SEPARATION AGREEMENT AND GENERAL RELEASE

RathGibson, Inc. (the “Company”), and its affiliated companies, RGCH Holdings
Corp. (“Holdings”) and RG Tube Holdings LLC (f/k/a RGCH Holdings LLC) (the
“LLC”), and Harley B. Kaplan (the “Executive”) (together, the “Parties”) entered
into an employment agreement, dated as of February 7, 2006, as amended
(the “Employment Agreement”).  Any capitalized terms used but not defined herein
have the respective meanings set forth in the Employment Agreement.  The Parties
hereby agree that this Separation Agreement and General Release
(this “Agreement”) sets forth their complete agreement and understanding
regarding the termination of the Executive’s employment with the Company.

1.

Separation Date;  Consulting Period; Resignation.  

(a)

The Executive’s employment with the Company will terminate effective August 6,
2008 (the “Separation Date”).  The Executive shall, within thirty (30) days
after the Separation Date, return all property belonging to the Company,
Holdings, the LLC, and any of their respective subsidiaries (collectively,
the “Affiliates”).  Except as specifically provided below, the Executive shall
not be entitled to receive any benefits of employment following the Separation
Date.  

(b)

During the time period from the Separation Date until September 15, 2008 (or
such longer period as is agreed upon in writing by the Company and the
Executive), the Executive shall act as an independent contractor to the Company
providing such transition-related consulting services to the Company as the
Company may reasonably request.  The consideration described below in Section 2
will constitute the Executive’s sole compensation for rendering such consulting
services to the Company.   The Company agrees to reimburse the Executive for any
reasonable out of pocket expenses incurred in connection with his performance of
such consulting services, in accordance with the Company’s expense reimbursement
policy.

(c)

By his execution and delivery of this Agreement, the Executive hereby resigns
from all positions as an officer, member of the board of directors (or any
similar governing body) and/or member of any committee of the board of directors
(or any similar governing body) of the Company and any of the Affiliates (as
applicable).  The Executive agrees to provide such further documentation
implementing such resignations as the Company may reasonable request.

2.

Consideration of the Company.  Termination of the Executive’s employment shall
be conclusively deemed to have been a termination of the Executive’s employment
by the Executive for Good Reason under Section 5.5 of the Employment Agreement.
 Accordingly, pursuant to Section 6.2 of the Employment Agreement and in
consideration of the releases and covenants of the Executive set forth in this
Agreement and in the Employment Agreement, the Company will provide the
Executive with the following:

(a)

the Accrued Benefits;

(b)

the Executive’s accrued but unpaid vacation, if any, to the Separation Date;

(c)

continued Base Salary for twenty-four (24) months after the Separation Date,
payable in weekly installments in accordance with the Company’s payroll
practices;

(d)

a lump sum payment of $281,095.89, which is equal to the product of: (i) the
$450,000 annual target Bonus amount payable to Executive with respect to the
2008-2009 fiscal year (which is from February 1, 2008 – January 31, 2009); and
(ii) a fraction, the numerator of which is the number of days the Executive was
employed during the 2008-2009 fiscal year (i.e., 228 days) and the denominator
of which is 365, payable twenty (20) days after the Separation Date;

(e)

continued coverage under the Company’s medical and dental plans for twenty-four
(24) months after the Separation Date; provided, that the Company may provide
such coverage through

reimbursement of the cost of continuation of group health coverage, pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1986, to the extent the
Executive is eligible and subject to the terms of the plan and the law; and

(f)

payment with respect to the college tuition of the Executive’s daughter for the
fall semester of 2008 under the Company’s tuition reimbursement policy.

3.

