EXHIBIT 10(v)
STATUS QUO AGREEMENT
THIS AGREEMENT dated October 22, 2002 is made
AMONG:
GERDAU STEEL INC.
- and -
GERDAU COURTICE STEEL INC.
GERDAU MRM HOLDINGS INC.
GERDAU USA INC.
- and -
GERDAU NOVA SCOTIA HOLDING COMPANY
- and -
CO-STEEL INC.
- and -
STATE STREET BANK AND TRUST COMPANY
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA
AS CANADIAN SECURITY AGENT
- and -
THE TORONTO-DOMINION BANK
AS ADMINISTRATION AGENT UNDER ONE OF THE CO-STEEL GROUP CREDIT AGREEMENTS
REFERRED TO BELOW
- and -
PNC BANK, NATIONAL ASSOCIATION
- and -
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
- and -
U.S. PRIVATE PLACEMENT FUND
- and -
THE TORONTO-DOMINION BANK
AS ADMINISTRATION AGENT UNDER THE GERDAU LOAN AGREEMENT REFERRED TO BELOW
- and -
2017387 ONTARIO LIMITED
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BACKGROUND
Gerdau Steel Inc. ("GERDAU STEEL") proposes to acquire common shares
in Co-Steel Inc. ("CO-STEEL") representing approximately 64.8% (following
completion of all related transactions) of the voting Capital Stock of Co-Steel
on a fully diluted basis after issuance pursuant to certain proposed combination
transactions (the "CO-STEEL COMBINATION TRANSACTIONS") outlined in more detail
in the Management Information Memorandum of Co-Steel dated August 26, 2002 (the
"MANAGEMENT INFORMATION MEMORANDUM"). The Co-Steel Combination Transactions
contemplate the following transfers (the "TRANSFERS"):
(i) the transfer by Gerdau Steel of all of the existing Capital
Stock (the "EXISTING GERDAU CANADA SUBGROUP SHARES") in each of
Gerdau Courtice Steel Inc. ("COURTICE"), Gerdau MRM
Holdings Inc. ("MRM HOLDINGS") and Gerdau USA Inc.
("GERDAU USA") to 4104315 Canada Limited (the "GERDAU CANADA
SUBGROUP INTERIM HOLDING COMPANY"),
(ii) followed by a transfer of the Existing Gerdau Canada Subgroup
Shares to Gerdau Nova Scotia Holding Company ("GERDAU CANADA
SUBGROUP HOLDING COMPANY") and
(iii) followed by a transfer of all of the issued Capital Stock in
Gerdau Canada Subgroup Holding Company to Co-Steel.
In order for the Co-Steel Combination Transactions (including the
Transfers) to take place (i) Gerdau Steel, among others, must obtain the consent
of The Toronto-Dominion Bank, acting in its capacity as administration agent for
and on behalf of the lenders (the "GERDAU LENDERS' AGENT") under the amended and
restated loan agreement initially dated November 8, 1996 (as further amended and
restated on or before the date hereof, the "GERDAU LOAN AGREEMENT"), and (ii)
Co-Steel must obtain the consent of the Co-Steel Lenders (as defined herein)
under certain of the Co-Steel Group Credit Agreements (as defined herein).
Neither the Gerdau Lenders' Agent nor the Co-Steel Lenders would consent to the
Co-Steel Combination Transactions unless each of the other Persons expressed to
be party to this Agreement agreed to preserve the status quo in respect of
Gerdau Canada Subgroup Holding Company and the Intermediate Holding Company and
the Capital Stock of each Gerdau Canada Subgroup Member in the manner
contemplated by this Agreement.
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NOW THEREFORE, in consideration of the mutual obligations contained in
this Agreement and for other consideration, the receipt and sufficiency of which
are acknowledged, the parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"BANKRUPTCY PROCEEDING" means, with respect to any Person, any
proceeding contemplated by any application, petition, assignment,
filing of notice or other means, whether voluntary or involuntary and
whether or not under the Bankruptcy and Insolvency Act (Canada), the
Companies' Creditors Arrangement Act (Canada), the Winding-Up and
Restructuring Act (Canada), the Bankruptcy Code of the United States
of America or any other like or similar legislation of any
jurisdiction seeking any moratorium, reorganization, adjustment,
composition, proposal, compromise, arrangement or other like or
similar relief in respect of any or all of the obligations of such
Person, seeking the winding up, liquidation or dissolution of such
Person or all or any part of its property, seeking any judgment, order
or declaration adjudging such Person insolvent or bankrupt, seeking
the appointment (provisional, interim or permanent) of any Receiver or
resulting, by operation of law, in the bankruptcy of such Person.
"CAPITAL STOCK" means common shares, preferred shares or other
equivalent equity interests (howsoever designated) of capital stock of
a body corporate, equity preferred or common interests in a limited
liability company, member or shareholder interests in an unlimited
liability company, limited or general partnership interests in a
partnership or any other equivalent of such ownership interest.
"CO-STEEL GROUP CREDIT AGREEMENTS" means (i) the Credit Agreement
dated as of April 30, 2002 between Co-Steel Inc. as Borrower, the
companies therein named as Guarantors, the Lenders therein named, The
Toronto-Dominion Bank as Administration Agent (the "ADMINISTRATION
AGENT") and The Bank of Nova Scotia as Syndication Agent, (ii) the
Second Amended and Restated Credit Agreement dated as of April 30,
2002 between Co-Steel Sayreville, Inc. as Borrower and PNC Bank,
National Association as Lender, (iii) the Second Amended and Restated
Credit Agreement dated as of April 30, 2002 between Co-Steel Raritan,
Inc. as Borrower and PNC Bank, National Association as Lender, (iv)
the Second Amended and Restated Note Agreement dated as of April 30,
2002 between Co-Steel Inc. as Issuer and The Prudential Insurance
Company of America and U.S. Private Placement Fund as Purchasers and
(v) the Intercreditor Agreement dated as of April 30, 2002 (the
"CO-STEEL INTERCREDITOR AGREEMENT") among the Co-Steel Security
Agents, the Administration Agent, The Prudential
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Insurance Company of America, U.S. Private Placement Fund and PNC
Bank, National Association.
