Agreement; provided, however, thar this Agreement shall not supersede or otherwise modify any
obligations of the parties under the Purchase Agreement or che Settlement Agreement ar any
other agreements executed in conection therewith to be performed in whole or in part after the
date hereof except as and to the extent expressly set forth herein, Nobwithstand ing tre foregoing,
the parties agree that the Transition Services Agreement has terminated and that neither party has
any further obligation thereunder except with cespect to the matters referenced in Section 3
thereof. No express or implied representat-ons, warranties or promises have been made or relied
on by the parties to this Agreement other than those set forth herein’ This Agreement can be
modified only by a writing signed by bath panies and this provision cannot be orally waived

{g) Each party warrants and represents that ic tes the authority to enter into
this Agreement. Specifically, each party represents and warrants:

@ that i: is firlly authorized to enter into this Agreement;

{ii} that in makir.g this Agreement it has obtained the advice of legal
cotnsel: and

that alt corporate formalities necessary to enter into this Agreement

have been completed.

(bh) All nouces and other communications required or permitted hereuader or
under the Purchase Agreement, the Settlement Agreement and any other agreements executed in
cuanection with any of che foregoing shall be in writing and will be deemed to have been duly
given when delivered in person or when dispatched by telegiam or electronic facsimile transfer
{confirmed in writing by mail simultareousty dispatched) or one business day after timely
delivery to a nationally recognized overnight courier service for next business day delivery, in
each case with all delivery, postage and similar charges prepaid and addressed us follows:

If to Resco:

Resco Products, Inc.

Four Penn Center West, Suite 200

Pittsburgh, PA 15276

Facsimile No.: 412.494.4571

Attention: Mr. Wilttam K. Brown
President an¢ CEO



set-off to each of NARCO, Globat and Resco Canada, which notice shall include an endertaking
by Resco to make @ capital contriburian to Resco Canada in an amount equal to the amguni of
the set-off, for purposes of permitting Resca Canada to make a schsiitute contrigution to rhe
Canadian Hourly Plan. Effective upon the giving of such notice. Resco Canada agrees that
Global shall be relieved of its obiizations under the Pension Auresment to make the contibution
referenced therein to the extent of the set-off asserted in the notice.

fe) WARCO represents that set forth on Exhibic B atrached hereto is a true,
correct and cumplete description of certain inventory manufsctured by NARCO ar irs Fulton.
Missouri facility for use at WCI Steel. Inc. (che "WCE taventory"), Such description includes a
listing of the price and unit quantities of each product included in the WCI Inventory, all of
which has been sold to Resco in connection with this Agreement. NARCO aurees that Resco
shall be entitfed ta set off against any amounts owed to NARCO pursuant lo Section 2(¢} bersof
an ameunt equal ta the excess, ifany, cf 327,000 over the price as set forth in Exhibit B for all
WCL Inventory aciually shipped to and received at Resco’s East Canton, Ohio facility within 10

days after the date hereof. Resco shall give NARCO notice of any such set-off.

3. Mutual Releases.

(2) In consideration for the covenants contained in this Agreesnent aod for
ocher good and valuable consideration, the receipt and sufficiency of which are hereby
acknowiedged by NARCO, NARCO, on its beitaif and on behalf of ali persons claiming by,
through and under it, including, withyul limtitatica, each and every subsidiary and joint venture
and their respective affiliates, parents, subsidiaries and divisions and any current or former
directar, officer, agent, employee or stockholder of any of the foregoing, together with their
agents, survivors, legal repcesentatives and assigns (collectively, che "NARGO Parties") hereby
waives, rernises, releases, selltes and forever discharges Resco an irbsidiaries and joint
veaturers and their respective affiliates, parents, subsidiaries and divistons end any current cc
former director, officer, agent, emplayee or stockholder of any of the foregoing, together w:
their respective agents, survivors, legal representatives and assigns (collectively, the "Resco
Patties"), ffom any and all claims, sums of money, fees, compensation, counterclaims, crass-
chims, rights, demands, losses, damages, trespasses, bonds, liabilities, suits, actions and causes
of action against any of the Resco Parties that any of the NARCO Parties, joiatly or severally,
ever had, now hus or may have, in law or in equity, of every nature or description, whether
known or unknown, suspected or unsuspected, fureseen or unforeseen, actual or potential, that
exist as of the date hereof; pravided, however, that the foregoing release shalf not apply to any
claims that any of the NARCO Parties may have against any of the Resco Parties arising ffom or

relating to the following;

Q@ this Agreement;

{ij} Section 3 of che Transition Services Agreement dated as of
March 3, 2000 between Resco and NARCO (the "Transition Services Agreement") and, with
respect to any such claim, Section 4 of such Transition Services Ageensent;

we


EXHIBIT A

Amounts Owed By Resco to NARCO

Description

Ww

os

pees

om

ltr
12.

14.
1.

1é.
17.

18,

Reconciliation of all purchases ard sales of divested and non-
divested brand products through 12/5 1/00.

"Scrap Inventory” within the mzanuig of Section 3 oF the Inventory
Purchase Agreement iturzd as of May 23, 2000 shipped to Resco
plants as of September 16, 2001,

“Scrap Inventory” and “Unsold Inventory" within the meaning of
Sections 3 and 8 of che Inventory Purchase Agreement dated as of
Jane 21, 2000 shipped to Resco plants as of Scptomber 16, 2001.
Reimbursement for lease of laser at WC] through September 2001.
Reimbursement for ccst of mixer at USX-ET through September
2001.

Reconciliation of all purchases and sales of divested and non-
divested brand products since 12/31/00.

Actual Inventory Valuation.

Inventory in pipeline for WCL.

Reimbursement for 50% of lease payments [or taser at Inland Stest.

"Unsold Inventory” withia the meining of che Inventury Purchase
Agreement dated as of May 23, 2000 and shipped ta Resco plants
as of September 16, 2001.

Sublotal:

Amounts Owed bv NARCO to Resco

Credit for overpayment of magnesite invoice #42 (374.
Reconciliation of all purchases and sates of divested and non-
divested brand products from 1/1401 through 3/3/01.
Reimbursement for supptenental unemployment benefits at
Marelan.

Reimbursement for vacation benesirs,

Credit for margin floor adjustments relating to intercompany
transactions.

USX Fairfield A/R adjustment.

Reconciliation of all purchases and sales of divested and non-
divested brand products since 3/31/01 where payment is due
as of LD/1 1/01,

Reimbursement for Harmmond property taxes.

Subtotal:
Total:

Amount
$733,000
191,000
133,000
105,000
3,000
963,000
500,000
27,000

23,000
662,000

S3.447,000

($6,000)
(231,000)
(41,000)

(28,000)
(49,000)

(36,000)
(99,000)

(109,000)

9,000)

$32,848,000


were consumed in the hankruptcy filings and the necessity to meet with credilors, prepare
bankruptcy schedules and review executory contracts. For a time, NARCO was requested by
bankruptcy counsel not lo do any act that might serve as a ratification or assumption of any
existing contracts until they could be reviewed in light of the bankruptcy filing and NARCO’s
duty to its interest-holders. For that reason, NARCO was not in a position to devete resources to
fling a petition with the Commission to approve the 200] Setllement. Because NARCO was the
contract party, ils assistance in seeking approval of the 2001 Scttlemcnt was a prerequisite for
RHI to file this Petition.

