PARTICIPATION AGREEMENT
This Participation Agreement (this "Agreement") is made as of
August 13, 1999 between USX Corporation ("USX") and Republic Technologies
International, LLC ("Republic").
W I T N E S S E T H :
Whereas, pursuant to the Asset Purchase and Contribution
Agreement dated as of May 31, 1989 and an Assignment and Assumption Agreement
dated June 30, 1989 (collectively, the "Asset Agreements") both among Kobe
Steel, Ltd., Kobe/Lorain Inc., USX, USS Lorain Holding Company, Inc. and
USS/KOBE Steel Company ("UKS"), UKS has been performing USX's obligations under,
inter alia, certain agreements set forth in Schedule 2.1 (d) (4) of the
aforesaid Asset Purchase and Contribution Agreement respecting: (a) $4,745,000
Ohio Air Quality Development Authority Floating Rate Environmental Improvement
Revenue Bonds, 1980 Series B (United States Steel Corporation Project) (the
"1980B Bonds"), and (b) $9,000,000 State of Ohio Variable Rate Demand
Environmental Improvement Revenue Bonds, Series 1984 (United States Steel
Corporation Project) (the "1984 Bonds"); and
Whereas, on November 16, 1995, USX engaged in the refunding of
various environmental revenue bonds, including the 1980B Bonds, in order to
achieve debt service savings and to extend the maturities of such bonds; and
Whereas, because UKS would benefit from that refunding, it
entered into a Participation Agreement with USX dated November 16, 1995 (the
"1995 Participation Agreement") pursuant to which UKS agreed to pay the debt
service on $4,745,000 (46.70%) of $10,160,000 Ohio Air Quality Development
Authority Variable Rate Environmental Improvement Revenue Bonds (USX Corporation
Project) Refunding Series of 1995 (the "1995 Bonds"-- the 1984 Bonds and the
1995 Bonds are collectively referred to as the "Bonds"); and
Whereas, Republic has, on the date hereof, effectively merged
with UKS and in connection therewith it has been agreed Republic will, to the
extent set forth in this Agreement, assume USX's obligations respecting the 1984
Bonds as well as 46.70% of USX's obligations respecting the 1995 Bonds as set
forth herein (collectively, the "EIRB Obligations").
Now, therefore, in consideration of the premises and intending
to be legally bound, the parties hereto agree as follows:
1. Republic assumes all of USX's payment obligations
respecting the EIRB Obligations including, without limitation, the obligation to
pay debt service on the 1984 Bonds and 46.70% of the debt service on the 1995
Bonds. The term "debt service" is meant to include all sums due with respect to
the Bonds including, without limitation, payments of principal, interest and
premium, letter of credit fees and expenses, trustee fees and expenses, issuer
fees and expenses and remarketing fees and expenses.
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2. Republic agrees to employ all reasonable efforts to take
all such action or refrain from acting so as to assure USX's compliance, and to
cooperate with USX in its endeavors to comply, with its obligations under the
various documents respecting the Bonds (collectively, the "Bond Documents")
including, without limitation, covenants respecting the financed facilities, in
each case, necessary to avoid the occurrence of an Event of Default under the
Bond Documents or cause the interest on the Bonds to be included in the gross
income of the holders thereof except holders who are "substantial users" or
"related persons" as defined in Section 147(a) of the Internal Revenue Code of
1986, as amended or its predecessor.