"CO-STEEL GROUP MEMBER" means any one of Co-Steel and its consolidated
Subsidiaries, excluding (i) the Gerdau Canada Subgroup and their
respective subsidiaries, (ii) the Gerdau Canada Subgroup Holding
Company, and (iii) the Intermediate Holding Company; and "CO-STEEL
GROUP" means all of the Co-Steel Group Members.
"CO-STEEL GROUP SYNDICATED CREDIT AGREEMENT" means the Co-Steel Group
Credit Agreement referred to in clause (i) of the definition thereof.
"CO-STEEL LENDERS" means (i) the parties to the Co-Steel Intercreditor
Agreement (other than any of the Co-Steel Group), excluding the
Co-Steel Security Agents and (ii) the Lenders party to the Co-Steel
Group Syndicated Credit Agreement.
"CO-STEEL LENDERS' SECURITY" means the Liens and guarantees granted by
any of the Co-Steel Group and held from time to time by or for the
benefit of the Co-Steel Lenders securing or intended to secure the
payment or performance of the obligations of the Co-Steel Group under
the Co-Steel Group Credit Agreements or any guarantee thereof.
"CO-STEEL SECURITY AGENTS" means State Street Bank and Trust Company
and Computershare Trust Company of Canada as the Security Agents party
to the Co-Steel Intercreditor Agreement, and includes (as the context
requires) any replacement security agent appointed under the Co-Steel
Intercreditor Agreement.
"GERDAU CANADA GROUP MEMBER" means any of Gerdau Steel and its
consolidated subsidiaries, including the Gerdau Canada Subgroup and
their respective subsidiaries, but excluding (i) each Co-Steel Group
Member, (ii) the Gerdau Canada Subgroup Holding Company, and (iii) the
Intermediate Holding Company; and "GERDAU CANADA GROUP" means all of
them.
"GERDAU CANADA SUBGROUP MEMBER" means any of Courtice, MRM Holdings
and Gerdau USA; and "GERDAU CANADA SUBGROUP" means all of them.
"GERDAU LENDERS" has the defined meaning assigned to "Lenders" in the
Gerdau Loan Agreement.
"GERDAU LENDERS' AGENT" has the defined meaning assigned to it in the
Background to this Agreement, and includes (as the context requires)
any replacement administration agent appointed under the Gerdau Loan
Agreement.
"GERDAU LENDERS' SECURITY" means the Liens and guarantees granted by
any of the Gerdau Canada Group and ▇▇▇▇▇▇ ▇.▇. and held from time to
time by or for the benefit of the Gerdau Lenders securing or intended
to secure the payment or performance of the obligations of the Gerdau
Canada Group under the Gerdau Loan Agreement or any guarantee thereof.
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"INTERMEDIATE HOLDING COMPANY" means 2017387 Ontario Limited, a
corporation incorporated under the laws of the Province of Ontario as
at the date hereof which may acquire all of the Capital Stock of the
Gerdau Canada Subgroup Holding Company pursuant to the Intermediate
Holding Company Transfer.
"INTERMEDIATE HOLDING COMPANY TRANSFER" means a transfer to the
Intermediate Holding Company by Co-Steel of all issued and outstanding
Capital Stock of the Gerdau Canada Subgroup Holding Company pursuant
to an Intermediate Holding Company Transfer Agreement.
"INTERMEDIATE HOLDING COMPANY TRANSFER AGREEMENT" means a share
purchase agreement between Co-Steel and the Intermediate Holding
Company in the form of Exhibit 1 annexed hereto.
"LIEN" means any mortgage, lien, pledge, assignment, charge, security
interest, lease, trust or other arrangement intended as security,
title retention agreement, conditional sale, rights reserved in any
governmental body, registered lease of real property, hypothec, levy,
execution, seizure, attachment, garnishment or other similar
encumbrance and includes any contractual restriction which, if
contravened, may give rise to an encumbrance.
"PERSON" means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, limited or unlimited
liability company, corporation or other body corporate with or without
share capital, unincorporated association, trust, estate, trustee,
executor, administrator or other legal personal representative or
Governmental Body.
"RECEIVER" means, with respect to any Person, any receiver, manager,
receiver and manager, custodian, sequestrator, liquidator, trustee or
like or similar official in respect of such Person or all or any part
of such Person's property.
"REPAYMENT OF THE CO-STEEL OBLIGATIONS" means permanent and
irrevocable payment to the Co-Steel Lenders in full of all obligations
arising under, by reason of, or otherwise in respect of, the Co-Steel
Group Credit Agreements and all guarantees thereof in accordance with
(i) the express provisions of the Co-Steel Group Credit Agreements and
such guarantees, (ii) any compromise or settlement agreement that is
binding upon and enforceable against each and all of the Co-Steel
Lenders and the Co-Steel Security Agents or (iii) a final order from a
court of competent jurisdiction from which no further appeal lies or
is taken that is binding on and enforceable against each and all of
the Co-Steel Lenders and the Co-Steel Security Agents.
"REPAYMENT OF THE GERDAU OBLIGATIONS" means permanent and irrevocable
payment to the Gerdau Lenders in full of all obligations arising
under, by reason of, or otherwise in respect of, the Gerdau Loan
Agreement and all guarantees thereof in accordance with (i) the
express provisions of the Gerdau Loan
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Agreement and such guarantees, (ii) any compromise or settlement
agreement that is binding upon and enforceable against each and all of
the Gerdau Lenders' Agent and the Gerdau Lenders or (iii) a final
order of a court of competent jurisdiction from which no further
appeal lies or is taken that is binding on and enforceable against
each and all of the Gerdau Lenders' Agent and the Gerdau Lenders.
Terms defined in the Background to this Agreement are used in this Agreement
with their respective meanings defined therein.