Moreover, the United Staics Bankruplcy Cade prohibited RHI from directing NARCO or
the other American subsidiaries fo act or refrain from acting, including but not limited to
assumption or rejection of the existing 2001 Settlement, as with any other executory contract. In
addition, because of the bankruptcy filing, RHI and NARCO no tonger had identical interests as
it related to various portions of the 2001 Settlement. Lastly, the Commission issued a Civil
Investigative Demand and Subpoena on May 24, 2002. RHI responded to the request with
almost 10,000 pages of documents. ‘That submission was made in tuid-July of 2002.

During this time period, RHI, both independently and jointly wilh ils American
subsidiaries, endeavored to provide notice to the Trustee an¢ Commission staff of any potential
issues and has cooperated in obtaining any requested information.

LU. THE 2001 SE7TLEMENT AGREEM :

important points to the 2001 Settlement include the tollowing:

1. Reconciliation of Accounts. ‘The partics agreed to a sum certain to retlect
amounts due NARCO aad its affiliates by Resco, a release for a claim
relating to inventory shrinkage, reimbursement obligations of NARCO
awing fo Resco under lhe terms of the 2000 Settlement.





with a copy to:

Thomas G, Spencer, Esq.
Duane Morris (.1.P

One Liberty Place
Philadelphia, PA 19103-7396
Facsimile No.; 215.979.1020

Ifto NARCO:

North American Refractories Compaay
600 Grant Street, $1" Floor

Pittsburgh, PA 15219

Facsimile No.: 412.562.6324
Attention: Michael A, Schalk, Esq.

with a copy to:

Ronald W, Frank, Esq.

Reed Smith LLP

435 Seth Avenue

Pittsburgh, PA 15219
Facsimile No,:  412,288,3063

fi) No amendment or waiver of any provision of this Agreement shalt be
effective unless the same shall be in waiting and signed by duly authorized representatives of the
parties, and such written and signed amendment or waiver shall be effective only in the specific
instance and for the specific purpose set forth in the text of the amendment or waiver. The
failure of any party tu seek redress for violation of, or to insist upon strict performance of, any
provision of this Agreement shall not be deemed a waiver of that provision or estop that party
from asserting fully all its rights under this Agreement.

1) This Agreement will not be effective until it has been executed by both
parties.

(kK) This Agreement may be executed in one or more counterparts, all of
which taken together shatl constitute one and the same instrument,

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IN WITNESS WHEREOF, NARCO and Resco have caused this Agreement to be
executed as of the day and year first above wricten.

NORTH AMERICAN REFRACTORIES COMPANY

By:

Title:

RESCO PRODUCTS, INC,

py, Wb KA B bpm?

William K. Brown
President and CEO

PHvte9099.4

-li-



2000 Settlement Agreement
By and between NARCO and RESCO

Paragraph Material Changes Caused by 2001 Settlement
Number Title or Subject Matter Agreement

1 Defined Terms No change.

2 Settlement Payment and Releases Payment not effected. Releases broadened.
Purchase by NARCO of Products

3 Manufaclured by Resco Time for purchase extended.
Determination of Actual Inventory

4 Valuation [Amount was settled.
NARCO Provision of Tar Impregnator

§ | ito Resco. No change except for credit limits.

6 _| |Magnesite Supply Agreement Terms _|No change except for credit dimits.

7 CI Steel Inc. Contract INo material change.

& IDecument Production INo material change.

g Brand Substitution Chart No material change.

10 Patent Assignment License back includes WO-4358.

44 Purchase Price Altgcation Allocation confirmed.
Reconciliation of Intercompany

12 Transactions Reconciliation finalized and settled.

43 Farber Inventory Na material change.

14 Canadian Hourly Plan ‘Transfer completed.

15 Hammond Safety Bonus No material change.
Hammond Supplemental

416 Unemployment Pian No material change. Amount owed part of final settiement.

17 Vacation Benefits No material change. Amount owed part of final settlement.
Mareian Supplemental Unemplayment

18 Plan, No material change. Amount owed part of final settlement

19 Removal of Excluded Assets No materlal change.

20 Environmental Matters: indernnity adjusted to reflect lirniled cost sharings.

21 Foreign Licenses INo material change.

22 through

33 inctusive

Miscellaneous Provisions

No material change.

Tort



third party that has invoiced NARCO for such costs provided tat NARCO has furaished Resco
a copy of any such invoice: provided, however, that (1) NARCO shall remaia cesponsibte ior
190% of the costs and expenses incurred in ceanectice with che remediation of matters
referenced in Htern 3 of Exhibit B to the Supalemental Agreement anc the foregoing Section 3{a):
and Resco shall bear no portion of the expense ia connection with such remediation; (ii) Resco
shail nut be obligated to assume or reimburse NARCO faz more than $250,000 in costs and
expenses incuzred in connection with any remediation of the condition identified on [tem E of
Exhibit A to the Supplemental Agreement and (iti) Resvo’s aggrozate liability under this Section
$(b) shall not exceed $500,060.

9 FRC Cooperation Resco shall use reasonable efiors to acvise the FTC staff and
trustee that Resco believes that the terms and condittons of this Agreement are in the best
interests of Resce and are not expected to have any material adverse effect on Resco's ability co
operate the Acquired Assets in a competitive manner. Resew agrees ro specifically advise the
FTC staff and the trustee that it does not believe the sales by NARCO of the WO-4358 laele lip
arch brick after Closing under the Purchase Agreement and prior te September 20, 2002 have
had any material adverse effect upon Resco's competitive position ia the magnesite carbon-based
refractory market

14. Credit Limit

fa) Resco agaees thar NARCO may establish a credit Itmit for purchases by
Resco under the Magnesite Supply Agreement in an amount froin time 10 Lime equal to the
aggregate purchases thereunder for the prior twelve months multiptied by 105/363

(6) Reseo agrees that NARCO may establish a credit limit for tar
impregnation services provided to Resco pursuant to Section 5 of che Settlement Agreement in
an amount from time to time equal co the aggregate price paid or payable by Resco fur suck
services provided during the prior twelve months multiplied by 73/365

(c) NARCO agrees co evaluate any suck credit limit from time to time ard to
consider in good faith appropriate changes to or elimination of such limits based on such Factors
as it considers appropriate, including historical payment pesformance.

11, Miscellancous.

(a) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors aud assigns. Nothing in this Agreement is
intended, nor shalt it be construed, to confer any benefit whatsoever on any persons other than
the parties.

