REIMBURSEMENT AND COOPERATION AGREEMENT
This REIMBURSEMENT AND COOPERATION AGREEMENT is dated as of February 6,
2006, by and among RGCH Holdings Corp. ("RGCHC"), a Delaware corporation,
RathGibson, Inc., a Delaware corporation (the "Company," and together with
RGCHC, collectively, the "Primary Obligors") and Xxxxxx Xxxxxx Partners IV, L.P.
("CHI"):
WHEREAS, RGCH Holdings LLC, a Delaware limited liability company
("RGCHH") has entered into that certain Stock Purchase Agreement (the "Purchase
Agreement"), dated as of December 6, 2005, with the Company and the Persons
listed as "Sellers" on the signature pages attached thereto, whereby RGCHH
agreed to acquire all of the issued and outstanding Common Stock of the Company
subject to the terms set forth therein;
WHEREAS, pursuant to the Purchase Agreement, RGCHH is obligated to make
certain payments to the Representative for the benefit of the Equityholders
under Sections 1.03 and 1.04 of the Purchase Agreement, subject to the terms,
conditions and limitations contained therein;
WHEREAS, RGCHH assigned all of its rights, powers, privileges, duties
and obligations under, among other things, the Purchase Agreement and Support
Agreement (as defined below) to RGCHC pursuant to that certain Assignment and
Assumption of Agreements, dated as of February 6, 2006; and
WHEREAS, pursuant to that certain Support Agreement (the "Support
Agreement"), dated December 6, 2005, between Xxxxxx Xxxxxx Partners IV, L.P. and
Liberty Partners Holdings 10, L.L.C., in its capacity as the Representative for
the Equityholders, CHI has agreed to pay to the Representative on behalf of the
Equityholders any portion of the Contingent Payment or the Second Contingent
Payment that RGCHH does not pay when due under the terms of the Purchase
Agreement, subject to the terms, conditions and limitations contained therein
and in the Support Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. All terms used in this Reimbursement and
Cooperation Agreement which are not otherwise defined herein shall have the same
meanings herein as set forth in the Purchase Agreement.
SECTION 2. Reimbursement. The Primary Obligors, jointly and
severally, hereby agree to pay to CHI (i) within five business days after each
date on which CHI shall pay any amount under the Support Agreement, a sum equal
to such amount so paid, plus (ii) interest on any amount remaining unpaid by the
Primary Obligors under clause (i) above, from the date
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such amount becomes payable on demand until payment in full, at a rate of 10%
per annum, compounded annually. The obligations of the Primary Obligors
hereunder are absolute and unconditional irrespective of: (i) any lack of
validity or enforceability of all or part of the Purchase Agreement or Support
Agreement or any agreement or instrument relating thereto; (ii) any change in
the time, manner or place of payment of, or in any other term in respect of, all
or any of the obligations set forth in the Purchase Agreement or Support
Agreement or any agreement or instrument relating thereto, or any other
amendment or waiver of or consent to any departure from any provision of any of
the foregoing; (iii) the existence of any claim, set-off, defense or other right
that the Primary Obligors may have against any Person, including, without
limitation, the Equityholders, or (iv) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the Primary
Obligors with respect to their obligations hereunder. CHI shall use reasonable
commercial efforts to provide contemporaneous notice to the Primary Obligors of
the payment by CHI of any amounts under the Support Agreement (it being
understood that any failure by CHI to provide such notice shall not affect any
of CHI's rights or the Primary Obligors' obligations to CHI.
SECTION 3. Evidence of Obligations. CHI shall maintain a ledger
or ledgers evidencing the obligations of each Primary Obligor resulting from
each payment under the Support Agreement made by CHI from time to time
thereunder and the amounts of principal and interest payable and paid by each
Primary Obligor from time to time hereunder. In any legal action or proceeding
in respect of this Reimbursement and Cooperation Agreement, the entries made in
such account or accounts shall be conclusive evidence of the existence and
amounts of the obligations of each Primary Obligor therein recorded, absent
manifest error.
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SECTION 4. Primary Obligors' Covenants.
(a) CHI shall have the right to participate in all activity and
work conducted in the preparation and delivery of any calculations, financial
statements or supporting documents to be used for the determination of 2007
Adjusted Consolidated EBITDA, the Contingent Payment or Second Contingent
Payment pursuant to Sections 1.03 and 1.04 of the Purchase Agreement
(collectively, the "Earnout Documents"). Neither the Company nor any of the
Primary Obligors shall deliver any Earnout Documents to the Representative
without the prior written consent of CHI.
(b) In the event that there are any disputes concerning the
Earnout Documents or the determination of the Contingent Payment or Second
Contingent Payment that would require resolution pursuant to the process
described in Sections 1.03(a) and 1.04(a) of the Purchase Agreement, CHI shall
have the right to be fully informed and to participate in any such resolution
process. Any resolution of any disputes regarding the Earnout Documents or final
determination of the Contingent Payment or Second Contingent Payment shall be
subject to the prior written consent of CHI.
(c) Neither of the Primary Obligors shall enter into any
agreement or waive, amend or modify any of their respective rights under the
Purchase Agreement affecting or relating to the determination of the Contingent
Payment or Second Contingent Payment without the prior written consent of CHI,
including with respect to any claims for indemnification that might result in an
offset to any such payment.
SECTION 5. Notice. Any notice or communication required or
permitted to be made hereunder shall be made in the same manner and with the
same effect, unless otherwise specifically provided herein, as set forth in the
Purchase Agreement. Notices to CHI shall be made as follows:
Xxxxxx Xxxxxx Partners IV, L.P.
c/o Xxxxxx Xxxxxx, Inc.
000 X. 00xx Xxxxxx--00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx and Xxxxxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx
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Facsimile: (000) 000-0000
SECTION 6. Miscellaneous.
(a) No amendment of any provision of this Reimbursement and
Cooperation Agreement shall be effective unless it is in writing and signed by
the parties hereto, and no waiver of any provision of this Reimbursement and
Cooperation Agreement and no consent to any departure by any party therefrom,
shall be effective unless it is in writing and signed by the other parties
hereto, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) This Reimbursement and Cooperation Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
The parties hereby irrevocably consent to, for the purposes of any proceeding
arising hereunder, the exclusive jurisdiction of the courts of the State of New
York and the United States District Court located in the borough of Manhattan in
New York City.
(c) This Reimbursement and Cooperation Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. There is no express or implied intention to benefit any other
third party and nothing contained in this Reimbursement and Cooperation
Agreement is intended, nor shall anything herein be construed, to confer any
rights, legal or equitable, in any person or entity other than CHI. No
assignment of this Reimbursement and Cooperation Agreement or of any rights or
obligations hereunder may be made by any party hereto (by operation of law or
otherwise) without the prior written consent of the other parties hereto;
provided that CHI may assign its rights and obligations hereunder to any person
or group of persons that acquire all or any portion of the business of the
Primary Obligors, whether by way of sale of stock, assets, merger or otherwise.
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IN WITNESS WHEREOF, the parties have caused this Reimbursement
and Cooperation Agreement to be executed by an officer thereunto duly
authorized, as of the date first above written.
RATHGIBSON, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President & CEO
RGCH HOLDINGS CORP.
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
Title: President
XXXXXX XXXXXX PARTNERS IV, L.P.
By: XXXXXX XXXXXX PARTNERS IV GP, INC., its
General Partner
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title:
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