1.2 ADDITIONAL REFERENCES
To the extent the context so admits, any reference in this Agreement
to:
"DISPOSE" shall be construed as lease, sell, transfer, license or
otherwise dispose of any property, or the commercial benefits of use
or ownership of (including the right to profit or gain from) any
property, either legally or beneficially, whether in a single
transaction or in a series of related transactions (other than the
payment of money), and "DISPOSED", "DISPOSITION" and "DISPOSAL" shall
be construed in like manner;
"GUARANTEE" shall be construed as any guarantee, indemnity, letter of
comfort or other assurance made in respect of any indebtedness, other
obligation or financial condition of another, including (i) any
purchase or repurchase agreement, (ii) any obligation to supply funds
or invest in such other, or (iii) any keep-well, take-or-pay,
through-put or other arrangement having the effect of assuring or
holding harmless another against financial loss, or maintaining
another's solvency or financial viability; but excluding endorsements
on notes, bills and cheques presented to financial institutions for
collection or deposit in the ordinary course of business, and
"GUARANTEED" and "GUARANTEES" shall be construed in like manner.
"INCLUDE", "INCLUDES" and "INCLUDING" shall be construed to be
followed by the statement "without limitation" and none of such terms
shall be construed to limit any word or statement which it follows to
the specific or similar items or matters immediately following it;
"RIGHTS" shall be construed as rights, title, benefits, interests,
powers, authorities, discretions, privileges, immunities and remedies
(actual or contingent, direct or indirect, matured or not, now
existing or arising hereafter), whether arising by contract or
statute, at law, in equity or otherwise, and "RIGHT" shall be
construed in like manner;
"OBLIGATIONS" shall be construed as indebtedness, obligations,
responsibilities, duties and liabilities (actual or contingent, direct
or indirect, matured or not, now existing or arising hereafter),
whether arising by contract or statute, at law, in equity or
otherwise, and "OBLIGED", "OBLIGATION" and "OBLIGATED" shall be
construed in like manner; and
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"SUCCESSOR" of a party (the "relevant party") shall be construed so as
to include (i) any amalgamated or other corporation of which the
relevant party or any of its successors is one of the amalgamating or
merging corporations, (ii) any Person to whom all or substantially all
the assets of the relevant party is transferred, (iii) any corporation
resulting from any court approved arrangement of which the relevant
party or any of its successors is party, (iv) any corporation
resulting from the continuance of the relevant party or any successor
of it under the laws of another jurisdiction of incorporation and (v)
any successor (determined as aforesaid or in any similar or comparable
procedure under the laws of any other jurisdiction) of any corporation
or Person referred to in clause (i), (ii), (iii) or (iv).
1.3 REFERENCES TO AGREEMENTS
Each reference in this Agreement to any agreement (including this
Agreement and any other defined term that is an agreement) shall be construed so
as to include such agreement (including any attached schedules, appendices and
exhibits) and each amendment, supplement, amendment and restatement, novation
and other modification made to it at or before the time in question.
1.4 HEADINGS, ETC.
The division of this Agreement into Articles, Sections and Subsections
and the insertion of headings are for the convenience of reference only and
shall not affect the construction or interpretation of this Agreement. The terms
"this Agreement", "hereof", "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section, Subsection, paragraph,
subparagraph, clause or other portion of this Agreement.
1.5 NUMBER AND GENDER
In this Agreement, words in the singular (including defined terms)
include the plural and vice versa (the necessary changes being made to fit the
context) and words in one gender include all genders.
ARTICLE 2
STATUS QUO
2.1 CONSENT TO TRANSFERS
In consideration for, amongst other things, the agreements of each of
the other parties expressed in this Agreement, (a) the Gerdau Lenders' Agent, on
behalf of the Gerdau Lenders, consents to the Transfers contemplated by the
Co-Steel Combination Transactions, subject to and upon the terms and conditions
contained in the Gerdau Loan Agreement, and (b) each of the Co-Steel Lenders
consents to the Transfers contemplated by the Co-Steel Combination Transactions,
subject to and upon the terms and conditions contained in the Co-Steel Group
Credit Agreements.
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2.2 GERDAU CANADA SUBGROUP AGREEMENTS
Each Gerdau Canada Subgroup Member agrees with the Gerdau Lenders'
Agent that it will not, without the prior written consent of the Gerdau Lenders'
Agent, (i) declare, set apart for payment or distribution, or pay any dividends
or make any other distributions (including in specie distributions and Capital
Stock dividends) on any of its existing or future Capital Stock, or redeem,
retract, purchase for cancellation or retire or otherwise acquire for value in
any manner any of its existing or future Capital Stock, or otherwise reduce its
capital in any manner, (ii) issue any Capital Stock or rights to acquire Capital
Stock, (iii) enter into any merger, amalgamation, arrangement, liquidation,
winding-up, dissolution or similar transaction or (iv) amend its articles or
memorandum of articles of association, or continue under any other statute or
the laws of any other jurisdiction.
2.3 GERDAU CANADA SUBGROUP HOLDING COMPANY AND INTERMEDIATE HOLDING
COMPANY AGREEMENTS
2.3.1 Gerdau Canada Subgroup Holding Company agrees with each of the Gerdau
Lenders' Agent and the Co-Steel Lenders that it will not (unless required by
applicable law), without the prior written consent of the Gerdau Lenders' Agent
and, solely in respect of clauses (i), (ii), (iii), (iv), (v) and (vi) below,
without the prior written consent of each of the Co-Steel Lenders, (i) conduct
any business, except for the holding of the Existing Gerdau Canada Subgroup
Shares, (ii) incur any contractual obligations, except those under this
Agreement or the agreements required to be entered into by it pursuant to this
Agreement or to complete the Co-Steel Combination Transactions (which must be in
form and substance satisfactory to the Gerdau Lenders' Agent and the Co-Steel
Lenders), (iii) receive any money or other property, except for the Existing
Gerdau Canada Subgroup Shares in the manner contemplated by the Co-Steel
Combination Transactions, (iv) make any distributions on any of its existing or
future Capital Stock or redeem or purchase any of its existing or future Capital
Stock, (v) enter into any merger, amalgamation, arrangement, liquidation,
winding-up, dissolution or similar transactions, (vi) amend its memorandum or
articles of association, or continue under any other statute or the laws of any
other jurisdiction (which, for certainty, shall exclude registering as limited
under the Companies Act (Nova Scotia) without amending or otherwise modifying
its memorandum or articles of association except to the extent necessary to
effect such registration as limited), (vii) authorize or permit any Gerdau
Canada Subgroup Member to take any of the actions referred to in Section 2.2
hereof, (viii) dispose of any of the Capital Stock in any Gerdau Canada Subgroup
Member (or any of its rights thereto), or any rights to acquire such Capital
Stock (or any rights thereto), now or hereafter held or owned by it or in which
it now or hereafter has rights or (ix) create or permit to subsist any Lien on
any property or rights referred to in clause (viii) above other than the Gerdau
Lenders' Security.