(b) — Each party warrants and agrees that, as of the effective date of this
Agreement, it dr one of more of its Affitiates is the sole and lawful owner of all rights, titl and
interest in and to every claim or matter released herein, that neither it nor any such Affiliate has
assigned, conveyed or otherwise t-ansferted to any person or eatity not 2 party to this Agreement

~75 we



Respectlully Submitted,
PIETRAGALLO, BOSICK & GORDON

By: a SABLE
Gyilfiam Pictragallo, TT
Pa. I.D. #16413
Ene G, Soller
Pa. 1.D. #65560
Counsel for RHI AG
One Ox ford Centre
Thity-Fighth Floor
Pittsburgh, PA 1521Y¥
(412) 263-2000



7 SERVICES PERFORMED BY AUTHORIZED REPRESENTATIVE. Nor
withstanding anytaing in this Agreement: to the contrary, Licensor may engage the services of an
authorized representative to act for and on bebalf of Licensor for any part or all aspects of this
Agreement. Accordingly, Liceasce agrees to deat with such representative upon written notice
from Licensor, which notice shall describe the scope of suck representative's respoasibitities

8 AMESDMENT. This Agreement may oe amended only by writen amendment
executed by an suthurzed: officer or agent of each cf Licensee and Liceasor. No approval,
permission or consent by either party to this Agreement shall have any effect unless itis madé in
weiting by an authorized iepresentative of f such p

9 PROHIBLITON ON ASSIGNMENT. Nothing in this Agreement shall be deemed
Io constitute or result in an assignment of the Pateat to Licensee or the creation of an equitable or
any other interest in the Patent ja Licenses

10 FRANSFERABILITY OF RIGHTS. Licensor’s rights and obligations under this
Agreervent shall be freely transferable, and such rights and obligations shal! inure to the benefir
of and be binding upon its respective successors and assigns, Licensee's rights and obligations
Under tis Agreement skall not, without the prior written consent of Licensor, be transferred,
sublicensed, assigned or alienated in amy mancer, except as expressly provided hereunder,
Notwithstanding the foregoing, Licensee may assign its rights hereunder to en AFil
defined in Rule 12b-2 promulgaced by the Securities and Exchange Commission un
Securities Exchange Act of 1934) of Licensee provided that suck Affiliate agrees to be jointly
Hable with Licenses for al] obligations hereunder.

iH GOVERNING LAW AND JURISDICTION: ARBITRATION. The validity,
interpretation and enforceability of this Agreament shall be determined in accordance with the
internal laws of the Commonwealth of Pennsylvania. Each panty irrevoeadly consents to the
exclusive jurisdiction of either the United States District Court for the Western District of
Pennsylvania or the Allegheny County Court of Common Pleas for purposes of any actian, suit
or ather proceeding arising out of this Agreement.

12 SEVERABITLITY. If any provision or any portion of any provision of this
Agreement shall be held to be vaid or unenforceable, the remaining provisions of this Agreement
and the remaining portion of any provision held void or unenforceable in part shall continue in
full force and effect.

13. NO_ ACKNOWLEDGMENT OF LIAB Licensor gtaazed Liceasee a
license with respect to the Patent for use in the field of refiactory products other than magnesite-
carbon based retractery products pursuant to a Patert License Agreement dated as of April 26,
2001. Resco acknowledges that, by entering into this Agreement, NARCO is not admitting that
the Product is 2 magnesite-carbon based refractory product within the meaning of the April 26,
2001 Patent License Agreement.

-S-



of 5% of Licensee's Ruyalty Base, 8 defined in Setrion 3B The initial Accrual Perivd
for the geriod tram the date bereel we December 36, 2001,

© For purposes of this Agreement, Licensee's “R
shall mean Licensee's tote] Nec Revenues derived from the sale of Product. The te,
rues” shall mean sales az the invoiced peice af Produce 6 deduction of che following all trade
and quandity discounts actually allowed: freighe: allow for credit cr returns: sales commis-
sions actually paid to third parties who ere -
customer duties or purchase taxes borne by che Licenses. "Nex Revenue” shall not include any
deduction for cash or prompt payment discounts, and shell not be decreased by invoices whick
have been written off as uncoliectible. °

C. Meritication bv Licensor, For the purposes cf verifying the accuracy of the
Royatty Fees payable to Licensor, Licensee shail praduce and forward to Licensor a quanerly
revenue report that ts certifted by 2 Francial officer cf Licensee within 43 days after the clase of
each Accruai Periad. Licensor has the ight to appoint a certified pudlic accountant to audit
Licensee's books and records at any time upon rior nctice to Licensee and during custornary
dusiness hours. Licenser shall not have the right co conduct more than one such audi: in any
fiscal year untess any prior audit has revealed an underpayment by Licensee cf 5% or mers of
royalties payable to Licensor hereuncer. Any sech audit shall be at che expense of Licensor,
unless the audit reveals an underpayment by Licensee of 5% ar more of rayalties pavaste to
Cicensor pursuant hereco, in which case the Fees and expenses of such audit shall he bore by
Licensee.

D. Payment end Report Require-nents. With each such quarterly report,
Liceasee shall remit to Licenser the amount of Royalty Fees due Licensor under Section 3B
hereof on account of the activities of Licensee under this +
Overdue Royalty Fees will de charged simple interest at the rate per annum of 1% in excess of

the prime rate as published in The Wall Sireet Journ:

3. PATENT PROTECTION

A. Licensee shall promptly give notice to Licensor of any infringement of the
Patent that shall come to Licensee's attention during the tert of this Agreement. Licensee
agrees, at Licensor’s expense, to cooperate with Licensor, when requested, in stupping such
infingement, but Licensee shall not teke any action against an infringer in its own name or on
behaif of Licensur without Licensor's prior written approval. Licensee acknowledges the validity
of and Licensgor’s exclusive ownership of all right, title and interest m and to the Patent. Licensee
shall not at any time (either during o¢ efter the termination of this Agreement} direct!
indirectly take ary action that mizht impair the valtdity of or che rights of Licensor in the Pace

B. Licensee shall promptly notify Licensor in the event that Licensee shall
acquire knowledge of any clatm that use of the Parent Ly Licensee infringes the rights of ozhers
or of the institution of any action or proceeding against Licensee or otherwise arising out of the
use of the Patent by Licensee. Licensor and its duly authorized representative shall have the
right (but not the obligation), upon written nutificatiun to Licensee within 60 days of receipt of
Licensee's notification to Licensor of such infringement claim, to take charge of the defense of



B, Amendment of Patent Licenses

Under the terms of the 2000 Settlement two patents (US patent numbers (5,427,360 and
5,824,263} were assigned to Resco from NARCO. One of the patents (and the patent in issue}
provides for a specialized shape for the lip of a ladle used in holding molicn steel. This shape,
sometimes known as a “lp arch” has @ very narrow application and can only be utilized by a
limited number of customers who have |alles who utilize this spocial design, (These customers
could use a monolithic material that is applied to the iadte as an alternative to purchasing the
specialized shape.) NARCO then received a royalty. (ree liecase to use (he Gyo paicnts except for
“tmagnesile carbon-based” refractory brick. A dispute arose between Resco and NARCO as to
whether a certain material was a “magnesite carbon-based” brick under the terms of the License
Agreement. NARCO had sold products that may have been within the scope of one of the
patents, which Resco believed to have been with materials that were “magnesite carbon-based”.
The parties have attempted to resolve this maticr by entering into a patent license for the two
shapes limited ty thal specific material (known as WO-4358), a non-divested product. ‘The
License Ayreement provides that NARCO would pay a royalty to Resco of approximately 5% of
sales under (he patents. Respondent believes thal such am arrangement cau only benefit
competition. it provides potential customers with another potential option for certain
applications. The license, therefore, encowrages competilion. The royalty payment, in effect,
provides Resco with a built in price advantage of 5% where there may be competition between
Resco and NARCO for a given customer. Customers would benefit by having another potential
source for this product.