Executive Release of Rights.  The Executive (defined for the purpose of this
Section 3 as the Executive and the Executive’s agents, representatives,
attorneys, assigns, heirs, executors, and administrators) irrevocably, fully,
and unconditionally releases the Released Parties (defined as the Company, the
Affiliates, DLJ Merchant Banking Partners IV, L.P., each of their respective
affiliated companies, parents, subsidiaries, predecessors, successors, assigns,
divisions, related entities and any of their respective past or present
employees, officers, agents, insurers, attorneys, administrators, officials,
directors, shareholders, employee benefit plans, and the sponsors, fiduciaries,
or administrators of the employee benefit plans of the Company or any of the
Affiliates) from any and all liability, claims, demands, actions, causes of
action, suits, grievances, debts, sums of money, agreements, promises, damages,
back and front pay, costs, expenses, attorneys’ fees, and remedies of any type,
arising or that may have arisen out of or in connection with the Executive’s
employment with or termination of employment from the Company or any of the
Affiliates, from the beginning of time through the date hereof, including but
not limited to claims, actions or liability under:  (1) Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866,
the Age Discrimination in Employment Act, the Americans with Disabilities Act of
1990, the Fair Labor Standards Act, the Workers’ Adjustment and Retraining
Notification Act, the Employee Retirement Income Security Act of 1974, the
Internal Revenue Code, the New York State Human Rights law, or the
Administrative Code of the City of New York, all as amended; (2) any other
federal, state or local statute, ordinance, or regulation regarding employment,
termination of employment, or discrimination in employment, and (3) the common
law relating to employment contracts, wrongful discharge, defamation, or any
other matter.  Notwithstanding the foregoing, the parties agree that the release
of rights provided by the Executive under this Section 3 shall not include or
cover any claims by the Executive relating to: (A) the Executive’s rights under
this Agreement; (B) the Executive’s rights to benefits under the Company’s
401(k) plan (subject to the terms and conditions thereof); or (C) the
Executive’s rights with respect to his Class A Units (as defined therein) under
the Amended and Restated Limited Liability Company Agreement of RG Tube Holdings
LLC, a Delaware limited liability company (“RG Tube”), dated as of  April 16,
2008, as amended (the “LLC Agreement”), which shall be governed by the LLC
Agreement and the Letter Agreement, dated June 15, 2007, between the Executive
and RG Tube (the “Side Letter”).

4.

Waiver of Reinstatement.  The Executive waives any reinstatement or future
employment with the Company or any of the Affiliates and agrees never to apply
for employment or otherwise seek to be hired, rehired, employed, re-employed, or
reinstated by the Company or any of the Affiliates, or any of their respective
affiliated companies or corporations.  However, if the Executive is employed by
an entity that subsequently acquires, is acquired by, or is merged with, the
Company and/or its Affiliates, nothing in this Agreement shall prevent the
Executive from continuing his employment with that entity.

5.

No Encouragement of Claims.  The Executive agrees not to encourage or assist any
person or entity who files a lawsuit, charge, claim or complaint against any of
the Released Parties unless the Executive is required to render such assistance
pursuant to a lawful subpoena or other legal obligation.

6.

Cooperation of the Executive.  During the twenty-four (24) month period
following the Separation Date, the Executive agrees to cooperate with the
Company and the Affiliates in any reasonable manner as the Company and the
Affiliates may request, including but not limited to furnishing information to
and otherwise consulting with them; and assisting them in any litigation or
potential litigation or other legal matters, including but not limited to
meeting with and fully answering their questions or the questions of their
respective representatives or agents, and testifying and preparing to testify at
any deposition or trial.  Subsequent to the twenty-four (24) month period
following the Separation Date, subject to other demands on

 

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the Executive’s time, the Executive agrees to cooperate with the Company and the
Affiliates in any reasonable manner as the Company and the Affiliates may
request, including but not limited to furnishing information to and otherwise
consulting with them; and assisting them in any litigation or potential
litigation or other legal matters, including but not limited to meeting with and
fully answering their questions or the questions of their respective
representatives or agents, and testifying and preparing to testify at any
deposition or trial.  The Company agrees to reimburse the Executive for any
reasonable out of pocket expenses incurred as a result of any cooperation
provided by the Executive under this Section 6.

7.

Non-admission/Inadmissibility.  This Agreement does not constitute an admission
by the Company or any of the Affiliates that any action it took with respect to
the Executive was wrongful, unlawful or in violation of any local, state, or
federal act, statute, or constitution, or susceptible of inflicting any damages
or injury on the Executive, and the Company and the Affiliates specifically deny
any such wrongdoing or violation.  This Agreement is entered into solely to
resolve fully all matters related to or arising out of the Executive’s
employment with and termination from the Company, and its execution and
implementation may not be used as evidence, and shall not be admissible in a
subsequent proceeding of any kind, except one alleging a breach of this
Agreement.

8.

Severability.  The provisions of this Agreement shall be severable and the
invalidity of any provision shall not affect the validity the other provisions.

9.

Governing Law.  This Agreement shall be governed by and construed in accordance
with the laws and judicial decisions of the State  of New York, without regard
to its principles of conflicts of laws.

10.

Scope of Agreement.  The Executive understands that he remains bound to those
provisions in the Employment Agreement, which survive the termination of the
Executive’s employment, including but not limited to, those provisions in
Section 7 of the Employment Agreement.  Except as specifically set forth in such
provisions, this Agreement contains the entire agreement and understanding
between the Executive and the Company concerning the matters described herein,
and supersedes all prior agreements, discussions, negotiations, understandings
and proposals of the Parties concerning such matters (for the avoidance of
doubt, the ‘matters described herein’ do not include the Executive’s rights or
obligations under the LLC Agreement and the Side Letter).  The terms of this
Agreement cannot be amended, modified or waived except in a subsequent document
signed by all of the Parties which states that it constitutes an amendment,
modification or waiver of this Agreement (as applicable) and specifies the
provisions hereof being amended, modified or waived (as applicable).  No delay
on the part of any Party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any
right, power or privilege hereunder, nor any single or partial exercise of any
right, power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.

11.

Revocation Period.  The Executive has the right to revoke this Agreement for up
to seven (7) days after he signs it.  In order to revoke this Agreement, the
Executive must sign and send a written notice of the decision to do so,
addressed to: Chief Financial Officer, RathGibson, Inc., 475 Half Day Road,
Suite 210, Lincolnshire, IL 60069 (with a copy to: Edward Johnson, DLJ Merchant
Banking Partners, One Madison Avenue, New York, NY 10010), and that written
notice must be received by the Company no later than the eighth (8th) day after
the Executive signed this Agreement.  If the Executive revokes this Agreement,
the Executive will not be entitled to any of the consideration from the Company
described in Section 2 above, except to the extent required by law.

12.

Voluntary Execution of Agreement.  The Executive acknowledges that:

(a)

the Executive has carefully read this Agreement and fully understands its
meaning;

(b)

the Executive had the opportunity to take up to twenty one (21) days after
receiving this Agreement to decide whether to sign it.  If the Executive elected
to sign this Agreement before the

 

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expiration of the full twenty-one (21) day period, the Executive acknowledges
that the Executive has chosen, of his own free will without any duress, to waive
his right to the full twenty-one (21) day period;

(c)

the Executive understands that the Company is hereby advising him, in writing,
to consult with an attorney before signing this Agreement;

(d)

the Executive is signing this Agreement, knowingly, voluntarily, and without any
coercion or duress; and

(e)

everything the Executive is receiving for signing this Agreement is described in
the Agreement itself or in the Employment Agreement, and no other promises or
representations have been made to cause the Executive to sign this Agreement.

13.

Nondisclosure.  The Executive shall not disclose the contents or substance of
this Agreement to any third parties, other than the Executive’s attorneys,
accountants and immediate family members or as required by law, and shall
instruct each of the foregoing not to disclose the same.

14.

Governing Law; Dispute Resolution and Venue.  This Agreement shall be governed
by and construed in accordance with the laws and judicial decisions of the State
of New York, without regard to its principles of conflicts of laws.  The Parties
agree irrevocably to submit to the exclusive jurisdiction of the federal courts
or, if no federal jurisdiction exists, the state courts, located in the City of
New York, Borough of Manhattan, for the purposes of any suit, action or other
proceeding brought by any Party arising out of any breach of any of the
provisions of this Agreement and hereby waive, and agree not to assert by way of
motion, as a defense or otherwise, in any such suit, action, or proceeding, any
claim that it is not personally subject to the jurisdiction of the above-named
courts, that the suit, action or proceeding is brought in an inconvenient forum,
that the venue of the suit, action or proceeding is improper, or that the
provisions of this Agreement may not be enforced in or by such courts.  In
addition, the Parties agree to the waiver of a jury trial.

15.

Assignment.  This Agreement, and all of the Executive’s rights and duties
hereunder, shall not be assignable or delegable by the Executive.  Any purported
assignment or delegation by the Executive in violation of the foregoing shall be
null and void ab initio and of no force and effect.  This Agreement may be
assigned by the Company to a person or entity which is an Affiliate or a
successor in interest to substantially all of the business operations of the
Company.  Upon such assignment, the rights and obligations of the Company
hereunder shall become the rights and obligations of such Affiliate or successor
person or entity.

16.

Successors; Binding Agreement.  This Agreement shall inure to the benefit of and
be binding upon personal or legal representatives, executors, administra­tors,
successors, heirs, distributees, devisees and legatees.

17.

Counterparts.  This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
instrument.

18.

Headings.  The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning of terms contained herein.

19.

Tax Withholding.  The Company is authorized to withhold from any benefit
provided or payment due hereunder, the amount of withholding taxes due any
federal, state or local authority in respect of such benefit or payment and to
take such other actions as may be necessary to satisfy all obligations of the
Company and the Affiliates for the payment of such withholding taxes in
accordance with applicable law.

 

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PLEASE READ CAREFULLY BEFORE SIGNING.  THIS DOCUMENT INCLUDES A RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS.

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IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of
the date set forth above.

THE EMPLOYEE:

/s/ Harley B. Kaplan

Harley B. Kaplan

THE COMPANY:

RATHGIBSON, INC.

By: /s/ Edward A. Johnson

Name:  Edward A. Johnson

Title:  Authorized Signatory

RCGH HOLDINGS CORP.:

By: /s/ Edward A. Johnson

Name:  Edward A. Johnson

Title:  Authorized Signatory

  

RG TUBE HOLDINGS LLC:

By: /s/ Edward A. Johnson

Name:  Edward A. Johnson

Title:  Authorized Signatory

 

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