2.3.2 The Intermediate Holding Company agrees with each of the Gerdau
Lenders' Agent and the Co-Steel Lenders that it will not (unless required by
applicable law), without the prior written consent of the Gerdau Lenders' Agent
and, solely in respect of clauses (i), (ii), (iii), (iv), (v) and (vi) below,
without the prior written consent of each of the Co-Steel Lenders, (i) conduct
any business, except for the holding of the issued Capital Stock in Gerdau
Canada Subgroup Holding Company if the Intermediate Holding Company Transfer
takes place, (ii) incur any contractual obligations, except those under this
Agreement, the Intermediate
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Holding Company Transfer Agreement or the agreements required to be entered into
by it pursuant to this Agreement (which must be in form and substance
satisfactory to the Gerdau Lenders' Agent and the Co-Steel Lenders), (iii)
receive any money or other property, except for the issued Capital Stock in
Gerdau Canada Subgroup Holding Company in the manner contemplated by the
Intermediate Holding Company Transfer, (iv) make any distributions on any of its
existing or future Capital Stock or redeem or purchase any of its existing or
future Capital Stock, (v) enter into any merger, amalgamation, arrangement,
liquidation, winding-up, dissolution or similar transactions, (vi) amend its
articles or continue under any other statute or the laws of any other
jurisdiction, (vii) authorize or permit the Gerdau Canada Subgroup Holding
Company to take any of the actions referred to in Section 2.3.1 hereof, (viii)
dispose of any of the Capital Stock in Gerdau Canada Subgroup Holding Company
(or any of its rights thereto), or any rights to acquire such Capital Stock (or
any rights thereto), now or hereafter held or owned by it or in which it now or
hereafter has rights or (ix) create or permit to subsist any Lien on any
property or rights referred to in clause (viii) above other than the Co-Steel
Lenders' Security.
2.4 CO-STEEL AND INTERMEDIATE HOLDING COMPANY AGREEMENTS
2.4.1 Co-Steel agrees with the Gerdau Lenders' Agent that it will not,
without the prior written consent of the Gerdau Lenders' Agent, (i) dispose of
any of the Capital Stock in the Gerdau Canada Subgroup Holding Company (or any
of its rights thereto), or any rights to acquire such Capital Stock (or any
rights thereto), now or hereafter held or owned by it or in which it now or
hereafter has rights, other than (y) to the Intermediate Holding Company
pursuant to the Intermediate Holding Company Transfer or (z) pursuant to the
Co-Steel Lenders' Security in accordance with Section 2.7.4 or (ii) except for
the Co-Steel Lenders' Security, create or permit to subsist any Lien on any
property or rights referred to in clause (i) above.
2.4.2 Co-Steel agrees with the Gerdau Lenders' Agent that it will not,
without the prior written consent of the Gerdau Lenders' Agent, (i) dispose of
any of the Capital Stock in the Intermediate Holding Company (or any of its
rights thereto), or any of the rights to acquire such Capital Stock (or any
rights thereto), now or hereafter held or owned by it or in which it now or
hereafter has rights, other than pursuant to the Co-Steel Lenders' Security in
accordance with Section 2.7.4 or (ii) except for the Co-Steel Lenders' Security,
create or permit to subsist any Lien on any property or rights referred to in
clause (i) above.
2.4.3 Co-Steel agrees with the Gerdau Lenders' Agent that it will not enter
into any agreement, provide any direction (including, without limitation, any
direction to any Receiver of any of the Gerdau Canada Subgroup, the Gerdau
Canada Subgroup Holding Company and the Intermediate Holding Company), waiver or
consent or knowingly take or fail to take any other action that would result in
authorizing or agreeing to permit any Gerdau Canada Subgroup Member, the Gerdau
Canada Subgroup Holding Company or the Intermediate Holding Company to take any
action that would constitute a breach of any of Sections 2.2, 2.3 or 2.4 hereof.
Co-Steel shall not challenge the validity, effect or priority of the Gerdau
Lenders' Security. Without limiting the foregoing, Co-Steel will not (i) file
any petition, application or motion that challenges the validity, effect or
priority of the Gerdau Lenders' Security during any Bankruptcy Proceeding
involving any Gerdau Canada Subgroup Member, the Gerdau Canada Subgroup Holding
Company, or the Intermediate Holding Company or (ii) vote for any proposal or
plan in such Bankruptcy Proceeding that would not give effect to this Agreement.
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2.4.4 The Intermediate Holding Company agrees with the Gerdau Lenders' Agent
that it will not enter into any agreement , provide any direction (including,
without limitation, direct any direction to any Receiver of any of the Gerdau
Canada Subgroup and the Gerdau Canada Subgroup Holding Company), waiver or
consent or knowingly take or fail to take any other action that would result in
authorizing or agreeing to permit any Gerdau Canada Subgroup Member or the
Gerdau Canada Subgroup Holding Company to take any action that would constitute
a breach of any of Sections 2.2 or 2.3 hereof. The Intermediate Holding Company
shall not challenge the validity, effect or priority of the Gerdau Lenders'
Security. Without limiting the foregoing, the Intermediate Holding Company will
not (i) file any petition, application or motion that challenges the validity,
effect or priority of the Gerdau Lenders' Security during any Bankruptcy
Proceeding involving any Gerdau Canada Subgroup Member or the Gerdau Canada
Subgroup Holding Company or (ii) vote for any proposal or plan in such
Bankruptcy Proceeding that would not give effect to this Agreement.