RHI respectfully requests that the Commission, in approving and adopting the 2001

Settlement, also modify Paragraph I. F. of the Conscnt Order, so that it conforms with the terms


2. Amendment of the shape patent Heenses to include one specific refractory
material. This material known as WO-4358 was disputed as to whether it
was a “magnesitc-carbon based brick” under the patent license executed
pursuant to the 2000 Settlement. The material, WO-4358 was a NARCO
developed brick that was not divested to Resco. Under the tenus of the
ficense, NARCO is to pay a royalty of 5% of total sales for that refractory.

3. Certain environmental indemnities contained in the Asset Purchase
Agreement were amended.

4. A mechanism for determining a credit limit for magnesite purchases by
Resco from NARCO was also part of the 200] Setilement.

5. Other provisions relating to the delivery of unsold inventory, the purchase
or products from Resco under the 2000 Settlement and the Allocation of
Purchase Price for the Asset Purchase Agreement.
As described below, RHI fimmly believes that these changes are in the best interests of the
parties to the conlract and are cousistent with the letter and spirit of the Consent Order. To assist

the Commission in analyzing the changes, RHi has prepared Exhibit “B” to identify the changes

to the 2000 Settlement accomplished by the 2001 Settlement.

A. Settkement of Accounts and Claims

Because of the multitude of transactions involved in the divestiture, identifying what
inyentory was transferred and attempting to identify whether inventory shrinkage at a customer
site occurred prior or subsequent to the closing has been difficult. Resco and NARCO found that
sather than altempt ta litigate the amounts owing by Resco te NARCO, it was beneficial to the
parties to settle the amount owing and provide ewch oliee wilh more complete releases than the
releases contained in the 2000 Scttlement. The 2001 Settlement permits the parties lo

concentrate management resources in competing against each other instead of litigating claims.


mis, demands or causes of action released herein, and that it bas

tions tc Caus2 its Affiliates to approve the consummation of the
reement to any persoa

2 the foregoing. NARCO

ign its tights under the License Agreement to an Affiliaee of NARCO provided tha: such
aiz alsa agrees ty be jointly Hable with NARCO for all obligations thereunder.

any of its rights. obligations. ¢lzi
taken or will take ait necessary
tvansactions coatemplated hereby. Ne:ther party shail assizn this Ay

(c} The terns of this Agreement shal! remaia confidential and shalt not be
isctosed to any person or entity (other than an officer, director or attorney for a party), except.
} as ecther party may find necessary in the sormat course of business to its employees.
attorneys, lenders, accountants, acditors and other professional advisors; (ii) in aay procecdi
enforce the terms of this Agreement; (if) as subsequently agreed to in writing by the parties:
{iv} as otherwise required by law or erder of court or governmental agency; (v) to the

uch
terms have become publicly available other thar. through a breach of this Section I1(c); or (vi) ta

the FTC staff and trustee; provided. however, that eithe: parry may disclose tc its employees the
fact that an agreemeat has been reached, wichout disctosing the specific terms of the Agreement.
Ifany person seeks disclosure of this Agreement from either parry, except as provided abave, the
party from which disclosure is sought will notify the other party in accordance with the notice
provisions set forth ia Section | [(h) of this Agreement as soon as praczicable and will forward
any writiigs evidencing any such requests to the other party. The pany from whom disclosure is
sought shatl be responsible for underaxing reasonable eons to resist disctosure and for the
costs, including attorneys’ fees. thereof Should a court erder the disclosure of th Sof oF a
copy of this Agreement to any olher person, the paitics shall use theic best efforts to keep it
confidential and to maintain its terms under seal.

(d) In addition to the confideatiality provisions in this Agreement, and rot by
way of limitation thereof, this Agreement shal] bz dee-ned to fatl within the protection afforded
compromises and offers to compromise by Rule 468 of the Federal Rules of Evidence or any
similar state law provision; provided, however, that it shall be admissibie in any proceeding
becween NARCO and Resco invoiving: (i) a claim that this Agreesent has been breached; or
(ii} a claim that NARCO or Resce violated any term, condition cr provision ef the Purchase
Agreement or the Settlement Agreement and any amendments or supplemental agreements
relating thereto.

(e) This Agreement is the procuct of infortned negotiations between and joint
drafting nf the pacties and their representatives, including counsel. In the event any anthizuity is
fund to exist in any provision of lhis Agreement, such ambiguity is not to be construed against
wither party as the drafter of the docurent. The parties further agree to cooperate in
-y, should the issue arise, that this Agreement was aegotiared

demozstrating to @ court of age!
and unplemented in good faith.

rent represents ‘he entire voderscanding between the parties

with respect to the subject matter hereof, and the parties agree that any previous or
contemporaneous communications, correspondence, memorializations uf agreement or proposed
agreements, or negotiations, setement discussions, proposals or offers are superseded by this

(® Tais Agr

-§- »
os


accordance with NARCO’s order acknowledgement. Resco is to provide forecasts for its
anticipated needs for the following month. The magnesite is priced at $255/metric ton delivered
to the Hammond facility ($265 for thc Marelan facility) or market price, whichever is better, plus
a PPI adjustment in years 2 and 3. Respondent believes the credit limits agreed to by the parties
are commercially reasonable.

D. Amendment of Environmental Indemnities

As part of the overal} setllement embodied in the 200) Setilement Resco and NARCO
agreed to share (to a limited extent) in the payment of costs related ta the environmental
indemnities. Gne of ihe more posilive results from this sharing would be to reduce the likelihoad

for disputes between the parties, or for spurious claims under the indenmity.

IV. CONCLUSION
The terms of the 2001 Settlement are consistent with the spirit and intent of the
Commission’s Decision and Order. Accordingly, the Respondent, RII] AG, requests that the
Commission; (1) approve and adopt the 2001 Settlement, under Rule 2.41(; (2) reopen and
modify the Consent Order to amend the detinition of “Divestiture Agreement” fo include the
2001 Settlement; and (3) reopen and modify Paragraph II.F. of the Consent Order so that RHE
can exercise its rights under the new palent license contained in the 2001 Selilement without

violating the Consent Order.