3. Subject to USX's discretion regarding the availability of
letters of credit respecting the Bonds as hereinafter described, Republic may
from time to time direct conversion of the 1984 Bonds to different interest rate
periods by providing an appropriate notice (i.e., so as to allow sufficient time
under the provisions of the Bond Documents respecting the 1984 Bonds) in writing
to USX, and USX shall undertake all reasonable efforts to effectuate such
conversion. If Republic notifies USX in writing that Republic elects to lawfully
redeem all or part of the 1984 Bonds and supplies adequate funds therefor, USX
shall be required to effectuate such redemption(s) and Republic's obligations
under this Agreement shall be reduced accordingly. USX shall not, without the
prior written consent of Republic, direct the redemption of any 1984 Bonds prior
to maturity. Except as expressly granted by this Agreement, Republic shall have
no rights with respect to the 1984 Bonds. USX will not, without the prior
written consent of Republic, convert the 1984 Bonds to a different interest
rate. Notwithstanding anything in this Agreement to the contrary, Republic's
ability to direct conversion of the 1984 Bonds to a different interest rate
period and maintain a given interest rate period shall be subject to USX's
willingness to maintain an appropriate letter of credit respecting the 1984
Bonds.
4. Republic may from time to time suggest conversion of the
1995 Bonds to different interest rate periods to USX, but may not direct such
conversions. If Republic notifies USX in writing that Republic elects to
lawfully redeem all or part of its 46.70% share of the 1995 Bonds and supplies
adequate funds therefor, USX shall be required to effectuate such redemption(s)
and Republic's obligations under this Agreement shall be reduced accordingly.
USX shall not, without the prior written consent of Republic, direct the
redemption of any 1995 Bonds attributable to Republic's 46.70% share of the 1995
Bonds prior to maturity. Except as expressly granted by this Agreement, Republic
shall have no rights with respect to the 1995 Bonds. USX shall, inter alia, be
entitled to convert the 1995 Bonds to different interest rates at any time,
provided that it shall advise Republic in writing at or prior to such
conversion. Notwithstanding the foregoing and subject to USX's rights regarding
its ability not to extend or renew letters of credit as set forth elsewhere in
this Agreement, USX will not convert the 1995 Bonds to a fixed interest rate
without the prior written consent of Republic.
5. USX represents and warrants that to the best of its
knowledge: (a) there are no matured or unmatured events of default currently
outstanding under the Bonds Documents that could reasonably be expected to cause
an acceleration of the obligations thereunder, and (b) the interest on the Bonds
is excludible from gross income of the holders thereof except holders who are
"substantial users" or "related persons" as defined in Section 147(a) of the
Internal Revenue Code of 1986, as amended or its predecessor.
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USX agrees to employ all reasonable efforts to take all such
action or refrain from acting so as to assure compliance with its obligations
under the Bond Documents including, without limitation, covenants respecting the
financed facilities in each case necessary to avoid the occurrence of an event
of default under the Bond Documents or cause the interest on the Bonds to be
included in the gross income of the holders thereof except holders who are
"substantial users" or "related persons" as defined in Section 147(a) of the
Internal Revenue Code of 1986, as amended or its predecessor.
USX agrees to refrain from amending or modifying the Bond
Documents without the prior written consent of Republic (such consent not to be
unreasonably withheld or delayed).
USX shall have no obligation to maintain any letter of credit
with respect to the Bonds. If any such letter of credit is terminated, USX shall
advise Republic in writing as promptly as practicable. USX shall advise Republic
promptly if it elects not to renew or continue any letter of credit that
supports payment of the Bonds.
If as a result of USX's conveyance of the facilities financed
by the proceeds of the 1984 Bonds to UKS or Republic, the 1984 Bonds become due
prior to maturity, the following shall occur: (a) USX shall pay the amount due
on the 1984 Bonds upon such acceleration (including, if applicable, amounts due
under the letter of credit, if any, relating to the 1984 Bonds), (b) Republic
shall pay USX interest on the first business day of each month payable in
arrears on the principal sum of the 1984 Bonds (i.e., $9,000,000) at a rate
equal to the average rate of interest on the 1984 Bonds for the preceding year,
and (c) Republic shall pay USX an amount equal to the principal sum of the 1984
Bonds (i.e., $9,000,000) on the maturity date thereof (December 1, 2001).
