Asset Purchase Agreement Dated As of June 7, 2002

EXECUTION COPY


ASSET PURCHASE AGREEMENT


by and among


RT ACQUISITION LLC
as Purchaser,


and


REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC,
NIMISHILLEN & TUSCARAWAS, LLC,
BLISS & LAUGHLIN, LLC,
REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC
and
RTI CAPITAL CORP.
as Sellers


TABLE OF CONTENTS


Page
---- ARTICLE I DEFINITIONS .......................................................................... 2


Section 1.1 Definitions .................................................................. 2
Section 1.2 Terms Generally .............................................................. 12


ARTICLE II PURCHASE AND SALE OF ASSETS ......................................................... 13


Section 2.1 Purchase and Sale of the Purchased Assets .................................... 13
Section 2.2 Excluded Assets .............................................................. 15


ARTICLE III LIABILITIES ASSUMED ................................................................ 16


Section 3.1 Assumption of Liabilities .................................................... 16


ARTICLE IV PURCHASE PRICE ...................................................................... 20


Section 4.1 Purchase Price for Purchased Assets .......................................... 20
Section 4.2 Payment of Purchase Price .................................................... 20


ARTICLE V REPRESENTATIONS AND WARRANTIES AND RELATED UNDERTAKINGS .............................. 21


Section 5.1 Representations and Warranties of Sellers .................................... 21
Section 5.2 Representations and Warranties of Purchaser .................................. 35
Section 5.3 Amendments to Disclosure Schedules ........................................... 36


ARTICLE VI EMPLOYEE MATTERS .................................................................... 36


Section 6.1 Employees .................................................................... 36
Section 6.2 Employee Benefit Plans ....................................................... 37
Section 6.3 Workers' Compensation ........................................................ 39
Section 6.4 Management Incentive Plans ................................................... 39
Section 6.5 Mutual Cooperation ........................................................... 39


ARTICLE VII TAX MATTERS ........................................................................ 40


Section 7.1 Transfer Taxes ............................................................... 40
Section 7.2 Proration of Real and Personal Property Taxes ................................ 40
Section 7.3 Tax Returns; Cooperation on Tax Matters ...................................... 41
Section 7.4 Allocation Purchase of Price and Purchase Price Allocation Forms ............. 42


ARTICLE VIII COVENANTS AND ADDITIONAL AGREEMENTS ............................................... 42


Section 8.1 Approval Proceedings ......................................................... 42
Section 8.2 Good Faith Deposit ........................................................... 42
Section 8.3 Access to Information, Confidentiality ....................................... 43
Section 8.4 Notification of Certain Matters .............................................. 44
Section 8.5 HSR Act ...................................................................... 44
Section 8.6 Filings and Approvals Regarding the Railroad Subsidiary ...................... 45
Section 8.7 Further Action ............................................................... 45
Section 8.8 Conduct of the Business ...................................................... 46
Section 8.9 Non-Assignable Contracts ..................................................... 48


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Section 8.10 Acquisition Agreements ...................................................... 48
Section 8.11 Indemnification Agreements .................................................. 49
Section 8.12 Litigation .................................................................. 49
Section 8.13 Public Announcements ........................................................ 50
Section 8.14 Filings and Authorizations .................................................. 50
Section 8.15 Amendment to List of Purchased Contracts .................................... 50
Section 8.16 Use of Cartersville Proceeds ................................................ 50
Section 8.17 Insurance ................................................................... 51
Section 8.18 Bulk Sale ................................................................... 51
Section 8.19 Creation of Easement ........................................................ 51


ARTICLE IX CONDITIONS TO THE CLOSING ........................................................... 51


Section 9.1 Conditions to Obligations of Purchaser ...................................... 51
Section 9.2 Conditions to Obligations of Seller ......................................... 53


ARTICLE X CLOSING .............................................................................. 54


Section 10.1 Closing ..................................................................... 54
Section 10.2 Documents to be Delivered at Closing by Sellers ............................. 54
Section 10.3 Documents to be Delivered at Closing by Purchaser ........................... 56


ARTICLE XI INDEMNIFICATION ..................................................................... 56


Section 11.1 Survival; Representations and Warranties .................................... 56
Section 11.2 Indemnification of Purchaser ................................................ 57
Section 11.3 Indemnification of Sellers .................................................. 57
Section 11.4 Limitation on Seller' Indemnification Liability ............................. 57
Section 11.5 Limitation on Purchaser's Indemnification Liability ......................... 58
Section 11.6 Satisfaction of Purchaser Claims ............................................ 58


ARTICLE XII TERMINATION, AMENDMENT AND WAIVER .................................................. 58


Section 12.1 Termination ................................................................. 58
Section 12.2 Effect of Termination ....................................................... 60
Section 12.3 Break-Up Fee; Expense Reimbursement ......................................... 60