2.5 LENDERS' AGREEMENT
2.5.1 Each of the Co-Steel Lenders and the Co-Steel Security Agents agrees
with the Gerdau Lenders' Agent that it will not enter into any agreement or
provide any waiver or consent, or direct any Receiver of any of the Gerdau
Canada Subgroup, the Gerdau Canada Subgroup Holding Company, the Intermediate
Holding Company or Co-Steel, that would result in authorizing or agreeing to
permit any Gerdau Canada Subgroup Member, the Gerdau Canada Subgroup Holding
Company, the Intermediate Holding Company or Co-Steel to take any action that,
to the actual (not constructive) knowledge of any of the Co-Steel Lenders and
the Co-Steel Security Agents, would constitute a breach of any of Sections 2.2,
2.3 and 2.4 hereof. The Co-Steel Lenders and the Co-Steel Security Agents agree
with the Gerdau Lenders' Agent that none of them will (i) challenge the
validity, effect or priority of the Gerdau Lenders' Security or (ii) assert any
claim against any of the Gerdau Canada Subgroup, by reason of any right in
Capital Stock issued by any of the Gerdau Canada Subgroup, the Gerdau Canada
Subgroup Holding Company and the Intermediate Holding Company. Without limiting
the foregoing, none of the Co-Steel Lenders and the Co-Steel Security Agents
will (iii) file any petition, application or motion that challenges the
validity, effect or priority of the Gerdau Lenders' Security during any
Bankruptcy Proceeding involving any Gerdau Canada Subgroup Member, the Gerdau
Canada Subgroup Holding Company, the Intermediate Holding Company or any
Co-Steel Group Member or (iv) vote for any proposal or plan in such a Bankruptcy
Proceeding that would not give effect to this Agreement.
2.5.2 The Gerdau Lenders' Agent agrees with the Co-Steel Lenders that none
of the Gerdau Lenders' Agent and the Gerdau Lenders will enter into any
agreement or provide any waiver or consent, or direct any Receiver of any of the
Gerdau Canada Subgroup, the Gerdau Canada Subgroup Holding Company, the
Intermediate Holding Company or Co-Steel, that would result in authorizing or
agreeing to permit any Gerdau Canada Subgroup Member, the Gerdau Canada Subgroup
Holding Company or the Intermediate Holding Company to take action that, to the
actual (not constructive) knowledge of any of the Gerdau Lenders' Agent and the
Gerdau Lenders, would constitute a breach of Sections 2.3 and 2.4 hereof. The
Gerdau Lenders' Agent agrees with the Co-Steel Lenders that none of the Gerdau
Lenders' Agent and the Gerdau Lenders will (i) challenge the validity, effect or
priority of the Co-Steel Lenders' Security or (ii) assert any claim against
Co-Steel in its capacity as the stockholder of Gerdau
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Canada Subgroup Holding Company or the Intermediate Holding Company for
liabilities of the Gerdau Canada Subgroup Holding Company or the Intermediate
Holding Company. Without limiting the foregoing, none of the Gerdau Lenders and
the Gerdau Lenders' Agent will (iii) file any petition, application or motion
that challenges the validity, effect or priority of the Co-Steel Lenders'
Security during any Bankruptcy Proceeding involving any Co-Steel Group Member,
the Gerdau Canada Subgroup Holding Company or the Intermediate Holding Company
or (iv) vote for any proposal or plan in such a Bankruptcy Proceeding that would
not give effect to this Agreement.
2.6 ACKNOWLEDGMENT OF GERDAU LENDERS' SECURITY
2.6.1 Each of Gerdau Steel, the Gerdau Canada Subgroup, Gerdau Canada
Subgroup Holding Company, the Intermediate Holding Company and Co-Steel hereby
severally confirms to and agrees with the Gerdau Lenders' Agent that (i) the
Liens expressed to be binding on the Existing Gerdau Canada Subgroup Shares
under the Gerdau Lenders' Security shall be unaffected by the Transfers
contemplated by the Co-Steel Combination Transactions and shall continue to be
binding on the Existing Gerdau Canada Subgroup Shares in full force and effect,
valid and enforceable in accordance with the respective terms and conditions
expressed in the Gerdau Lenders' Security, and (ii) such Liens in favour of the
Gerdau Lenders' Agent on the Existing Gerdau Canada Subgroup Shares shall
continue, after each of the Transfers, to secure all present and future
obligations expressed to be secured by the Gerdau Lenders' Security.
2.6.2 Each of Gerdau Steel, the Gerdau Canada Subgroup, Gerdau Canada
Subgroup Holding Company and the Intermediate Holding Company hereby severally
confirms to and agrees with the Co-Steel Lenders that (i) the Liens expressed to
be binding on the Existing Gerdau Canada Subgroup Shares under the Co-Steel
Lenders' Security shall be unaffected by the Intermediate Holding Company
Transfer and shall continue to be binding on the Existing Gerdau Canada Subgroup
Shares in full force and effect, valid and enforceable in accordance with the
respective terms and conditions expressed in the Co-Steel Lenders' Security, and
(ii) such Liens in favour of the Co-Steel Security Agents on the Existing Gerdau
Canada Subgroup Shares shall continue, after the Intermediate Holding Company
Transfer, to secure all present and future obligations expressed to be secured
by the Co-Steel Lenders' Security.
