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
MASTER RESTRUCTURING AGREEMENT
TABLE OF CONTENTS
Page
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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
4.7 No Priority in Debt Payment....................................................................29
SECTION 5 THE CLOSING...........................................29
5.1 Closing........................................................................................29
5.2 Closing Obligations............................................................................30
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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
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
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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
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 OFTHE USX/KOBE PARTIES TO CLOSE.............81
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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
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
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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
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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
SCHEDULES
Schedule 3.1(d) Preliminary/Final Closing Balance Sheets
Schedule 11.1(a) Tubular Employees and Other USS/Kobe Employees.
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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
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BarTech, the Republic Parties and USS/Kobe, the purchase of additional shares of
capital stock 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., Xxxxxxxxx Xxxxxx &
Xxxxxxxx Securities Corporation and BancBoston Xxxxxxxxx Xxxxxxxx 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.
3
"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 & Xxxxxxxx, 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 & Xxxxxxxx" - Xxxxx & Xxxxxxxx Steel Company, an Illinois
corporation.
"B&L Merger Agreement" - the merger agreement to be entered into among
BarTech, Bliss & Xxxxxxxx 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.
4
"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).
5
"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.
6
"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 Xxxx-Xxxxx-Xxxxxx 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.
7
"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.
8
"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.
9
"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.
10
"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).
11
"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., Xxxxxx Specialty Steel, Inc., Xxxxxx Xxxxx 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
Xxxxxxxx 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 Xxxxxxxx Xxxxx & 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
12
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.
13
"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.
14
"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
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)
BarTech Merger Subsidiary 3.3
16
Term Section
---- -------
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 Ratification 2.2(a)
NewTube Spinoff Plans 11.1(d)(i)
NewTube Spinoff Savings Plans 11.1(f)(i)
NewTube VEBA 11.1(e)
Preliminary Closing Balance Sheets 3.1(c)
17
Term Section
---- -------
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 Ratification 2.2(b)
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)
USS/Kobe Introduction
18
Term Section
---- -------
USS/Kobe Bar Business Closing Balance Sheet 3.1(d)
USS/Kobe Bar Business Current Assets 3.1(c)
USS/Kobe Bar Business Payables 2.8(c)
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 Closing Balance Sheet 3.1(d)
USS/Kobe Tubular Business Current Assets 3.1(c)
USS/Kobe Tubular Business Payables 2.8(c)
USX Holdings/Kobe Holdings-RTI Opco Merger 3.9
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
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 with the
Sources and Uses, to be secured by RTI Opco's and its Subsidiaries' property,
plant and
20
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 of NewTube to the
USS/Kobe Bar Business, and (ii) to whomever owed, all other
21
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 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
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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.
(d) 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(d),
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(d), 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 Closing Balance Sheet delivered at the Closing,
(B) any changes to the balances of
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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(d) 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 (with such written modifications as RTI
Opco and NewTube have agreed in reaching
24
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(d) 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(d) 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.
3.5 Merger of RESI. At or prior to the Closing, RES Holding, RESI and
RTI Opco will enter into the RESI
25
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 & Xxxxxxxx Industries Inc. to be
liquidated (which will result in Bliss & Xxxxxxxx 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 & Xxxxxxxx ("B&L, LLC") following
the Closing and (iii) BarTech, Bliss & Xxxxxxxx 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 & Xxxxxxxx to be merged with and into B&L, LLC, with
B&L, LLC surviving and the outstanding shares of Bliss & Xxxxxxxx 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").
3.9 Contributions to Capital of USS/Kobe; Merger of USS/Kobe Bar
Business into RTI Opco.
26
(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 15.568073% of the outstanding RTI
Holdings Common Units) and (iii) Kobe RTI Holdings (owning 14.198775%
of the outstanding RTI Holdings Common Units).
27
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 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
28
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., Xxxxxxxxx Xxxxxx &
Xxxxxxxx Securities Corporation and BancBoston Xxxxxxxxx Xxxxxxxx Inc.,
Chase Securities Inc., Xxxxxxxxx Xxxxxx & Xxxxxxxx Securities
Corporation and BancBoston Xxxxxxxxx Xxxxxxxx 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 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.
29
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
Xxxxxxx Xxxxxxx & Xxxxxxxx, New York, New York, at 10:00 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
30
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;
(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
31
(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
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.
32
(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.
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
33
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
(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
34
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 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
35
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 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.
36
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.
(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).
37
(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 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
38
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.
(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.
39
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 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
40
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
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.
41
(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 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
42
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.
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
43
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.
(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
44
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 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
45
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 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]
46
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 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.
47
(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 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.
48
(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" (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,
49
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 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
50
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:
(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.
51
(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
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
52
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 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
53
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 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.
54
(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 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
55
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 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.
56
(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
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
57
to or bound by) any tax indemnity, tax sharing or tax allocation
agreement or similar contractual arrangement.
(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.
58
(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) 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
59
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.
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
60
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.
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.
61
(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.
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
62
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 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]
SECTION 10
63
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 provided
to pursuant to this Agreement or other Transaction Documents as
provided in Section 10.6; and
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(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 extent it replaces existing outstanding indebtedness or
indebtedness incurred pursuant to clause (B) below, is incurred in the
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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 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)
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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 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
67
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.
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.
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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
xxxx, 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, xxxx 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, xxxx or logo
confusingly similar thereto, to another corporate name that does not
include any of the Retained Names and Marks or any name, xxxx 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, xxxx or logo confusingly similar
thereto, where the removal of any of the Retained Names and Marks or
any such similar name, xxxx 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, xxxx 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
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 Xxxx 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
69
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 XXX.
00.0 Xxx-Xxxxxxxxxxx xxx Xxx-Xxxxxxxxxxxx.
(x) 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, 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
70
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.
SECTION 11
EMPLOYMENT COVENANTS
11.1 USS/Kobe Employee Benefits and Pension Plans.
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(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 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
72
("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).
(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
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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 Xxxxxx Xxxxx & 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 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.
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(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 Xxxx 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.
(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
75
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 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
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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 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
77
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
Xxxx 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 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
78
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.
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
79
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 OFEACH 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.
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.
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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 OFTHE 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 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.
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(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.
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.
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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.
(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.
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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 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.
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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 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
85
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:
(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]
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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.
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
87
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 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
88
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 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).
89
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 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
90
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);
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
91
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:
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
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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
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
93
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 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
94
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 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).
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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 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
96
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. Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxx Xxxxxxx 000 Xxxxxxxxx Xxxxxx
Xxxxx, Xxxx 00000-0000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxxxxxxx.xxx E-mail: x_xxxxx@xxxxxx.xxx
and
The Blackstone Group
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
E-mail: xxxxxxxx@xxxxx.xxx
97
If to any Republic Party: with a copy to:
------------------------
Republic Engineered Steels, Inc. Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxx Xxxxxxx 000 Xxxxxxxxx Xxxxxx
Xxxxx, Xxxx 00000-0000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxxxxxxx.xxx E-mail: x_xxxxx@xxxxxx.xxx
and
The Blackstone Group
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
E-mail: xxxxxxxx@xxxxx.xxx
If to Kobe: with a copy to:
----------
Kobe Steel, Ltd. Cleary, Gottlieb, Xxxxx &
10-26 Wakinohamacho 2-Chome Xxxxxxxx
Chuo-Ku, Kobe City, Hyugo 651-0072 Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx Attention: Xxxxxxx Xxxxx
Telecopy: 011-81-78-261-5444 Telecopy: (000) 000-0000
E-mail: xx00000@xxxxx.xxxxxxx.xx.xx E-mail: xxxxxx@xxxx.xxx
If to USX: with a copy to:
---------
USX Corporation USX Corporation
000 Xxxxx Xxxxxx 000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000 Xxxxxxxxxx, Xxxxxxxxxxxx
00000-0000
Attention: X.X. Xxxxxxx, Xx. Attention: X.X. Xxxxxxx
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
E-mail: xxxxxxxxx@xxx.xxx E-mail: xxxxxxxxx@xxx.xxx
98
If to USS/Kobe: with a copy to:
--------------
USS/Kobe Steel Company Cleary, Gottlieb, Xxxxx & Xxxxxxxx
0000 Xxxx 00xx Xxxxxx Xxx Xxxxxxx Xxxxx
Xxxxxx, Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Attention: Xxxxxxx Xxxxx
Telecopy: Telecopy: (000) 000-0000
E-mail: E-mail: xxxxxx@xxxx.xxx
and
USX Corporation
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: X.X. Xxxxxxx
Telecopy: (000) 000-0000
E-mail: xxxxxxxxx@xxx.xxx
If to Veritas: with a copy to:
-------------
The Veritas Capital Fund, X.X. Xxxxxxx, Breed, Xxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. XxXxxx Attention: Xxxxxxxx Xxxx
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
E-mail: xxxxx@xxxx.xxx
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
99
(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
100
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.
101
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BAR TECHNOLOGIES INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President of Finance,
Treasurer and Secretary
RES HOLDING CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Secretary
REPUBLIC ENGINEERED STEELS, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
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/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Member
BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P.
By: Blackstone Management Associates II
L.L.C., as general partner
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Member
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P.
By: Blackstone Management Associates II L.L.C.,
as general partner
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Member
THE VERITAS CAPITAL FUND, L.P.
By: Veritas Capital Management, L.L.C., as
general partner
By: /s/ Xxxxxx X. XxXxxx
----------------------------------
Name: Xxxxxx X. XxXxxx
Title: Member
HVR HOLDINGS, L.L.C.
By: /s/ Xxxxxx X. XxXxxxxxx
----------------------------------
Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
USX CORPORATION
By: /s/ X.X. Xxxxxxx, Xx.
----------------------------------
Name: X.X. Xxxxxxx, Xx.
Title: Vice President - Strategic Planning
KOBE STEEL, LTD.
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxxx
Title:
KOBE DELAWARE INC.
By: /s/ Xxxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Secretary
USS LORAIN HOLDING COMPANY, INC.
By: /s/ X.X. Xxxxxxx
----------------------------------
Name: X.X. Xxxxxxx
Title: Vice President
USX RTI HOLDINGS, INC.
By: /s/ X.X. Xxxxxxx
----------------------------------
Name: X.X. Xxxxxxx
Title: Vice President
KOBE/LORAIN INC.
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
KOBE RTI HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxxx
Title:
USS/KOBE STEEL COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
LORAIN TUBULAR COMPANY, L.L.C.
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, L.L.C.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President of Finance,
Treasurer and Secretary
REPUBLIC TECHNOLOGIES INTERNATIONAL, L.L.C.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President of Finance,
Treasurer and Secretary