ARTICLE XIII MISCELLANEOUS ..................................................................... 61


Section 13.1 Expenses .................................................................... 61
Section 13.2 Governing Law; Forum ........................................................ 61
Section 13.3 Notices ..................................................................... 61
Section 13.4 Headings .................................................................... 62
Section 13.5 No Assignment; Benefit to Third Parties ..................................... 62
Section 13.6 Entire Agreement ............................................................ 63
Section 13.7 Counterparts ................................................................ 63
Section 13.8 Waiver ...................................................................... 63
Section 13.9 Amendment ................................................................... 63
Section 13.10 Severability ................................................................ 63
Section 13.11 Further Assurances .......................................................... 63


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EXHIBITS
--------

Assumption Agreement Exhibit A
Bidding Procedures Order Exhibit B
Bill of Sale Exhibit C
Lender Retention Program Exhibit D
Successor Labor Agreement Exhibit E
Limited Warranty Deed Exhibit F
lease assignment and assumption agreement Exhibit G
Seller's Officer's Certificate Exhibit H
Seller's Secretary Certificate Exhibit I
Sellers' FIRPTA Certificate Exhibit J
Purchaser's Officer's Certificate Exhibit K
Purchaser's Secretary Certificate Exhibit L
Indemnity Interest Formula Exhibit M


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SCHEDULES
---------

Excluded Plants Schedule 1.1
Real Property Schedule 2.1(a)
Owned Machinery and Equipment Schedule 2.1(b)
Railroad Subsidiary Assets Schedule 2.1(d)
Seller's Corporate Headquarters Assets Schedule 2.1(e)
Purchased Plants - Fixed Assets Schedule 2.1(f)
Purchased Contracts Schedule 2.1(k)
Claims of Credit Schedule 2.1(n)
Sellers Excluded Assets or Properties Schedule 2.2(b)
Excluded Real Property Schedule 2.2(f)
Consents, Approvals or Authorizations Schedule 5.1(c)
Intellectual Property Rights Schedule 5.1(d)
Material Contracts Schedule 5.1(e)(i)
Terminated Material Contracts; Cure Amounts Schedule 5.1(e)(ii)
Non-Violative Agreement Exceptions Schedule 5.1(g)
Governmental Authority - Permits and Licenses Schedule 5.1(h)
Owned Real Property Schedule 5.1(i)
Leased Real Property Schedule 5.1(j)
Violations; Defects Schedule 5.1(m)
Tax Certiorari Proceedings Schedule 5.l(p)
Certain Actions Schedule 5.1(q)
Compliance With Laws Schedule 5.1(r)(i)
Environmental Matters Schedule 5.1(r)(ii)
Employee Matters Schedule 5.1(s)
Employer Plan Liability Schedule 5.1(t)(i)
Liability Under Employee Benefit Plans Subject to Non-U.S. Laws Schedule 5.1(t)(ii)
Unaudited Financial Statements Schedule 5.1(u)(iii)
Tax Matters Schedule 5.1(v)
35 Largest Customers Schedule 5.l(w)(i)
35 Largest Suppliers Schedule 5.1(w)(ii)
Customer and Supplier Status Schedule 5.1(w)(iii)
Inventory Schedule 5.1(x)
Affiliate Transactions Schedule 5.1(y)
Insurance Schedule 5.1(aa)
Certain Changes or Events Schedule 5.1(bb)
Fees Schedule 5.1(dd)
Litigation Schedule 5.1(gg)
Vacation Accruals Schedule 6.2(b)
Key Managers Schedule 6.4(a)
Key Management Severance and Termination Plans Schedule 6.4(b)
System-Wide or Regional Changes Schedule 8.8(i)
Prohibited Agreements Schedule 8.8(j)
Indemnification Agreements Schedule 8.11
Consents and Approvals Related to Purchased Contracts Schedule 9.1(e)
Required Consents and Approvals Schedule 9.2(e)


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ASSET PURCHASE AGREEMENT


This ASSET PURCHASE AGREEMENT, dated as of June 7, 2002, by and among REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a Delaware limited liability company ("Republic"), NIMISHILLEN & TUSCARAWAS, LLC, a Delaware limited liability company, BLISS & LAUGHLIN, LLC, a Delaware limited liability company, REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC, a Delaware limited liability company, and RTI CAPITAL CORP., a Delaware corporation (together with Republic, "Sellers" and each a "Seller") which Sellers, other than Nimishillen & Tuscarawas, LLC, are debtors in possession under Chapter 11 of Title 11, United States Code (as amended from time to time, the "Bankruptcy Code"), and RT ACQUISITION LLC, a Delaware limited liability company ("Purchaser").