2.6.3 Co-Steel hereby confirms to and agrees with the Co-Steel Lenders that
(i) the Liens expressed to be binding on the Co-Steel Group under the Co-Steel
Lenders' Security shall be unaffected by the Transfers contemplated by the
Co-Steel Combination Transactions and shall continue to be binding on the
Co-Steel Group in full force and effect, valid and enforceable in accordance
with the respective terms and conditions expressed in the Co-Steel Lenders'
Security, (ii) the Liens expressed to be binding on the Capital Stock of the
Gerdau Canada Subgroup Holding Company under the Co-Steel Lenders' Security
shall be unaffected by the Intermediate Holding Company Transfer and shall
continue to be binding on such Capital Stock in full force and effect, valid and
enforceable in accordance with the respective terms and conditions expressed in
the Co-Steel Lenders' Security, and (iii) such Liens in favour of the Co-Steel
Lenders and the Co-Steel Security Agents on the Co-Steel Group shall continue,
after each of the Transfers and the Intermediate Holding Company Transfer, to
secure all present and future obligations expressed to be secured by the
Co-Steel Lenders' Security.
12
2.7 CREDIT FACILITIES INDEPENDENT
2.7.1 Each of the Co-Steel Lenders, the Co-Steel Security Agents and
Co-Steel severally confirms to and agrees with each of the Gerdau Lenders'
Agent, Gerdau Steel and the Gerdau Canada Subgroup that to the extent (if any)
any provision of the Co-Steel Group Credit Agreements to which it is a party
imposes any restrictions on, or otherwise affects, any of the rights,
obligations, business activities, actions or omissions of any of the Gerdau
Canada Group, such provision shall be void and of no force or effect as against
the Gerdau Canada Group, the Gerdau Lenders' Agent and the Gerdau Lenders, save
that Gerdau Steel will be restricted under the Co-Steel Group Credit Agreements
from disposing of any Capital Stock in Co-Steel. For greater certainty, except
as expressly stated in the last sentence of this Section 2.7.1, nothing in this
Agreement is intended (i) to diminish the rights of the Co-Steel Lenders with
respect to any Co-Steel Group Member or diminish any restrictions that any
Co-Steel Lender may have imposed on any Co-Steel Group Member, (ii) to affect
covenants requiring the computation of certain financial ratios and covenants
that by operation of applicable law may include the Gerdau Canada Subgroup, such
as those related to the Employee Retirement Income Security Act of the United
States, as amended, (iii) to prohibit the Co-Steel Lenders from administering
their respective loan documents or entering into amendments or waivers
concerning their respective loan documents, (iv) to prohibit the Co-Steel
Lenders from consenting to the terms of any such amendments or waivers, or (v)
to require the consent of the Gerdau Lenders to any action taken by any of the
Co-Steel Lenders and the Co-Steel Security Agents. With respect to the matters
referred to in clauses (iii), (iv) and (v) above, this Section 2.7.1 shall not
affect or prevail over the obligations of each of the Co-Steel Lenders and the
Co-Steel Security Agents, or the restrictions expressly imposed under, Sections
2.5.1 and 2.7.4 hereof.
2.7.2 Each of the Gerdau Lenders' Agent, Gerdau Steel and the Gerdau Canada
Subgroup severally confirms to and agrees with each of the Co-Steel Lenders and
Co-Steel that to the extent (if any) any provision of the Gerdau Loan Agreement
imposes any restrictions on, or otherwise affects, any of the rights,
obligations, business activities, actions or omissions of any of the Co-Steel
Group, such provision shall be void and of no force or effect as against the
Co-Steel Group and the Co-Steel Lenders, save to the extent provided for under
Sections 2.4 and 2.5 hereof. For greater certainty, except as expressly stated
in the last sentence of this Section 2.7.2, nothing in this Agreement is
intended (i) to diminish the rights of the Gerdau Lenders with respect to any
Gerdau Canada Group Member or diminish any restrictions that any of the Gerdau
Lenders may have imposed on any Gerdau Canada Group Member, (ii) to affect
covenants requiring the computation of certain financial ratios and covenants
that by operation of applicable law may include the Co-Steel Group, such as
those related to the Employment Retirement Income Security Act of the United
States, as amended, (iii) to prohibit the Gerdau Lenders from administering
their respective loan documents or entering into amendments or waivers
concerning their respective loan documents, (iv) to prohibit the Gerdau Lenders
from consenting to the terms of any such amendments or waivers, or (v) to
require the consent of any of the Co-Steel Lenders and the Co-Steel Security
Agents to any action taken by any of the Gerdau Lenders' Agent and the Gerdau
Lenders. With respect to the matters referred to in clauses (iii), (iv) and (v)
above, this Section 2.7.2 shall not affect or prevail over the obligations of
each of the Gerdau Lenders' Agent and the Gerdau Lenders, or the restrictions
expressly imposed under, Sections 2.5.2 and 2.7.3 hereof.
13
2.7.3 Notwithstanding subsections 2.7.1 and 2.7.2 hereof, the Gerdau
Lenders' Agent shall be entitled to a Lien on the Capital Stock in Co-Steel held
by Gerdau Steel under the Gerdau Lenders' Security but none of the Gerdau
Lenders' Agent and the Gerdau Lenders shall be entitled to foreclose upon or
dispose of that Capital Stock pursuant to and in accordance with the provisions
of the Gerdau Lenders' Security unless (i) the Co-Steel Lenders provide their
written consent to such disposal or (ii) Repayment of the Co-Steel Obligations
has taken place.
2.7.4 Notwithstanding subsections 2.7.1 and 2.7.2 above, the Co-Steel
Lenders shall be entitled to a Lien on the Capital Stock in each of the Gerdau
Canada Subgroup Holding Company and the Intermediate Holding Company, as
applicable, held by Co-Steel under the Collateral Documents (as that term is
defined in the Co-Steel Intercreditor Agreement) but none of the Co-Steel
Lenders and the Co-Steel Security Agents shall be entitled to foreclose upon or
dispose of that Capital Stock pursuant to and in accordance with the provisions
of such Collateral Documents unless (i) the Gerdau Lenders' Agent provides its
written consent to such disposal or (ii) Repayment of the Gerdau Obligations has
taken place.