Brand
Aladin 80
Aladin 80
Aladin 80
Aladin 80

10492
39178
73985
73986

EXHIBIT Bs

Description of WCY Inventory

Size/Shape

12x6x3 st
Sx 6x3 st
ISx3Xx3st

}2x3x3st

Unit
Quantity
1,955
3,504

342

173

Per Unit

Price
4.03
5.05
251
2.02

Total
3 7,798.05
17,695.20
358.42
349.46


EME Fog
f<

, >
TECEIVED DOCURFRTS “Z"
JAN 1G 2095
SECRETARY

UNITED STATES OF AMERICA.
BEFORE THE FEDERAL TRADE COMMISSION

Tn the Matter of

RHI AG Docket No, C-4005

wee wee

PETITION OF RAI AG TO APPROVE CERTAIN SETTLEMENT AGREEMENT
DATED OCTOBER 19, 2001, BETWEEN NORTH AMERICAN REFRACTORIES
COMPANY, AN INDIRECT SUBSIDIARY OF RHI AG,

AND RESCO PRODUCI'S, INC, AND MAKE PART OF THE DECISION AND ORDER

I. INTRODUCTION

Pursuant to Sections 2.41(f} and 2.51 of the Federal ‘Trade Commission (“Commission”)
Rules of Practice and Procedure, 16 €.F.R. 2.41(f) and 2.51 (2001), RHI AG (“RHE") hereby
petitions the Commission 10 approve a certain settlement agreement dated October 19, 2001
{*2001 Settlement”) between North American Refractories Company (““NARCO”), an indirect
subsidiary of RAT, and Resco Products, Inc., and to make said 2001 Settlement part of the FTC
Decision and Order, dated March 21, 2001 (“Consent Order”). The 2001 Settlement, among
other things, sccks to facilitate the implementation of the Assel Purchase Agreement dated
November 11, £999, as amended (the “Asset Purchase Agrecment”) between NAKCO and Resco
Products, Inc. ("Resco") and a settlement agreement between NARCO and Resco dated October
27, 2000 (2000 Seitement”), The 2000 Sctilement. has been approved by the FTC and is part of
the Consent Order.

RII, pursuant 10 Section 2.41(f}, applics for the Commission’s appraval of the 2001
Settlement. (A copy of the 2001 Settlement is attached hercto as Exhibit “A”). Additionally,

pursuant ws Rule 2.51, RHT requests that the Commission reopen the proceeding in order to


Confidential Settlement Proposal
Inadmissibie in any proceeding

SETTLEMENT AGREEMEN?

This Setdement Axreemen: dated as of tae 1y” day of October, 2001 is made by and
between North American Resractorics Company, an Ohio corporation {"NARCD") and Resco
Products, Inc., 2 Pennsytvania corporation ("Resco").

WHEREAS, on Marca 3, 2000, Resco purchased certain assets fran; NARCO pursuaat to
an Asset Purchase Agreement dated November 11, 1999, as anenced (the “Purchase
Agreement"); and.

WHEREAS, in an effars to resolve certain disputes that has arisen between Resco and
WARCO concerning their respective duties and obligations under, and compliance with, the
terms of the Purchase Agreement, Resco and NARCO entered into a Settlement Agreement
dated Octaber 27, 7600 (the "Settlement Agreement"); and

WHEREAS, certain disputes lave arisen betwevn Resco and NARCO concerning their
respective duties and obligations under, and compliance with, the terms of the Purchase
Agreement and the Settlement Agreement; and

WREREAS, the parties desire to resolve these disputes without either party admitting
liability to the other and without the need fer licigation, aif on the terms and conditions sct forth
herein. -

NOW, THEREFORE, in considezation of the premises and the mutual covenants
contained herein, and intending to be legally bound hereby, the parties agree as follows:

1 Defined Terms. All capitalized terms used herein but not defined hevein shail
have the same respective meanings as are set forth im the Purchase Agreement or the Settlement
Agreement, as applicable.

2. Settlement Amount and Payment.

fa) The parties acknowledye and agree that the amounts to be paid by Resco
to NARCO or by NARCO to Resco in connection with various contractual commitments or other
agreements are as set fortit on Exhibit A attached hereto. The aygreyate net balance due from
Resco to NARCO in connection with such matters is $2,848,000 (the "Settlement Amount”).

(b) = The Settlement Amount shall be paid by Resco te NARCO by wire
transfer in immediately availabie fiinds tn accordance with the following wire transfer

instructions:

ate




as hereinafter provided, and shall be automatically renewed for successive consecutive one-year
terms at the end of each tern: if not terminated in accordance with this Agreement.

B. Default and Termination, This Agreement: shall terminate at the election of
either party to this Agreement if the ather party (the "Defautting Party") shall breach or default in
the performance of any of its obligations under this Agreement or any other agreement between
Licensor and Licensee, and such treach or defaul: is not cured after notice ts given as provided
ja Section 6C of this Agreement or as provided ia such other agreement.

Regardless of the foregoing provisions, Licensor may te:minate this Agreement at
any time if any of the folowing circumstances shat! occur:

(i) Declaration of bankruptey or an assignment for the benefit of
creditors by Licensee.

(it) Failure of Licenses to pay Royalty Fees overdue for longer than six
moths after the duc daze

(ii) In case of a traasfer of the rights by Licensee to a third party ia
violatian af Section 10 of this Agreement.

Gv} in case of any material breach of any provision of this Agreement, or
an intentional violation of Liceasor's rights in the Patent.

C. Notice of Default. If either party desires to terminate this Agreement in the
event of a breach or default, such purty shall give written notice ta the defaulting party of the
breach or default by the defaulting party and atlow the defaulting party 30 days thereafter within
which to cure such breach or defah, if suck breach or default shall te capable of curs. Failure
by either party to terminate this Agreement for any one or more acts ar omissions of a defaulting
party that constitute a breach or default hereunder shall in no way whatsoever be construed as a
waiver, express of implied, of that party's right to terminate she Agreement for any other breach
or default or for the same breach or default at a later time.

D. Rights on Tenmination. Upon termination af this Agreement for any reason,
the rights, privileges and obligations of the parties shall be as follows:

(i) Such termination shall be without prejudice to Licensor’s rights to
recover Royalty Fees or other sums due from Licensee under the terms of this Agreement.

(i) Any remedy for any breach or default that has not previously been
cured shall be preserved,

(ii) Licensee shall immediately cease to use the Patent for any and all
purposes.

Without limiting any other provision of this Agreement, the provisions of this Section 6 shall
survive the termination of this Agreement,

-4-


any such clam, action or praveeding fasd of any r

such claim,

mM. action or

2 any seluement ‘of any such ct
proceeding brought azainsi Licensee involving a monetary paya.ent by Licensee without the
consent in writing of Licansee. Licenser shall be lint 4 (to Licenses in rescect of
ary damages aszessed or assened agzinsi Licensee ia, or any liabiticy incurred by oF imposed
upon Licensee in connection with, aay such cluim, action or proeseciag. Licerser and Licenses
agres to cooperate with each erher in all zaspects in any sich claim, action or proceeding.

action ef proces!

C. Un the evens thet Licensee shall accuire knowledze af any use by a chird gary
(other thart any party known to have a license agreement with Li censor) of che Patent, Licensee
shalt not take any actton whaisoever, unless otherwise authorized by Licensor, but shall promptiy
notify Licensor in writing of suca use. Licensor (and its duly suthorized represencative) i
nave the right (bus nor the chligazion) so take v-hateves actinn i: deems agpropniate, inclu
institution of any action ur procesding against such third pany or otherwise, so obtain a discon-
tinuance of such use. Licensor’s far its aulhorized representative's) right to take such action,
however, shall expire if Licensor (or its authorized representative) does aot notify Licenses in
writing within 30 days cf receipt of the aforementioned notice from Licensee of such third party
use. If Licensor exercises its right to cake such action, Licensor shall pay its own expenses and
retain any costs or damayes awarded to it therein. Uf Licensar does not exercise its right to take
suck acsion, or such right expires, Liceasee may take whatever action Licenses, in i
and at its sole expense, deems 10 be necessary and appropriare. Licensee and Licensor
cocperate with each other ia ali respects and to provide each other with ail assistance requested
by the other with respect to ail suck actians.