WHEREAS, Sellers have determined that it is in their best interest to sell to Purchaser and Purchaser desires to purchase certain of the assets used or usable in connection with Sellers' business (the "Business"), and Purchaser desires to assume certain specified liabilities of Sellers which are related to the Business, all on the terms and subject to the conditions set forth in this Agreement; and


WHEREAS, Republic and certain of its subsidiaries commenced cases in the United States Bankruptcy Court for the Northern District of Ohio, Eastern Division under Chapter 11 of the Bankruptcy Code on April 2, 2001 (collectively, the "Chapter 11 Cases"); and


WHEREAS, Republic and certain of its subsidiaries continue in the management and possession of their properties as debtors in possession in the Chapter 11 Cases pursuant to sections 1107(a) and 1108 of the Bankruptcy Code and, following approval of this Agreement, subject to the terms and conditions of this Agreement; and


WHEREAS, the transactions contemplated by this Agreement have been implemented through the filing of a motion seeking the entry of an order by the Bankruptcy Court approving this Agreement and the terms of the sale of the Purchased Assets and the assumption of the Assumed Liabilities pursuant to Section 363 of the Bankruptcy Code in accordance with the terms of this Agreement; and


WHEREAS, subject to the entry of the Sale Order and on the terms and conditions set forth herein, Purchaser shall purchase the Purchased Assets and assume the Assumed Liabilities of Sellers.


NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows:


ARTICLE I


DEFINITIONS


Section 1.1 Definitions. As used in this Agreement, the following terms shall have the following meanings:


"Acquisition Agreements" has the meaning set forth in Section 8.10.


"Action" means any claim, charge, action, suit, arbitration, mediation, inquiry, proceeding or investigation by any Person or Governmental Authority before any Governmental Authority.


"Adjustment Date" has the meaning set forth in Section 7.2.


"Affiliate" of a Person means any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the first mentioned Person.


"Agreement" means this Agreement, including the Schedules and the Exhibits, as amended from time to time in accordance with its terms.


"Allocation" has the meaning set forth in Section 7.4.


"Approvals" means all certificates, licenses, permits or other approvals required to be obtained by Seller or its Subsidiaries in connection with the use or ownership of its or their assets or properties or the operation of its or their business.


"Assets" means the assets of every type and description, tangible or intangible, real or personal that are owned, leased or licensed by any Seller.


"Assumed Liabilities" has the meaning set forth in Section 3.1(a).


"Assumption Agreement" means one or more assignment and assumption agreements in substantially the form attached to this Agreement as Exhibit A.


"Attendant Documents" has the meaning set forth in Section 5.1(a).


"Auction" means, as more fully described in the Bidding Procedures Order, the auction to be held prior to the Sale Hearing for consideration of qualifying higher and better offers that may be presented to Sellers.


"Audited Financial Statements" has the meaning set forth in Section 5.1(u)(ii).


"Bank Lenders" means the institutional lenders that are parties to the Debtor-in-Possession Revolving Credit Facility at the date hereof.


"Bankruptcy Code" has the meaning set forth in the Preamble.


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"Bankruptcy Court" means the United States Bankruptcy Court for the Northern District of Ohio, Eastern Division, or such other court as may have jurisdiction over the Chapter 11 Cases.


"Bidding Procedures Order" means the order of the Bankruptcy Court entered on May 31, 2002, a copy of which is attached hereto as Exhibit B.


"Bill of Sale" means one or more bills of sale in substantially the form attached to this Agreement as Exhibit C.


"Break-Up Fee" has the meaning set forth in Section 12.3.


"Business" has the meaning set forth in the Recitals.


"Business Combination" means with respect to any Person any (a) merger, consolidation or combination to which such Person is a party, (b) any sale, dividend, split or other disposition of any capital stock or other equity interests of such Person, or any acquisition of capital stock or equity interests or securities of such Person, representing in any such case at least 25% of such class of capital stock or equity interests, (c) any tender offer (including, without limitation, a self-tender), exchange offer or recapitalization for or affecting the outstanding equity or debt securities of such Person, (d) any plan of reorganization under Chapter 11 of the Bankruptcy Code, (e) any liquidation, dissolution or similar transaction involving such Person, (f) any sale, dividend or other disposition of all or a material portion of the assets of such Person or (g) the entering into of any agreement or understanding, or the granting of any rights or options, with respect to any of the foregoing.


"Business Day" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the City of New York.


"Canadian Steel Asset Purchase Agreement" means the asset purchase agreement by and between Purchaser and Canadian Drawn Steel Company, Inc., a wholly owned Subsidiary of Republic pursuant to which Purchaser will purchase substantially all of the assets of such subsidiary in the form reasonably acceptable to each of Purchaser and Republic.


"Canton EPA Corrective Action Order" means the Administrative Order on Consent (U.S. EPA Docket No. R8H-5-99-006) ordered by the U.S. Environmental Protection Agency, Region 5, on June 16, 1999 proceeding under Section 3008(h) of the Resource Conservation and Recovery Act, as amended, in the matter of Republic Engineered Steels, Inc., with respect to the facility at 2633 Eighth Street N.E., Canton, Ohio 44701.


"Cartersville Asset Sale" means the sale of certain assets associated with the Cartersville Cold Finishing Plant, located in Cartersville, Georgia pursuant to the terms of that certain asset purchase agreement, dated as of May 20, 2002, by and between Republic and AmeriSteel Corporation.


"Cash Consideration" has the meaning set forth in Section 4.1(a).


"Chapter 11 Cases" has the meaning set forth in the Recitals.


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"Chapter 11 Expenses" means the costs incurred and expenses paid or payable by Debtor Sellers in connection with the administration of the Chapter 11 Cases, including, without limitation, (a) fees and expenses related to the Debtor-in-Possession Revolving Credit Agreement, (b) obligations to pay professionals' fees and expenses in connection with the Chapter 11 Cases (including, without limitation, fees of attorneys, accountants, investment bankers, financial advisors, and consultants retained by Debtor Sellers, the Creditors' Committee or the pre-petition lenders, and any compensation for making a substantial contribution in the Chapter 11 Cases) and reimbursement of any expenses incurred by Debtor Sellers prior to the Closing Date in connection therewith (including, without limitation, any obligations to pay any holdback of any such fees and expenses), (c) fees and expenses payable to the United States trustee under Section 1930 of title 28, United States Code and (d) expenses of members of the Creditors' Committee.


"Closing" has the meaning set forth in Section 10.1.


"Closing Date" has the meaning set forth in Section 10.1.


"Code" means the Internal Revenue Code of 1986, as amended, together with the rules and regulations promulgated thereunder.


"Competing Bid" means a Qualified Bid that is determined to be the highest or best offer at the Auction in accordance with the procedures set forth in the Bidding Procedures Order.


"Competing Bidder" means a Person other than Purchaser that submits a Qualified Bid.


"Conducted" has the meaning set forth in Section 5.1(a).


"Contract" means any written agreement, arrangement, understanding, lease or instrument or other contractual or similar arrangement.


"Control" (including the terms "Controlled by" and "under common Control with") means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of capital stock, including as trustee (other than a Chapter 11 trustee) or executor, by contract or credit arrangement or otherwise.


"Copyrights" has the meaning set forth in Section 2.1(i).


"Creditors' Committee" means the statutory committee of unsecured creditors appointed by the United States trustee in the Chapter 11 Cases.


"Cure Costs" means all monetary liabilities, including pre-petition monetary liabilities, of Debtor Sellers that must be paid or otherwise satisfied to cure all of each Debtor Seller's monetary defaults under the Purchased Contracts or Reference Leases at the time of the assumption thereof and assignment to Purchaser as provided hereunder as such amounts are determined by the Bankruptcy Court.


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"DB Plan" means a defined benefits plan as described in Section 3(35) of ERISA.


"Debtor-in-Possession Revolving Credit Agreement" means the Debtor-in-Possession Revolving Credit Agreement, dated as of April 3, 2001, among Republic, Republic's subsidiary guarantors that are a party thereto and the Bank Lenders, as supplemented or modified from time to time.


"Debtor Sellers" means those Sellers that are named as debtors and debtors-in-possession in the Chapter 11 Cases.


"DOJ" has the meaning set forth in Section 8.5(b).


"Employee Benefit Plan" means (1) each employee benefit plan within the meaning of Section 3(3) of ERISA and (2) each personnel policy; stock option plan; collective bargaining agreement; bonus plan or arrangement; incentive award plan or arrangement; workers' compensation program; vacation policy; voluntary employees' beneficiary association (VEBA); severance pay plan, policy or agreement; deferred compensation agreement or arrangement; executive compensation or supplemental income arrangement; consulting agreement; employment agreement; and other employee benefit plan, agreement arrangement, program, practice, or understanding, which is sponsored, maintained, or contributed to by Republic or any ERISA Affiliate for the benefit of any employee(s), former employee(s), independent contractor(s), or agent(s) of Republic or any ERISA Affiliate, or has been so sponsored, maintained, or contributed to at any time since 1974.


"Encumbrance" means (except for any lien for Taxes not yet due) any claim, liability, charge, lease, covenant, easement, encumbrance, security interest, lien, option, pledge, right of others, mortgage, hypothecation, conditional sale, or restriction (whether on voting, sale, transfer, defenses, set-off or recoupment rights, disposition, or otherwise) against or with respect to tangible or intangible property or rights, whether imposed by agreement, understanding, law, equity, or otherwise, except for any restrictions on transfer generally arising under any applicable federal or state securities law.


"Environmental Law" has the meaning ...