2.8 GERDAU STEEL AGREEMENTS
Gerdau Steel agrees to pay all administrative costs (including legal
and accounting fees and disbursements and government filing fees) of each of the
Gerdau Canada Subgroup Holding Company and the Intermediate Holding Company
associated with the preservation of their respective corporate existence in good
standing, including the preparation of corporate tax returns and annual filings.
Gerdau Steel shall have no right, and shall not seek, to receive reimbursement
from any of the Co-Steel Group, the Gerdau Canada Subgroup Holding Company and
the Intermediate Holding Company for any such payments.
ARTICLE 3
GENERAL CONTRACTUAL PROVISIONS
3.1 BENEFIT OF AGREEMENT
None of the Gerdau Canada Group, the Gerdau Canada Subgroup Holding
Company, the Intermediate Holding Company or Co-Steel shall derive any rights
under this Agreement, except under Section 2.1 hereof.
3.2 SEVERAL OBLIGATIONS OF LENDERS
3.2.1 The obligations of the Co-Steel Lenders under this Agreement are
several and not joint or joint and several. No Co-Steel Lender shall have any
liability hereunder by reason of the breach by any other Co-Steel Lender of such
other Co-Steel Lender's obligations hereunder.
3.2.2 The obligations of the Gerdau Lenders under this Agreement are several
and not joint or joint and several. No Gerdau Lender shall have any liability
hereunder by reason of the breach by any other Gerdau Lender of such other
Gerdau Lender's obligations hereunder.
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3.3 SCOPE OF AGREEMENT
Nothing in this Agreement is intended or shall be construed or
interpreted so as to create any right or remedy in favour of anyone that is not
a party to this Agreement.
3.4 FURTHER ASSURANCES
Each party hereto shall at all times do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged or delivered all such
further acts, deeds, agreements and assurances as any party hereto may
reasonably request from time to time in order to give effect to the provisions
of this Agreement or for the better implementing or assuring the intent hereof.
3.5 NO RETROACTIVE EFFECT
This Agreement is intended to govern the actions or omissions of the
parties hereto that take place or occur after the execution and delivery hereof
and is not intended to affect any actions or omissions that have taken place or
occurred before the execution and delivery hereof.
3.6 TERMINATION
3.6.1 This Agreement shall cease to be binding upon the parties hereto if,
as and when Repayment of the Gerdau Obligations has taken place, but without
prejudice to any rights and obligations of each of the parties hereto which
shall have accrued at or prior to such time.
3.6.2 This Agreement shall cease to be binding upon the Co-Steel Lenders
and the Co-Steel Security Agents if, as and when Repayment of the Co-Steel
Obligations has taken place, but without prejudice to any rights or obligations
of each of the parties hereto which shall have accrued at or prior to such time.
3.7 GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with
the laws in force in the Province of Ontario, including the federal laws of
Canada applicable therein.
3.8 INVALIDITY
If any provision of this Agreement is determined to be invalid or
unenforceable by a court of competent jurisdiction from which no further appeal
lies or is taken, that provision shall be deemed to be severed therefrom, and
the remaining provisions of this Agreement shall not be affected thereby and
shall remain valid and enforceable.
3.9 AMENDMENT
This Agreement may only be amended, supplemented, otherwise modified,
restated or novated by a written agreement signed by all of the parties hereto
provided that the written agreement of the Co-Steel Lenders and the Co-Steel
Security Agents shall not be
15
required after this Agreement has ceased to be binding on them in accordance
with Section 3.5.2 hereof.
3.10 BINDING EFFECT
This Agreement shall enure to the benefit of and be binding on the
parties hereto, their respective successors and assigns. None of the Gerdau
Lenders' Agent, the Co-Steel Lenders and the Co-Steel Security Agents shall
assign or transfer any of its rights or interests under any of the Gerdau Loan
Agreement and the Co-Steel Group Credit Agreements to which it is party unless
the assignee or transferee shall also be bound by this Agreement. Execution and
delivery to the other parties hereto of a counterpart of this Agreement shall
constitute an agreement to be so bound by such an assignee or transferee. Each
reference in this Agreement to any party hereto shall (to the extent the context
so admits) be construed accordingly to include reference to such successors and
assigns.
3.11 NOTICES
Any notice, demand, consent, approval or other communication to be
made or given under or in connection with this Agreement (a "NOTICE") shall be
in writing and may be made or given by personal delivery, by internet e-mail
(confirmed by mail) or by facsimile addressed to the respective parties at their
respective addresses set forth in the signature pages of this Agreement or to
such other address as such party may from time to time notify the others in
accordance with this Section 3.10. Any notice made or given by personal delivery
shall be conclusively deemed to have been given at the time of actual delivery
or, if made or given by internet e-mail (confirmed by mail) or by facsimile, at
the opening of business on the first business day in the place of intended
receipt following the transmittal thereof.
16
3.12 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which taken together shall be
deemed to constitute one and the same instrument, and it shall not be necessary
in making proof of this Agreement to produce or account for more than one such
counterpart. Delivery of an executed signature page of this Agreement by
internet e-mail (in PDF format) or facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF the parties have executed this Agreement.
Address: c/o Gerdau Steel Inc. GERDAU STEEL INC.
Orion Place
Box 1734 Per:______________________
Cambridge, Ontario Name:
▇▇▇ ▇▇▇ Title:
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Address: c/o Gerdau Steel Inc. GERDAU COURTICE STEEL INC.
Orion Place
Box 1734 Per:______________________
Cambridge, Ontario Name:
▇▇▇ ▇▇▇ Title:
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Address: c/o Gerdau Steel Inc. GERDAU MRM HOLDINGS INC.
Orion Place
Box 1734 Per:______________________
Cambridge, Ontario Name:
▇▇▇ ▇▇▇ Title:
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
17
Address: c/o Gerdau Steel Inc. GERDAU USA INC.