4. INDEMNIFICATION BY LICENSEE. Licensee shall indemnify, defend anc hold
Licersor harmless against enc fren all claims, demands, actions and rights of action with respect
to ihe subject matter of this Agreement, including without fimitation the maaviacture,
distribution and sale of the Product, thar shall oc may arise by viree of anything done or cmitied
to be done by Licensee or by any of Licensee's agents, empioyecs or other representatives unless
the claim, demand, action or sight arises from an act or omission of Licensor or any of its agents,
employees or other representstives The rights and obligations of the pasties hereto under this
Section 4 shall survive the terminativs of this Agreement.

AXES. All payments or reimbursements under this Agreement shall be made
without seroff or counterclaim and free and clear of and withouc deduction far any and all oresent
and future taxes, levies, imposts, duties or any other charges of a similar natere ("Taxes")
Licensee agrees co cause all Taxes imposed in connectica wich the purchase and sale of the Pred-
uct to de paid directly ta the appropriac? governmental authority.

6. TERM, TERMINATION AND DEFAULT.

A. Term. This Agreement shall begin on the date first set forth above and
continue for an initial terin of ane year foc the date of Us Agreement, unless sooner terminated



of license set forth in the 2001 Settlement. In particular, RHI requests that Paragraph If of the
Consent Order be modified to permit the manufacture and sale of WO-4358. WO-4358 contains
more alumina than other brick with comparable carbon content, has different performance
characteristics than other bricks with comparable carbon content, and generally does nol compete
with traditional mag-carbon bricks. Moreover, the WO-4358 is not the product that was
referenced in the Commission's Complaint issued with the Consent Order.
C, Esinblishing Credit Limits for Magnesite Agreement

Criginally, sales under the Magnesite Agreement were ta be paid on 45-day Lerms.
Under the (enms of the 2000 Settlement, the payment terms were extended to 75 days. During
the summer of 2001, because of the substantial amounts owing by Resco (the bulk of which were
undisputed - only the timing of the payments was in dispute), NARCO and Resco sought to
resolve these matters. The immediate problem has been rectified to some degree by the
settlement referred to above. The credit limits set forth in the 2001 Settlement are hased upon
historical usage of product based upon a period 30 days longer than the crudit terms. Thus,
NARCO could impose a credit limit based upon 105-day usage. It is doubtful that Resco’s
foreseeable usage would cause it to cxeced the credit limit. Therefore, the terms ate
commercially reasonable. The Magnesite Agreement will temninate in March, 2003. The tar
impregnation serviecs, could, if Resco exercises certain options to renew, extend until October
2005.

Under the terms of (he Section D | of the Order the Respondent is required to deliver
“under reasonable tcrms and conditions” any raw materials necessary for Resce to use the
Divested Assets. Under the Magnesite Agreement, Resco agrees to purchase 80% of its annual

magpesite requirements from NARCO, using 4 standard Resco purchase order, with delivery in


IN WITNESS WHEREOF, NARCC and Resco have caused this Agreement to be
executed as af the day and year first above veritten.

NORTI AMERICAN REFRACTORIES COMPANY

By: (a Se Paco

Titlescgl seni

RESCO PRODUCTS, INC.

By:
William K. Brown
President and CEO

PHIER IONS.

aie


EXHIBIT D

Fonm of Patent License Agreement


the Magnesite Agreement, Resco and NARCO entered into a second settlement zyrcement, the
2001 Settlement, in an effort to resolve all disputes.

Subsequent to the execution of the 2001 Scitlement, NARCO and two of its affiliates
iiled for protection uadcr Chapter 11 of the United States bankruptcy Jaws on January 4, 2002
Certain of NARCO's other U.S. affiliates (including Harbison-Walker Refractories Company
and Global) subsequently filed for bankruptcy protection, the iast being filed March 19, 2002.

RHI has nol submitted the 2001 Settlement to the Commission for approval wud adoption
until he present, because of several factors, including:

(1) the financial condition of RHF's American subsidiaries in late 200);

(2} the Chapter 11 filing of RIW’s American affiliates in January,
February and March of 2002;

(3) the change in RHI management in the 4" quarter of 2001;

(4) the dedication of efforts af RHI and its American affiliates to
maintain compliance with Lhe Cansent Order; and

(5} the dedication of cfforts of RHI and its American affiliates in
responding 10 the Commission’s Civil Investigative Demand and
Subpocna,

During the final two months of 200, NARCO was experiencing significant cash low
deficiencics. Its principal motive in scttlmg ils dispute with Resco was to collect cash that
KARCO required for its operations. Because of the importance of obtaining immediate cash,
NARCO initially decided that it did not have the luxury of wailing for the Commission to
approve the 2001 Settlement. It intended to apply for the incorporation of the 2001 Scluement
promptly. At this same ime, RHI was undergoing a change in its executive management. In
November, it announced 4 new Chief Exccutive Officer, who assumed his dulies in January

2002, Virtually all of the management resources of NARCO and other RII American affiliates



{iii} the Magnesite Supply Agrsement dated as of March 3, 2000
between NARCO ard Resco, as amended by the Setlement Agreement (ihe "Magnesite Supply
Agreement"}; and

{iv) Sections 3, 5 and 20 (as amenced hereby) of the Seulement
Agreement.

In consideration for the covenants contained in this Agreement ane for
other good and valuable corsideratian, the receipt and suiticieney of which ace hereby
acknowledeed by Resco, Resco, oa its own behalf aad on behalf ef each Resco Party, hereby
waives, remises, releases, settles and forever discharges eack NARCO Party from any and all
claims, sums of money, fees, cumpensation, counterclaims, cross-claims, rights, demands, losses,
damazes, trespasses, bonds, liabilities, su‘is, actions and causes of action inst any of the
NARCO Parties that any of the Resco Purties, joiatly or severally, ever had, now has or may
have, in Jaw or in equity, of every nature or description, wether known or unknown, suspected
or Ensuspected, foreseen ar unforeseen, actual or potential, that exist as of the cate Hereof,
provided, however, that the foregoing release shall not apply to any claims that any of the Resco
Panies may have against any of the NARCO Pasties arising from ar relazing to the following:

ti) this Agreement,

(ii) the Sugplemental Ageeemert dated December 1, 1999 by and
between NARCO and Resco;

i

( Section 3 cf the Assignment, Bill of Sale and Assumpticn
Agreement dated March 3, 2000 by and amoag NARCO, Harbison-Walker Relractories
Company (“H-W"), Global, Resco and Resuo Canada, Inc, ("Resco Canada"),

(iv) Section 3 of the Transition Services ement, and, with respect
to any such claims, the provisions of Section 4 of such Transition Services Agreement,

(v) the Magnesite Supply Ayreement;

(vi) the Assignments of U.S. Trademarks dated February 23, 2000
between H-W and Rescu, between AP Green Refractories, Inc. and Resco and among H-W,
AP. Green Refractories, Inc., A.P. Green industries, Inc. and Resco,

(wii) the Assignment of Tracemarks dated February 25, 2000 between
NARCO and Resco,

(vit) the Assigament of Canadian Trademarks dated February 23, 2000
between Global and Resco;

(ix) the Letter Agreement dated February 25, 2000 between NARCO
and Resco regarding Use af Certain Trademarks,

-4- ws


‘avinent. Section S¢c) of the Investory
n Resco and NARCO (the "May Tnven’
aceement’ and Section si ie) of the inventory Purchase Agrezment dated’as of June 2£, 2000
between Resco and NARCO {rhe “Jitre Inventory Agreements") shall be supezseded by tae
provisions of this Section 3. Resco siajt nay to NARCO the purchase price for any Unsold
Inventory under the May Inventory Acreement and the June Inver ; Agreement (collectively,
the "Inventory Agreements”) within ered £0 the
applicable: Resco factlity. Resco agrezs th: at} NaRCO shall ke pera d to deliver not less tyan
ws of such Unsni sach applicable Resco facility on each regular

busin¢ss day. The purchase price far suck Linsold Inventecy shal! he (a) the Base Price (as
defined in the May Inventory Agreement) for any such Unsold Inventory referenced in the May
Taventory Agreement, which amount the parties estimate will not excesd $351,000, and [) the
purchase price referénced in the June Inventory Agreement, which amount the patiies estimate
will not exceed $83,000,

7. Patent License. Resco ard NARCO are executing an the date herecf a Jicense
Agreement to the form xdubit D anached heceto (the “Licerse Agreement")

8 Environmental Matters

(a) As promptly as practicable after this date hereof, NARCO shalt retain an
Environmental Consulcance meeting the crizena set forth in Section 6.19{4) of the Purchase
Agreement, as amended, to determine the remediation recuiced by Item 3 of Exhibit B to the
Supplemental Agreemeat dated December |, (999 between NARCO and Resco (the
“Supplemental Agreement”), Such Environmeseal Consultant shall complete any such
remediation as promptly as practicable and in accordance with the procedures specified in
Section 6,19 of the Purchase Agreement, as amended. Notwithstanding the foregoing, Resco
agrees that such remediation shail not require chat any asbastos-tontaining materials removed
fram the equipment or areas to be specified by Resco after reviewing the Environmental
Consultant's repost in order to satisfy the standards set forth in [tem 3 of Exhibit B of the
Supplemental Agreement be replaced by substinwte materials, provided that Resco agrees that the
Enviroumnental Consultant need not replace with substitute materials any asbestos-containing
inatcrials removed from cither (1) the tungel Kiins or the shaft kiln located at Resvo's Hamed,
Indiana pfant and any piping or ductwork used exclusively in connection with such kilns, or fii)
the tar impregnation building located at Resco's Mavelan Facility and any contents thereof.

the provisions of Sectians 1.3(b)(x) and 6 19 of the
Purchase Agreement and the provisions of the Supplemental Agr ent, Resco hereby agrees 10
assume 50% of the costs incurred by NARCO to third parties in performing its obligations under
Section 6 19 of the Purchase Agreement and further agrees to puy such amounts directly to the

(b) = Notwichstandi



Subsequent to the Closing, disputes arose between Resco and NARCO relating to the
Asset Purchase Agreement and the partics’ respective obligations thereunder. The parties,
including RHI, attempted lo resolve ihose disputes by entering into the 2000 Settlement. The
2000 Settlement addressed the main dispute between the parties relating to production and
transfer of documents contemplated under the Asset Purchase Agreement. NARCO, under the
terms of the 2000 Settlement, paid $5,000,000 to settle the dispute. The 2000 Scttlement also
provided tor the extension of credit terms under the Magnesite Agreement, and it introduced
additional provisions not specifically included in the Asset Purchase Agreement, including, by
way of illustration, the assignment of two specific patents, the requirement of best efforts to
veform of cancel certain foreign licenses, the purchase of 1,300 tons of material from Resco, and
NARCO providing lar impregnation services for Resco.

The 2000 Settlement was incorportled into tbe Consent Order. The Commission issued
the final Decision and Order on March 21, 2001.

As an Austrian corporation, RII utilized its American subsidiarics, mostly NARCO, to
maintain compliance with the Conscnt Order, RITI operated through its American subsidiaries to
hetier facilitate compliance, and because the divested assels were directly held by the
subsidiaries. In no way was the use of au Arsnerican subsidiary designed to transfer or
circumscribe KIE’s responsibilities under the Consent Order. Additionutly, (he management of
the American subsidiaries had an ongoing relationship with the management of Resco, which
RAT believed would farther facilitate compliance.

Aller the entering of the Consent Order, certain disputes developed between Resco and

NARCO relating to, among other things, the reconciliation of accounts, the assigned patents and


EXHIBIT €

Purchase Price Allocation


modily the Consent Order, consistent with the terms of the 2001 Settlement. In particular, RHI
asks that the Commission reopen and modify the Consent Order to amend the definition of
“Divestiture Agreement” (o include (he 2001 Settlement, and to modify Paragraph II. F. of the
Consent Order permitting RHI to exercise its rights under [be new patent license set forth in the
2001 Sctilement. RHI seeks this relief, because the approval of the 2001 Settlement and the
modification to the Consent Order will eliminate future disputes between RIL and Resco; it. will
facilitale free lrade; hecawse the terms are commercially reasonable; and because the terms are
consistent with the spirit of the Consent Order.

The 2001 Settlement was voluntarily entered into between NARCO and Resco and
settled a number of disputes and issucs between the companics that resulted, in parl, from certain
ambiguities it the 2000 Settlement. The principal cffects of the 2001 Settlement were to: (a)
resolve once and for all a number of dispntes between the purlics; and (6) amend or modify
certain provisions of the 2000 Settlement, the Magnesite Supply Agreement dated as of March 3,

2000 (“Magnesite Agreement”) and the Asset Purchase Agreement.

On December 30, 1999, the Commission accepted the Consent Agreement and Proposed
Decision and Order submitted by RHI and the Commission Staff, relating to the proposed
acquisition of Global Industrial ‘Technologies, Inc., (“Global”) by NARCO, a wholly owned
indirect subsidiary of RHI, an Austrian corporation. The proposed decision and order required
the divestiture of certain assets of subsidiaries of KHT [Glohal - NARCO] to Resco. The
divestiture was embodicd in the Assct Purchase Agreement. ‘Ihe divestiture transaction closed

on March 3, 2000 (“Closing”).



IN WITNESS WHEREOF, the parties hereof have duly executed this Agreement 35 of
the day and year first above written.

RESCO PRODUCTS, INC.
By:

William K. Brown,
President and CEO

NORTH AMERICAN REFRACTORIES
COMPANY

By:

Name:

Titles.