6. (a) The following shall be "Events of Default" under this
Agreement:
(i) Republic shall fail to make any payment hereunder
when due and such failure shall continue for two business days
after Republic becomes aware thereof;
(ii) Republic shall fail to comply with any other
covenant contained in this Agreement and such failure shall
continue for more than thirty (30) days after Republic becomes
aware of it provided that such period shall be extended to the
extent (but only to the extent) it does not precipitate an
Event of Default under the applicable Bond Documents;
(iii) Republic shall make a general assignment for
the benefit of creditors, or file or have filed a petition in
bankruptcy, or a petition or answer seeking a readjustment of
Republic's indebtedness under the United States Bankruptcy
Code or any similar law or code, or Republic shall consent to
the appointment of a receiver or trustee of any of its
respective properties; or
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(iv) Republic shall be adjudged bankrupt or
insolvent, or a petition or proceedings for bankruptcy shall
be filed against Republic, and Republic shall admit the
material allegations thereof, or an order, judgment, or decree
shall be made approving such a petition, and such order,
judgment or decree shall not be vacated or stayed within sixty
(60) days of its entry, or a receiver or trustee shall be
appointed for Republic or its properties or any part thereof
and remain in possession thereof for sixty (60) days.
(b) Upon the occurrence of any one or more Events of Default
pursuant to subparagraphs (iii) or (iv) of paragraph 6(a), all sums then or
thereafter due hereunder shall become immediately due and payable. Upon the
occurrence of any one or more of the other Events of Default, all sums then or
hereafter due hereunder shall, at USX's option, immediately become due and
payable. Overdue amounts shall bear interest at a rate of interest equal to that
announced from time to time by Xxxxxx Guaranty Trust Company of New York as its
"prime rate" plus two percent per annum.
7. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof and supersedes any other
agreement, whether written or oral, that may have been made or entered into by
any party hereto (or by any director, officer or representative of such parties)
relating to the matters contemplated hereby. By its execution and delivery of
this Agreement, USX releases UKS from its obligations with respect to the Bonds
under the Asset Agreements and the 1995 Participation Agreement. It is the
intent of the parties that the obligations agreed to by Republic under this
Agreement supercede any obligations with respect to the Bonds Republic would
succeed to under the Asset Agreements and the 1995 Participation Agreement.
8. The recitals set forth at the beginning of this Agreement
are true and correct and are incorporated into the terms of this Agreement.
9. This Agreement and all the terms and provisions hereof
shall be binding upon and shall inure to the benefit of the parties and their
respective legal representatives, heirs, successors and assigns. Notwithstanding
the foregoing, no party may assign its rights or obligations under this
Agreement without the written consent of the other.
10. This Agreement may be executed in one or more
counterparts, each of which shall, for all purposes, be deemed an original and
all of such counterparts, taken together, shall constitute one and the same
Agreement.
11. In case any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein and, in lieu of each such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement, a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and still be legal, valid and enforceable.
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12. Each of the parties hereto agrees to execute all documents
and instruments and to take or to cause to be taken all actions that are
necessary or appropriate to complete the transactions contemplated by this
Agreement.
13. No waiver of any provision of this Agreement shall be
valid unless it is in writing and executed by the party to be charged. The
waiver by any party of any breach of this Agreement (whether in writing, by
course of conduct or otherwise) shall not operate or be construed as a waiver of
any subsequent breach.
14. Nothing in this Agreement, express or implied, is
intended to confer upon any third party any rights or remedies under or by
reason of this Agreement. Each party represents that it is entering into this
Agreement as principal for its own account and not as an agent for any other
party.
15. By its execution in the space hereinafter provided, Kobe
Steel, Ltd. acknowledges the appropriateness of this agreement and its consent
to the execution and delivery of this agreement by the parties hereto.
16. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.
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Witness the due execution hereof.
USX Corporation
By:
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Name: X.X. Xxxxxxx, Xx.
Title: Vice President
Republic International Technologies, LLC
By:
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