Orion Place
Box 1734 Per:______________________
Cambridge, Ontario Name:
▇▇▇ ▇▇▇ Title:
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Address: ▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ HOLDING
Orion Place COMPANY
Box 1734 Per:______________________
Cambridge, Ontario Name:
▇▇▇ ▇▇▇ Title:
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Address: ▇▇▇▇▇▇▇ Street South CO-STEEL INC.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ Per:______________________
Name:
Title:
Attention: Vice President & Chief Financial
Officer
Telephone:
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
18
Address: ▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ BANK AND TRUST
6th Floor COMPANY, AS U.S. SECURITY AGENT
▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ Per:______________________
Name:
Title:
Attention: Corporate Trust Administration
(Co-Steel 2002 Intercreditor Agreement)
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Address: Corporate Trust Services COMPUTERSHARE TRUST COMPANY
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, AS CANADIAN SECURITY AGENT
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇:______________________
▇▇▇ ▇▇▇ Name:
Title:
Attention: Manager, Corporate Trust
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Address: The Toronto-Dominion Bank THE TORONTO-DOMINION BANK, AS ADMINISTRATION AGENT FOR
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ITSELF AND ON BEHALF OF THE LENDERS UNDER THE CO-STEEL
38th Floor GROUP SYNDICATED CREDIT AGREEMENT
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Per:______________________
M5K 1A2 Name:
Title:
Attention: Vice President, Loan Syndications -
Agency
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
19
Address: One PNC Plaza PNC BANK, NATIONAL ASSOCIATION
18th Floor, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ Per:______________________
15222 Name:
Title:
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Address: c/o Prudential Capital Group THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
Four Gateway Center
7th Floor Per:______________________
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name:
Newark, NJ Title:
07102
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone:
Telecopier: Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Address: c/o Prudential Private Placement U.S. PRIVATE PLACEMENT FUND
Investors, Inc. BY: PRUDENTIAL PRIVATE PLACEMENT
Four Gateway Center INVESTORS, L.P., INVESTMENT ADVISOR
7th Floor BY: PRUDENTIAL PRIVATE PLACEMENT
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INVESTORS, INC., ITS GENERAL PARTNER
▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ Per:______________________
Name:
Title:
Attention: Institutional Asset Management
Telephone:
Telecopier:
20
Address: The Toronto-Dominion Bank THE TORONTO-DOMINION BANK, AS
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ADMINISTRATION AGENT FOR ITSELF
38th Floor AND ON BEHALF OF THE LENDERS
Toronto-Dominion Bank Tower UNDER THE GERDAU LOAN AGREEMENT
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ Per:______________________
Name:
Title:
Attention: Vice President, Loan Syndications -
Agency
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Address: ▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇▇ ONTARIO LIMITED
Orion Place
Box 1734 Per:______________________
Cambridge, Ontario Name:
▇▇▇ ▇▇▇ Title:
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
21
EXHIBIT 1
INTERMEDIATE HOLDING COMPANY TRANSFER AGREEMENT
THIS AGREEMENT is made as of the __________ day of ________________,
_____,
B E T W E E N:
CO-STEEL INC.,
a corporation incorporated under the laws of the Province of Ontario
(the "VENDOR")
- and -
2017387 ONTARIO LIMITED
(the "PURCHASER")
RECITALS:
A. The Vendor is the beneficial and registered owner of 10,000,001
common shares of Gerdau Nova Scotia Holding Company (the "Property");
B. The Vendor wishes to sell and the Purchaser wishes to purchase the
Property;
C. The Vendor and the Purchaser intend that the "agreed amount" in
respect of the Property be equal to the cost amount thereof to the
Vendor within the meaning of the Income Tax Act (Canada) (the "Act")
for the purpose of making an election under subsection 85(1) of the
Act;
NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this agreement and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
agree as follows:
1. PURCHASE AND SALE
The Vendor agrees to sell and the Purchaser agrees to purchase all of
the Vendor's right, title and interest in and to the Property on the terms and
conditions contained herein.
2. PURCHASE PRICE
The purchase price of the Property shall be equal to the fair market
value of the Property at the date hereof (the "Fair Market Value"). The purchase
price shall be satisfied by the issuance by the Purchaser to the Vendor of
10,000,000 common shares in the capital stock of the Purchaser (the "Shares").
22
3. ELECTION
The Vendor and the Purchaser shall jointly elect in prescribed form
and within the prescribed time under subsection 85(1) of the Act as to the
amount they have agreed upon to be deemed to be the Vendor's proceeds of
disposition of the Property sold hereunder and the Purchaser's cost thereof. The
Vendor and the Purchaser agree that the amount that shall be deemed to be the
Vendor's proceeds of disposition and the Purchaser's cost in respect of which
such election is made shall be the "cost amount" within the meaning of the Act
to the Vendor of the Property.
For greater certainty, the prescribed form referred to above is the
Department of National Revenue Form T2057 and the time prescribed for filing the
election is the date that is the earlier of the day on or before which either
the Vendor or the Purchaser is required to file a return of its income under the
Act for the taxation year in which the sale of the Property occurred.
4. COMPLETION OF THE TRANSACTION
This agreement shall be completed contemporaneously with the execution
hereof at which time the following shall occur:
4.1 the Vendor shall execute and deliver to the Purchaser all such
documents, certificates and instruments and do all such other acts and things as
the Purchaser may consider necessary or desirable, acting reasonably, to
effectively transfer and assign the Property to the Purchaser and to deliver
possession thereof to or at the direction of the Purchaser; and
4.2 the Purchaser shall issue to or at the direction of the Vendor the
Shares.
5. FURTHER ASSURANCES
Each of the parties hereto shall promptly do, make, execute or
deliver, or cause to be done, made, executed or delivered, all such further
acts, documents and things as the other party hereto may reasonably require from
time to time for the purpose of giving effect to this agreement and shall use
its best efforts and take all such steps as may be reasonably within its power
to implement to their full extent the provisions of this agreement.
23
6. GOVERNING LAW
This agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
IN WITNESS WHEREOF the parties hereto have executed this agreement.
CO-STEEL INC.
Per:
------------------------------------
Name:
Title:
2017387 ONTARIO LIMITED
Per:
------------------------------------
Name:
Title:
