arising therefrom, whether or not such
Kobe Indemnified Party is a party thereto. The Company will not be liable under
the foregoing indemnification provision with respect to any Kobe Indemnified
Party, to the extent that any loss, claim, damage, liability, cost or expense is
determined by a court, in a final judgment from which no further appeal may be
taken, to have resulted primarily from the gross negligence or willful
misconduct of Kobe Delaware. If a Kobe Indemnified Party is reimbursed hereunder
for any expenses, such reimbursement of expenses shall be refunded to the extent
it is finally judicially determined that the Liabilities in question resulted
primarily from the gross negligence or willful misconduct of Kobe Delaware.
SECTION 4
TERM OF AGREEMENT
Section 4.1 Term. This Agreement shall be effective as of the date
hereof and shall continue until the later of the Blackstone Termination Date,
the Veritas Termination Date, USX Termination Date or the Kobe Termination Date,
provided that Sections 2.3(c) and 2.4 shall remain in effect with respect to
Out-of-Pocket Expenses incurred prior to termination hereof. The provisions of
Sections 3 and 5 and otherwise as the context so requires shall survive the
termination of this Agreement.
SECTION 5
ADDITIONAL AGREEMENTS OF THE COMPANY
<PAGE>
7
Section 5.1 Accuracy of Information. The Company shall furnish or
cause to be furnished to each Monitoring Party such information as such
Monitoring Party believes appropriate to its monitoring services hereunder and
to the ownership by affiliates of such Monitoring Party of shares of BarTech
(all such information so furnished being the "Information"). The Company
recognizes and confirms that each of the Monitoring Parties (i) will use and
rely primarily on the Information and on information available from generally
recognized public sources in performing the services contemplated by this
Agreement without having independently verified the same, (ii) does not assume
responsibility for the accuracy or completeness of the Information and such
other information and (iii) is entitled to rely upon the Information without
independent verification.
Section 5.2 Permissible Activities. Subject to applicable law and to
any non-competition/non-solicitation provisions of the Master Restructuring
Agreement, nothing herein shall in any way preclude any of BMP, Veritas, USX,
Kobe Steel and Kobe Delaware, their respective affiliates or their respective
partners (both general and limited), members (both managing and otherwise),
officers, directors, employees, agents or representatives from engaging in any
business activities or from performing services for its or their own account or
for the account of others, including for companies that may be in competition
with the business conducted by the Company.
SECTION 6
MISCELLANEOUS
Section 6.1 Amendments; Waiver. No amendment or waiver of any
provision of this Agreement, or consent to any departure by either party hereto
from any such provision, shall be effective unless the same shall be in writing
and signed by all of the parties hereto. Any amendment, waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given. The waiver by any party of any breach of this Agreement shall not
operate as or be construed to be a waiver by such party of any subsequent
breach.
Section 6.2 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if delivered personally or sent
by telecopier, Federal Express, or other overnight courier, addressed as follows
or to such other address of which the parties may have given notice:
If to BMP: c/o The Blackstone Group L.P.
345 Park Avenue, 31st Floor
New York, New York 10154
Attention: David A. Stockman
Telecopy: (212) 754-8720
If to Veritas: Veritas Capital Management, L.L.C.
660 Madison Avenue
New York, New York 10021
<PAGE>
8
Attention: Robert B. McKeon
Telecopy: (212) 688-9411
If to USX: USX Corporation
600 Grant Street
Pittsburgh, Pennsylvania 15219-4776
Attention: A.E. Ferrara, Jr.
Telecopy: (412) 433-1176
If to Kobe: Kobe Steel, Ltd.
10-26-Wakinohama 2-Chome
Chao-Ku, Kobe, Hyugo 651-0072
Attention: Shinsuke Asai
Telecopy: 011-81-78-261-5444
If to the Company: Republic Technologies International, LLC
3770 Embassy Parkway
Akron, Ohio 44333-8367
Attention: Thomas N. Tyrrell
Telecopy: (330) 670-3020
Unless otherwise specified herein, such notices or other communications shall be
deemed received (i) on the date delivered, if delivered personally or sent by
telecopier, and (ii) one business day after being sent by Federal Express or
other overnight courier.
Section 6.3 Entire Agreement. This Agreement shall constitute the
entire agreement between the parties with respect to the subject matter hereof,
and shall supersede all other previous oral and written (and all contemporaneous
oral) negotiations, commitments, agreements and understandings relating hereto.
Section 6.4 Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York.