PHIAS9£I13


PATENT LICENSE AGREEMENT

This Patent License Azreemeat is made a3 of October 19, 2001, by and between Rasen
Products, Enc. {"Licensor"}. a2 Pennsylvaria corporation, and Nonh American R
Company ("Licensee"), an Ohio corperation

Background

Licensor is thy owner of a patent entitled “Refractory Brick Design For Open Fed of
Refractory Lined Vessel," No. 3.327,360 (Serial No. 126,255) issued on June 27, 1955 (the
“Patent"). Licensee is desirous of obtaining a ficense to use, commercialize and exploit the
Patent in the manufacture and sale of Licensee's current formulation of a ladle lip arch brick
knows as WO-4353 (the “Product") on a non-exclusive basis throcgnout the world. Licensor
and Licensee have agreed to the cerms of such nana-exctusive ticense of the Patent in the
manure and sale of the Product on the terms provided in chis Agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein and for
other good ard valuable constderation received, the receipt and sufficiency of which are hereby
acknowledged, and of the representations and covenants hereinafter set forth, the parties hereby
agree as follows:

I. GRANT OF LICENSE.

A. License af Patent. Subject to the provisions of this Agreement, Licensor
hereby grants to Licensee the non-exclusive right tp use, commercialize and exploit the Parent to
manufacture, market, distribute, lease and sell the Product throughout the world. The foreg
Ecense shalt not apply to any modification of the Product, inuluding without fimitation any
change in the furmulation of the Pradtct, from the Product's current formulation.

B. Identification of Status and Ownershio of Parent

(i) Licensee ecknowiedges that Licensor owns the Patent and agrees never ta
impugn or challenge or to assist in any challenge of the validity of the Patent, the registraton of
the Pateat or Licensor's ownership of the Patent.

Gi} Tf requested by Licensor in writing, Licensee agrees to affix to each
Product or to the package ccataining such Product er to an insection slip in the package with
each such Product # legibte notice reading: “Licensed under U.S, Patent No. 3,427,360."

2. ROYALTIES.

A. Royalty Fees for Products. Licensee agrees to pay to Licensor for the license
of the Patent for each Rscal quarter of each year ducing the term of this Agreement (each of

which ts referred to herein as an "Accrual Period") royalty fees ("Royalry Fees") in the amount



Bank. Citibank, NA. New York, NY
ABA No.: O21 O00 08D

Account Name: Elarbisun-Walkxer R:
Account No: 3045-9874

ctories Ci

(©) The Settlement Amount shalt be paid on the folluwing schedul:
{iy One mitiion dollars is buiag paid on the dare hereof: and

(i) the batanve of $#,$48,006 shall be payable in weedy installments
of $200,000 on Friday of each week commencing October 26, 2001, vaxit the entire Settlement
Amount has been paid, with the final payment being in the a:neunt of 548, 900; provided,
however, that Resco shal] have no obligation to make any such pericdic payment hereunder after
November 30, 2001 unless and until Glebal-GIX Canada ("Global") shall make the eatire
contribution referanved in Section 2(d) hereof, in which event payments hereunder shall 1esume
as set forth in Section 2(cMiii) herenf.

(ig) If Global makes the entire cor
hereof on or before December 31, 2001, then Resca shall,
pay to NARCO an amount equal to the lesser of the unpaid balance of the Settlement Amount or
$200,000 multiplied by the number of Fridays commencing with December 1, 2602 through and,
if applicable, including the date on whick such contribution is made Sy Giobal. Bf any portion of
the Settlement Amount remains unpatd foilowing such: payment, Resco shall resume making
weekly instalment paynrzats in the amount of $200,006 until such balance is paid in full, with
the final payment being $48,006.

ibutian seferenced ia Section 2d)
‘ithin iuee business days thereafer,

Gv) [F Resco defaults on its obligation tu make eny pe¥ment wher dee
pursvant to this Section 2(c) and such defaclt remains uncured for a period of 15 days afier
notice of such default from NARCO, then (A) all portions of the Settlement Amount that are
then due and payable shall accrue interest from and after the dats of such Cefault at a cate equal
to the prime rate es published from time to ime in Tre Wal? Sereet sournal plus 1%, and (B) at
NARCO's option, exercisable hy notice given to Resco, the eatire unpaid Settlement Amount
shall become immediately duc and payable.

{d) Resto and NARCO acknowledge that, pursuant to the terms of a Pension
Plan Transfer Agreement (the “Peasion Agreement") dated as uf October 27, 2000 between
Globat and Resco Canada, Inc. ("Kesco Canada”), Globat has agreed co make a contribution in
the amount of CDN $1,938,400 to the Canadian Hourly Plan nce Jater then December 3), 2001.
NARCO agrees that if Global does not make the entire contribution referenced above on a1
before December 3], 260%, Resco shali have the right, exercisable on or after Fanuary t, 2002, ro
set off any deficiency in such contribution azainst any amount then owed by Resco to NARCO.
pursuant to Section 2(c) hereof, the Magnesite Supply Agreement, the Transition Services
Agreement or pursuant to any other obligation then owing by Resco to NARCO; provided that
Resco shalf first assert any such set-off against any portion of the Settlenient Amount that
remains unpaid. In order to assert such set-off, Resco shall give notice of its assertion of such

«2-

why


(x} Assignment of Patents dated February 23, 2000 between H-W and
Resco;

{xi} the following sections of the Purchase Agreement:

(H t3tb):

3(a}(3} as and to che extent it relates to a breach of
chase emeut, end only if and to the extent such
greement;

(IT)
Section 2.1.5, 2.1.6 oF 2.1.12 of the Asset Pur
breach causes Resco any damages after the date of tats

(ET} 3.3 {a){it) as and to the extent it relates te a breach of
Section 6.4 or 6.19, and only ifand to the extent such breach causes Resco any damages aiter

the date of this Agreement,
(EV) 5 S(aM{iti), 5 I (a)tiv), $.3(aM¥) or 5 3{aXvi),

(NY) 5.4, with iespezt to any claims described in the
foregoing clauses (xi —{xiXTV)};

(WT) 6.14; 0
{VII} 6.19 {as amended); or

(sii) Sections 3, 5, $(a), 14, 20 (as arnendet hereby) and 21 of the
Setrement Agreement.

4. Purchase hy NARCO of Products Manufactured by Resco. Subject to the
provisions of this Section 4, a5 promptty as practicable and in any event no later than
November 30, 2001, Resco shall ship to NARCO ths products manufactured by Resco at its East
Canton, Ohio facility using the brand technology that had historically been used by NARCO at
the Farber Facility for which NARCO has previously subwitted purchase orders, which
shipments shalt be in accordance with such purchase orders. ENARCO gives Resco notice that
it cannot accept any such shipment by November 30, 2001, Resca shatt delay shipping the
products referenced in any such notice until such date(s) as shall be specified in a subsequent
notice from NARCO, Notwithstanding any such delay in shipment, NARCO agrees that Resco
may invoice NARCO for afl such products that remain tashipped as of November 30, 2001 on
such date. The price for such products as set forth on such purchase orders shall be payable
within 30 days of the invoice date, which shall be tae earlier of November 30, 2001 or the date of
shipment. Resco acknowledges that, upon completion of the purchases contemplated by this
Sectian 4 including payment therefor, NARCO shall have completed its obligations under

Section 3 of the Settlement Agreement.