Section 6.5 Assignments and Successors. This Agreement shall inure
to the benefit of, and be binding upon, BMP, Veritas, USX, Kobe Steel, Kobe
Delaware and the Company and their respective successors and assigns. The
Provisions of Section 3 shall inure to the benefit of each Indemnified Party.
Section 6.6 Counterparts. This Agreement may be executed by one or
more parties to this Agreement on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.
Section 6.7 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
<PAGE>
9
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers or agents as of the
date first above written.
BLACKSTONE MANAGEMENT PARTNERS L.P.
By: Blackstone Management Associates
L.L.C., its general partner
By: /s/ Robert L. Friedman
-------------------------------------
Name: Robert L. Friedman
Title: Member
VERITAS CAPITAL MANAGEMENT, L.L.C.
By:/s/ Robert B. McKeon
-------------------------------------
Name: Robert B. McKeon
Title: Member
USX CORPORATION
By: /s/ A.E. Ferrara, Jr.
-------------------------------------
Name: A.E. Ferrara, Jr.
Title: Vice President
KOBE STEEL USA, INC.
By: /s/ Susumu Okushima
-------------------------------------
Name: Susumu Okushima
Title:
<PAGE>
KOBE DELAWARE, INC.
By: /s/ Nobuyuki Kurosu
-------------------------------------
Name: Nobuyuki Kurosu
Title: Secretary
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By: /s/ John B. George
-------------------------------------
Name: John B. George
Title: Vice President of Finance,
Treasurer and Secretary
<PAGE>
Exhibit 21
Subsidiaries of Republic Technologies International, LLC
RTI Capital Corp.
Bliss & Laughlin, LLC
Canadian Drawn Steel Company, Inc.
Nimishillen & Tuscarawas, LLC
Oberlin Insurance Company
Subsidiaries of RTI Capital Corp.
None
<PAGE>
FORM T-1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) _______
------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
Republic Technologies International, LLC
(Exact name of obligor as specified in its charter)
Delaware None
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
------------------
RTI Capital Corp.
(Exact name of obligor as specified in its charter)
Delaware 34-1900904
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3770 Embassy Parkway
Akron, Ohio 44333-8367
(Address of principal executive offices) (Zip Code)
------------------
13-3/4% Senior Secured Notes due 2009
(Title of the indenture securities)
================================================================================
<PAGE>
- 2 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Republic Technologies International, LLC and RTI Capital Corp. currently
are not in default. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9,
10, 11, 12, 13, 14 and 15 of Form T-1 are not required under General
Instruction B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by
the State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 3 -
16. List of Exhibits
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section
321(b) of the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of November 18, 1999, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 18th day
of November 1999.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/Cynthia Chaney
---------------------------
Cynthia Chaney
Assistant Vice President
<PAGE>
Exhibit T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
----------------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
JUNE 30, 1999
($ IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 237,532
Short-Term Investments 155,678
Securities, Available for Sale 505,561
Loans 2,312,569
Less: Allowance for Credit Losses 17,486
-----------
Net Loans 2,295,083
Premises and Equipment 56,119
Other Assets 128,087
-----------
Total Assets $ 3,378,060
===========
LIABILITIES
Deposits:
Non-Interest Bearing $ 815,644
Interest Bearing 1,931,882
-----------
Total Deposits 2,747,526
Short-Term Credit Facilities 310,113
Accounts Payable and Accrued Liabilities 131,638
-----------
Total Liabilities $ 3,189,277
===========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 121,974
Unrealized Loss on Securities
Available for Sale (Net of Taxes) (1,227)
-----------
Total Stockholder's Equity 188,783
-----------
Total Liabilities and
Stockholder's Equity $ 3,378,060
===========
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
August 23, 1999
<PAGE>
LETTER OF TRANSMITTAL
FOR
13 3/4% SENIOR SECURED NOTES DUE 2009
OF
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
RTI CAPITAL CORP.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON (THE "EXPIRATION DATE") UNLESS EXTENDED
The Exchange Agent is:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
For Delivery by Registered or Certified Mail: For Overnight Delivery Only or by Hand:
United States Trust Company of New York United States Trust Company of New York
[Address] [Address]
Attention: Attention:
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
[fax number]
Attention:
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated
, 1999 (the "Prospectus") of Republic Technologies
International, LLC and RTI Capital Corp. (the "Issuers"), and this Letter of
Transmittal (the "Letter of Transmittal"), which together describe the Issuers'
offer (the "Exchange Offer") to exchange their 13 3/4% Senior Secured Notes due
2009, which have been registered under the Securities Act of 1933, as amended
(the "Securities Act") (the "Exchange Notes") for each of their outstanding
13 3/4% Senior Secured Notes due 2009 (the "Outstanding Notes" and, together
with the Exchange Notes, the "Notes") from the holders thereof.
The terms of the Exchange Notes are identical in all material respects
(including principal amount, interest rate and maturity) to the terms of the
Outstanding Notes for which they may be exchanged pursuant to the Exchange
Offer, except that the Exchange Notes are freely transferable by holders thereof
(except as provided herein or in the Prospectus).
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
<PAGE>
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND
THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW.
List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate numbers and
aggregate principal amounts should be listed on a separate signed schedule
affixed hereto.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES TENDERED HEREWITH
- -----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED AGGREGATE PRINCIPAL
HOLDER(S) AMOUNT REPRESENTED BY PRINCIPAL AMOUNT
(PLEASE FILL IN) CERTIFICATE NUMBER(S)* OUTSTANDING NOTES* TENDERED**
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
TOTAL
-------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by such Outstanding Notes. See
instruction 2.
Holders of Outstanding Notes whose Outstanding Notes are not immediately
available or who cannot deliver all other required documents to the Exchange
Agent on or prior to the Expiration Date or who cannot complete the procedures
for book-entry transfer on a timely basis, must tender their Outstanding Notes
according to the guaranteed delivery procedures set forth in the Prospectus.
Unless the context otherwise requires, the term "holder" for purposes of
this Letter of Transmittal means any person in whose name Outstanding Notes are
registered or any other person who has obtained a properly completed bond power
from the registered holder or any person whose Outstanding Notes are held of
record by The Depository Trust Company ("DTC").
/ / CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s): __________________________________________________
Name of Eligible Institution that Guaranteed Delivery: _________________________
Date of Execution of Notice of Guaranteed Delivery: ____________________________
If Delivered by Book-Entry Transfer:
Name of Tendering Institution: _________________________________________________
Account Number: ________________________________________________________________
Transaction Code Number: _______________________________________________________
/ / CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO PERSON OTHER THAN
PERSON SIGNING THIS LETTER OF TRANSMITTAL:
Name: __________________________________________________________________________
Address: _______________________________________________________________________
2
<PAGE>
/ / CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO ADDRESS DIFFERENT FROM
THAT LISTED ELSEWHERE IN THIS LETTER OF TRANSMITTAL:
Name: __________________________________________________________________________
Address: _______________________________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED OUTSTANDING NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES
AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF
ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: __________________________________________________________________________
Address: _______________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Outstanding Notes that were acquired
as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. A broker-dealer may not
participate in the Exchange Offer with respect to Outstanding Notes acquired
other than as a result of market-making activities or other trading activities.
Any holder who is an "affiliate" of the Issuers or who has an arrangement or
understanding with respect to the distribution of the Exchange Notes to be
acquired pursuant to the Exchange Offer, or any broker-dealer who purchased
Outstanding Notes from the Issuers to resell pursuant to Rule 144A under the
Securities Act or any other available exemption under the Securities Act must
comply with the registration and prospectus delivery requirements under the
Securities Act.
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Issuers the principal amount of the
Outstanding Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of all or any portion of the Outstanding Notes tendered
herewith in accordance with the terms and conditions of the Exchange Offer
(including, if the Exchange Offer is extended or amended, the terms and
conditions of any such extension or amendment), the undersigned hereby
exchanges, assigns and transfers to, or upon the order of, the Issuers all
right, title and interest in and to such Outstanding Notes as are being tendered
herewith. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent as its true and lawful agent and attorney-in-fact of the
undersigned (with full knowledge that the Exchange Agent also acts as the agent
of the Issuers, in connection with the Exchange Offer) to cause the Outstanding
Notes to be assigned, transferred and exchanged.
The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Outstanding Notes and to
acquire Exchange Notes issuable upon the exchange of such tendered Outstanding
Notes, and that, when the same are accepted for exchange, the Issuers will
acquire good and unencumbered title to the tendered Outstanding Notes, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim. The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Issuers to be necessary or desirable to complete the exchange, assignment and
transfer of the tendered Outstanding Notes or transfer ownership of such
Outstanding Notes on the account books maintained by the book-entry transfer
facility. The undersigned further agrees that acceptance of any and all validly
tendered Outstanding Notes by the Issuers and the issuance of Exchange Notes in
exchange therefor shall constitute performance in full by the Issuers of their
obligations under the Notes Exchange and Registration Rights Agreement dated as
of August 13, 1999, among the Issuers, Republic Technologies International
Holdings, LLC, Nimishillen & Tuscarawas, LLC, Bliss & Laughlin, LLC, Canadian
Drawn Steel Company, Inc., Chase Securities Inc., Donaldson, Lufkin & Jenrette
Securities Corporation and BancBoston Robertson Stephens Inc. (the "Registration
Rights Agreement"), and that the Issuers shall have no further obligations or
liabilities thereunder except as provided in the first paragraph of Section 3 of
such agreement. The undersigned will comply with its obligations under the
Registration Rights Agreement. The undersigned has read and agrees to all terms
of the Exchange Offer.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer--Conditions to the Exchange
Offer." The undersigned recognizes that as a result of these conditions (which
may be waived, in whole or in part, by the Issuers), as more particularly set
forth in the Prospectus, the Issuers may not be required to exchange any of the
Outstanding Notes tendered hereby and, in such event, the Outstanding Notes not
exchanged will be returned to the undersigned at the address shown above,
promptly following the expiration or termination of the Exchange Offer. In
addition, the Issuers may amend the Exchange Offer at any time prior to the
Expiration Date if any of the conditions set forth under "The Exchange
Offer--Conditions to the Exchange Offer" occur.
The undersigned understands that tenders of Outstanding Notes pursuant to
any one of the procedures described in the Prospectus and in the instructions
attached hereto will, upon the Issuers' acceptance for exchange of such tendered
Outstanding Notes, constitute a binding agreement between the undersigned and
the Issuers upon the terms and subject to the conditions of the Exchange Offer.
The undersigned recognizes that, under circumstances set forth in the
Prospectus, the Issuers may not be required to accept for exchange any of the
Outstanding Notes.
By tendering shares of Outstanding Notes and executing this Letter of
Transmittal, the undersigned represents that Exchange Notes acquired in the
exchange will be obtained in the ordinary course of business of the undersigned,
that the undersigned has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of such
Exchange Notes, that the undersigned is not an "affiliate" of the Issuers within
the meaning of Rule 405 under the Securities Act and that if the undersigned or
the person receiving such Exchange Notes, whether or not such person is the
undersigned, is not a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, a distribution of Exchange Notes.
If the undersigned or the person receiving such Exchange Notes, whether or not
such person is the undersigned, is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Outstanding Notes that were acquired
as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the
4
<PAGE>
Securities Act. If the undersigned is a person in the United Kingdom, the
undersigned represents that its ordinary activities involve it in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of its business.
Any holder of Outstanding Notes using the Exchange Offer to participate in
a distribution of the Exchange Notes (i) cannot rely on the position of the
staff of the Securities and Exchange Commission enunciated in its interpretive
letter with respect to Exxon Capital Holdings Corporation (available April 13,
1989) or similar interpretive letters and (ii) must comply with the registration
and prospectus requirements of the Securities Act in connection with a secondary
resale transaction.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered Outstanding Notes may be withdrawn at
any time prior to the Expiration Date in accordance with the terms of this
Letter of Transmittal. Except as stated in the Prospectus, this tender is
irrevocable.
Certificates for all Exchange Notes delivered in exchange for tendered
Outstanding Notes and any Outstanding Notes delivered herewith but not
exchanged, and registered in the name of the undersigned, shall be delivered to
the undersigned at the address shown below the signature of the undersigned.
The undersigned, by completing the box entitled "Description of Outstanding
Notes Tendered Herewith" above and signing this letter, will be deemed to have
tendered the Outstanding Notes as set forth in such box.
5
<PAGE>
TENDERING HOLDER(S) SIGN HERE
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Outstanding Notes hereby tendered or in whose name
Outstanding Notes are registered on the books of DTC or one of its participants,
or by any person(s) authorized to become the registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please set forth
the full title of such person. See Instruction 3.
________________________________________________________________________________
________________________________________________________________________________
(SIGNATURE(S) OF HOLDER(S))
Date: __________________________________________________________________________
Name(s): _______________________________________________________________________
(PLEASE PRINT)
________________________________________________________________________________
Capacity (full title): _________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(INCLUDING ZIP CODE)
Daytime Area Code and Telephone No.: ___________________________________________
Taxpayer Identification No.: ___________________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTION 3)
Authorized Signature: __________________________________________________________
Dated: _________________________________________________________________________
Name: __________________________________________________________________________
Title: _________________________________________________________________________
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ___________________________________________________
6
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if Exchange Notes or Outstanding Notes not tendered
are to be issued in the name of someone other than the registered holder of the
Outstanding Notes whose name(s) appear(s) above.
Issue
/ / Outstanding Notes not tendered to:
/ / Exchange Notes to:
Name(s): _______________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.: ___________________________________________
Tax Identification No.: ________________________________________________________
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if Exchange Notes or Outstanding Notes not tendered
are to be sent to someone other than the registered holder of the Outstanding
Notes whose name(s) appear(s) above, or such registered holder(s) at an address
other than that shown above.
Mail
/ / Outstanding Notes not tendered to:
/ / Exchange Notes to:
Name(s): _______________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ___________________________________________________
7
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. A holder of Outstanding Notes may tender the same by (i)
properly completing and signing this Letter of Transmittal or a facsimile hereof
(all references in the Prospectus to the Letter of Transmittal shall be deemed
to include a facsimile thereof) and delivering the same, together with the
certificate or certificates, if applicable, representing the Outstanding Notes
being tendered and any required signature guarantees and any other documents
required by this Letter of Transmittal, to the Exchange Agent at its address set
forth above on or prior to the Expiration Date, or (ii) complying with the
procedure for book-entry transfer described below, or (iii) complying with the
guaranteed delivery procedures described below.
Holders of Outstanding Notes may tender Outstanding Notes by book-entry
transfer by crediting the Outstanding Notes to the Exchange Agent's account at
DTC in accordance with DTC's Automated Tender Offer Program ("ATOP") and by
complying with applicable ATOP procedures with respect to the Exchange Offer.
DTC participants that are accepting the Exchange Offer should transmit their
acceptance to DTC, which will edit and verify the acceptance and execute a
book-entry delivery to the Exchange Agent's account at DTC. DTC will then send a
computer-generated message (an "Agent's Message") to the Exchange Agent for its
acceptance in which the holder of the Outstanding Notes acknowledges and agrees
to be bound by the terms of, and makes the representations and warranties
contained in, this Letter of Transmittal, the DTC participant confirms on behalf
of itself and the beneficial owners of such Outstanding Notes all provisions of
this Letter of Transmittal (including any representations and warranties)
applicable to it and such beneficial owner as fully as if it had completed the
information required herein and executed and transmitted this Letter of
Transmittal to the Exchange Agent. Delivery of the Agent's Message by DTC will
satisfy the terms of the Exchange Offer as to execution and delivery of a Letter
of Transmittal by the participant identified in the Agent's Message. DTC
participants may also accept the Exchange Offer by submitting a Notice of
Guaranteed Delivery through ATOP.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OUTSTANDING NOTES
AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER, AND
EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY
MAIL, IT IS SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, BE USED. IN ALL CASES SUFFICIENT TIME SHOULD BE ALLOWED TO
PERMIT TIMELY DELIVERY. NO OUTSTANDING NOTES OR LETTERS OF TRANSMITTAL SHOULD BE
SENT TO THE ISSUERS.
Holders whose Outstanding Notes are not immediately available or who cannot
deliver their Outstanding Notes and all other required documents to the Exchange
Agent on or prior to the Expiration Date or comply with book-entry transfer
procedures on a timely basis must tender their Outstanding Notes pursuant to the
guaranteed delivery procedure set forth in the Prospectus. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible Institution
(as defined below); (ii) on or prior to the Expiration Date, the Exchange Agent
must have received from such Eligible Institution a letter, telegram or
facsimile transmission (receipt confirmed by telephone and an original delivered
by guaranteed overnight courier) setting forth the name and address of the
tendering holder, the names in which such Outstanding Notes are registered, and,
if applicable, the certificate numbers of the Outstanding Notes to be tendered;
and (iii) all tendered Outstanding Notes (or a confirmation of any book-entry
transfer of such Outstanding Notes into the Exchange Agent's account at a
book-entry transfer facility) as well as this Letter of Transmittal and all
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent within three New York Stock Exchange trading days after the date
of execution of such letter, telegram or facsimile transmission, all as provided
in the Prospectus.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Outstanding Notes for exchange.
2. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal amount
of Outstanding Notes evidenced by a submitted certificate is tendered, the
tendering holder must fill in the aggregate principal amount of Outstanding
Notes tendered in the box entitled "Description of Outstanding Notes Tendered
Herewith." A newly issued certificate for the Outstanding Notes submitted but
not tendered will be sent to such holder as soon as practicable after the
Expiration Date. All Outstanding Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise clearly indicated.
If not yet accepted, a tender pursuant to the Exchange Offer may be
withdrawn prior to the Expiration Date.
8
<PAGE>
To be effective with respect to the tender of Outstanding Notes, a written
notice of withdrawal must: (i) be received by the Exchange Agent at one of the
addresses for the Exchange Agent set forth above before the Issuers notify the
Exchange Agent that it has accepted the tender of Outstanding Notes pursuant to
the Exchange Offer; (ii) specify the name of the person who tendered the
Outstanding Notes to be withdrawn; (iii) identify the Outstanding Notes to be
withdrawn (including the principal amount of such Outstanding Notes, or, if
applicable, the certificate numbers shown on the particular certificates
evidencing such Outstanding Notes and the principal amount of Outstanding Notes
represented by such certificates); (iv) include a statement that such holder is
withdrawing its election to have such Outstanding Notes exchanged; and (v) be
signed by the holder in the same manner as the original signature on this Letter
of Transmittal (including any required signature guarantee). The Exchange Agent
will return the properly withdrawn Outstanding Notes promptly following receipt
of notice of withdrawal. If Outstanding Notes have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn Outstanding Notes or otherwise comply with the
book-entry transfer facility's procedures. All questions as to the validity of
notices of withdrawals, including time of receipt, will be determined by the
Issuers, and such determination will be final and binding on all parties.
Any Outstanding Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Outstanding Notes
which have been tendered for exchange but which are not exchanged for any reason
will be returned to the holder thereof without cost to such holder (or, in the
case of Outstanding Notes tendered by book-entry transfer into the Exchange
Agent's account at the book entry transfer facility pursuant to the book-entry
transfer procedures described above, such Outstanding Notes will be credited to
an account with such book-entry transfer facility specified by the holder) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Outstanding Notes may be retendered by
following one of the procedures described under the caption "The Exchange
Offer--Procedures for Tendering" in the Prospectus at any time prior to the
Expiration Date.
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered holder(s) of the Outstanding Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the
certificates without alteration, enlargement or any change whatsoever.
If any of the Outstanding Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Outstanding Notes registered in different names are
tendered, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Outstanding Notes.
When this Letter of Transmittal is signed by the registered holder or
holders (which term, for the purposes described herein, shall include the
book-entry transfer facility whose name appears on a security listing as the
owner of the Outstanding Notes) of Outstanding Notes listed and tendered hereby,
no endorsements of certificates or separate written instruments of transfer or
exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of the Outstanding Notes listed, such Outstanding
Notes must be endorsed or accompanied by separate written instruments of
transfer or exchange in form satisfactory to the Issuers and duly executed by
the registered holder, in either case signed exactly as the name or names of the
registered holder or holders appear(s) on the Outstanding Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Issuers, proper evidence
satisfactory to the Issuers of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by an
Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution, unless Outstanding Notes are tendered: (i) by a holder who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter of Transmittal; or (ii) for the account of an
Eligible Institution (as defined below). In the event that the signatures in
this Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by an eligible guarantor
institution which is a member of a firm of a registered national securities
9
<PAGE>
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another "eligible institution" within the meaning of Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (an "Eligible
Institution"). If Outstanding Notes are registered in the name of a person other
than the signer of this Letter of Transmittal, the Outstanding Notes surrendered
for exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Issuers, in their sole discretion, duly executed by the registered holder with
the signature thereon guaranteed by an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate, as applicable, the name and address to which the Exchange Notes or
certificates for Outstanding Notes not exchanged are to be issued or sent, if
different from the name and address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the tax identification
number of the person named must also be indicated. Holders tendering Outstanding
Notes by book-entry transfer may request that Outstanding Notes not exchanged be
credited to such account maintained at the book-entry transfer facility as such
holder may designate.
5. TRANSFER TAXES. The Issuers shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Outstanding Notes to them or their
order pursuant to the Exchange Offer. If a transfer tax is imposed for any
reason other than the transfer and exchange of Outstanding Notes to the Issuers
or their order pursuant to the Exchange Offer, the amount of any such transfer
taxes (whether imposed on the registered holder or any other person) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exception therefrom is not submitted herewith the amount of such
transfer taxes will be billed directly to such tendering holder.
6. WAIVER OF CONDITIONS. The Issuers reserve the absolute right to waive,
in whole or in part, any of the conditions to the Exchange Offer set forth in
the Prospectus.
7. MUTILATED, LOST, STOLEN OR DESTROYED SECURITIES. Any holder whose
Outstanding Notes have been mutilated, lost, stolen or destroyed, should contact
the Exchange Agent at the address indicated below for further instructions.
8. SUBSTITUTE FORM W-9. Each holder of Outstanding Notes whose Outstanding
Notes are accepted for exchange (or other payee) is required to provide a
correct taxpayer identification number ("TIN"), generally the holder's Social
Security or federal employer identification number, and certain other
information, on Substitute Form W-9, which is provided under "Important Tax
Information" below, and to certify that the holder (or other payee) is not
subject to backup withholding. Failure to provide the information on the
Substitute Form W-9 may subject the holder (or other payee) to a $50 penalty
imposed by the Internal Revenue Service and 31% federal income tax backup
withholding on payments made in connection with the Outstanding Notes. The box
in Part 3 of the Substitute Form W-9 may be checked if the holder (or other
payee) has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked and a TIN is not
provided by the time any payment is made in connection with the Outstanding
Notes, 31% of all such payments will be withheld until a TIN is provided.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the address and telephone number set forth above. In addition, all questions
relating to the Exchange Offer, as well as requests for assistance or additional
copies of the Prospectus and this Letter of Transmittal, may be directed to the
Exchange Agent at the address and telephone number indicated above.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE OR COPY THEREOF
(TOGETHER WITH CERTIFICATES OF OUTSTANDING NOTES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY
MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
10
<PAGE>
IMPORTANT TAX INFORMATION
Under U.S. Federal income tax law, a holder of Outstanding Notes whose
Outstanding Notes are accepted for exchange may be subject to backup withholding
unless the holder provides United States Trust Company of New York, as Paying
Agent (the "Paying Agent"), through the Exchange Agent, with either (i) such
holder's correct taxpayer identification number ("TIN") on Substitute Form W-9
attached hereto, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such holder of Outstanding Notes is awaiting a TIN) and that
(A) the holder of Outstanding Notes has not been notified by the Internal
Revenue Service that he or she is subject to backup withholding as a result of a
failure to report all interest or dividends or (B) the Internal Revenue Service
has notified the holder of Outstanding Notes that he or she is no longer subject
to backup withholding; or (ii) an adequate basis for exemption from backup
withholding. If such holder of Outstanding Notes is an individual, the TIN is
such holder's social security number. If the Paying Agent is not provided with
the correct TIN, the holder of Outstanding Notes may be subject to certain
penalties imposed by the Internal Revenue Service.
Certain holders of Outstanding Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. However, exempt holders of Outstanding
Notes should indicate their exempt status on Substitute Form W-9. For example, a
corporation must complete the Substitute Form W-9, providing its TIN and
indicating that it is exempt from backup withholding. In order for a foreign
individual to qualify as an exempt recipient, the holder must submit a Form W-8,
signed under penalties of perjury, attesting to that individual's exempt status.
A Form W-8 can be obtained from the Paying Agent. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9" for
more instructions.
If backup withholding applies, the Paying Agent is required to withhold 31%
of any such payments made to the holder of Outstanding Notes or other payee.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
surrendering holder of Outstanding Notes has not been issued a TIN and has
applied for a TIN or intends to apply for a TIN in the near future. If the box
in Part 3 is checked, the holder of Outstanding Notes or other payee must also
complete the Certificate of Awaiting Taxpayer Identification Number below in
order to avoid backup withholding. Notwithstanding that the box in Part 3 is
checked and the Certificate of Awaiting Taxpayer Identification Number is
completed, the Paying Agent will withhold 31% of all payments made prior to the
time a properly certified TIN is provided to the Paying Agent.
The holder of Outstanding Notes is required to give the Paying Agent the
TIN (e.g., social security number or employer identification number) of the
record owner of the Outstanding Notes. If the Outstanding Notes are in more than
one name or are not in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
11
<PAGE>
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<TABLE>
<S> <C> <C>
PAYER'S NAME:
SUBSTITUTE
PART I -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
--------------------------
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW. Social Security Number
OR
------------------------------
DEPARTMENT OF THE Employer Identification Number
TREASURY
INTERNAL REVENUE SERVICE PART 2 PART 3 --
CERTIFICATION -- Under penalties of perjury, I certify that: / / Awaiting TIN
(1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to be
issued to me) and
PAYER'S REQUEST FOR
TAXPAYER (2) I am not subject to backup withholding because: (a) I am
IDENTIFICATION exempt from backup withholding, or (b) I have not been
NUMBER (TIN) notified by the Internal Revenue Service (the "IRS")
that I am subject to backup withholding as a result of
failure to report all interest or dividends, or (c) the
IRS has notified me that I am no longer subject to
backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by
the IRS that you are subject to backup withholding because of under-reporting interest or
dividends on your tax return. However, if after being notified by the IRS that you were
subject to backup withholding you received another notification from the IRS stating that
you are no longer subject to backup withholding, do not cross out item (2).
SIGNATURE _________________________________________________________________________________
Sign Here (Right Arrow) DATE ______________________________________________________________________________________
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER,
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld.
SIGNATURE ______________ DATE ________________________________________________
12
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF ALL OUTSTANDING 13 3/4% SENIOR SECURED NOTES DUE 2009
IN EXCHANGE FOR
NEW 13 3/4% SENIOR SECURED NOTES DUE 2009
OF
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC AND
RTI CAPITAL CORP.
Registered holders of outstanding 13 3/4 Senior Secured Notes due 2009 (the
"Outstanding Notes") who wish to tender their Outstanding Notes in exchange for
a like principal amount of new 13 3/4% Senior Secured Notes due 2009 (the
"Exchange Notes") and whose Outstanding Notes are not immediately available or
who cannot deliver their Outstanding Notes and Letter of Transmittal (and any
other documents required by the Letter of Transmittal) to the United States
Trust Company of New York (the "Exchange Agent") prior to the Expiration Date,
may use this Notice of Guaranteed Delivery or one substantially equivalent
hereto. This Notice of Guaranteed Delivery may be delivered by hand or sent by
facsimile transmission (receipt confirmed by telephone and an original delivered
by guaranteed overnight courier) or mail to the Exchange Agent. See "The
Exchange Offer--Procedures for Tendering" in the Prospectus.
The Exchange Agent for the Exchange Offer is:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
For Delivery by Registered or Certified Mail: For Overnight Delivery Only or by Hand:
United States Trust Company of New York United States Trust Company of New York
[Address] [Address]
Attention: Attention:
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only):
[fax number]
Attention:
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an eligible institution (as defined in the Prospectus), such
signature guarantee must appear in the applicable space provided on the Letter
of Transmittal for Guarantee of Signatures.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders the principal amount of Outstanding Notes
indicated below, upon the terms and subject to the conditions contained in the
Prospectus dated , 1999 of Republic Technologies International, LLC and RTI
Capital Corp. (the "Prospectus"), receipt of which is hereby acknowledged.
DESCRIPTION OF OUTSTANDING NOTES TENDERED
Name of Tendering Holder: ______________________________________________________
Name and Address of Registered Holders as it Appears
on this Outstanding Notes: _____________________________________________________
(PLEASE PRINT)
Certificate Number(s) of Outstanding Notes Tendered
(or Account Number at Book-Entry Facility): ____________________________________
Principal Amount Outstanding Notes Tendered: ___________________________________
SIGN HERE
Name of Registered or Acting Holder: ___________________________________________
Signature(s): __________________________________________________________________
Name(s): _______________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
Telephone Number: ______________________________________________________________
Date: __________________________________________________________________________
IF SHARES OF OUTSTANDING NOTES WILL BE TENDERED BY BOOK-ENTRY TRANSFER,
PROVIDE THE FOLLOWING INFORMATION:
DTC Account Number: _____________________________________________________
Date: ___________________________________________________________________
2
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended, hereby guarantees to deliver to the Exchange Agent at one of
its addresses set forth on the reverse hereof, the certificates representing the
Outstanding Notes (or a confirmation of book-entry transfer of such Outstanding
Notes into the Exchange Agent's account at the book-entry transfer facility),
together with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, and any other
documents required by the Letter of Transmittal within three New York Stock
Exchange trading days after the Expiration Date (as defined in the Letter of
Transmittal).
________________________________________________________________________________
Name of Firm
________________________________________________________________________________
Address
________________________________________________________________________________
Zip Code
Area Code & Tel. No. ___________________________________________________________
________________________________________________________________________________
Authorized Signature
________________________________________________________________________________
Name
________________________________________________________________________________
Title (Please type or print)
Dated: __________________________________________________________________ , 1997
NOTE: DO NOT SEND OUTSTANDING NOTES WITH THIS NOTICE OF GUARANTEED
DELIVERY. OUTSTANDING NOTES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
