EXHIBIT D
AMENDED AND RESTATED LOAN AGREEMENT
dated November 8, 1996
as further amended and restated on December 18, 1998,
September 27, 1999 and November 4, 1999
A M O N G :
GERDAU STEEL INC.
GERDAU COURTICE STEEL INC.
GERDAU MRM STEEL INC.
as Borrowers
CHASE SECURITIES INC.
XXXXXXX XXXXX XXXXXX INC.
THE TORONTO-DOMINION BANK
as Joint Arrangers
and Joint Bookrunners
THE INSTITUTIONS NAMED HEREIN
as Lenders
THE TORONTO-DOMINION BANK
as Agent
TORY XXXX XXXXXXXXXXX & BINNINGTON FASKEN XXXXXXXX XXXXXXX
0000 Xxxxx Xxxxx Xxxxxxx Dominion Xxxx Xxxxx
X.X. Xxx 000, Xxx. Xxxxxxx Dominion P.O. Box 20, Toronto-Dominion Centre
Toronto, Ontario Xxxxxxx, Xxxxxxx
X0X 0X0 X0X 0X0
(Borrowers' Counsel) (Banks' Counsel)
EXHIBIT D
AMENDED AND RESTATED LOAN AGREEMENT
THIS AGREEMENT dated as of November 8, 1996 as further amended and
restated by agreements dated as of December 18, 1998, September 27, 1999 and
November 4, 1999.
A M O N G :
GERDAU COURTICE STEEL INC., a corporation continued pursuant
to the laws of the Province of Saskatchewan
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GERDAU MRM STEEL INC., a corporation continued pursuant to the
laws of the Province of Saskatchewan
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GERDAU STEEL INC., a corporation incorporated pursuant to the
laws of Canada
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THE INSTITUTIONS NAMED HEREIN AS LENDERS
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THE TORONTO-DOMINION BANK, as Agent
RECITALS:
A. By Letter of Offer and Term Sheet (collectively, the "1989 Term Sheet")
dated October 31, 1989, The Toronto-Dominion Bank ("TD") established
certain term and operating facilities in favour of Courtice on and subject
to the terms and conditions set out in the 1989 Term Sheet;
B. Each of Courtice and MRM subsequently requested TD to provide Courtice and
MRM with certain additional financing relating to the purchase by Courtice
of preference shares in the capital of MRM Holdings and in connection with
the acquisition by MRM of the MRM Steel and the Mandak Metal divisions of
The Canam Manac Group Inc.;
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C. TD agreed to provide such financing on and subject to the terms and
conditions set out in a Letter of Offer and Term Sheet (the "1995 Term
Sheet") dated June 19, 1995 between the TD and Courtice;
X. Xxxxxxxx, MRM, MRM Holdings, Gerdau Steel and TD amended the terms and
conditions of the Original Facilities referred to and defined in the 1989
Term Sheet and incorporated them, as amended, into an amended and restated
loan agreement dated June 23, 1995 (the "Original Amended and Restated
Loan Agreement" which expression includes the first amending agreement
thereto dated as of September 26, 1995) which also sets out the terms and
conditions relating to the Revolver Facility (as it then was) and the term
facility established under the 1995 Term Sheet;
E. On or about September 27, 1995 MRM arranged for Tellib to lend to MRM U.S.
$38,000,000 (the "Tellib Advance") on the basis that the repayment of such
Tellib Advance and payment of interest thereon would be postponed in
favour of TD in form and substance satisfactory to TD;
F. Each Gerdau Canada Group Member subsequently requested TD to provide or
arrange for additional credit facilities in the aggregate amount of Cdn.
$35,000,000, reconstitute the Revolver Facility and the 1995 Term
Facility, allow MRM to borrow U.S. $38,000,000 under such reconstituted
facilities and permit MRM to repay the Tellib Advance (partly or wholly
funded) from the proceeds of that borrowing;
G. By letter of offer (the "Syndication Offer") dated September 25, 1996 TD
agreed to arrange the credit facilities requested by the Gerdau Canada
Group referred to above;
H. The parties thereto amended the terms and conditions of the Original
Amended and Restated Loan Agreement and incorporated them, as amended,
into an agreement dated as of November 8, 1996 (the "First Syndicated
Amended and Restated Loan Agreement") which also set out the terms and
conditions relating to the reconstituted facilities established pursuant
to the Syndication Offer;
I. The Borrowers at that time (the "Prior Borrowers") and Guarantors at that
time requested the Lenders at that time (the "Prior Lenders"), and the
Prior Lenders agreed, to amend and restate the terms and conditions of the
First Syndicated Amended and Restated Loan Agreement and in that regard
the parties to the First Syndicated Amended and Restated Loan Agreement
entered into an agreement dated as of December 18, 1998 (the "Prior Loan
Agreement").
J. Pursuant to the Prior Loan Agreement the Prior Lenders agreed to make
loans and other credit available to the Prior Borrowers in the aggregate
amount of up to Cdn.$85,000,000 under the Revolver Facility (as defined
therein) and up to Cdn.$65,000,000 under the Term Facility (as defined
therein).
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K. Pursuant to a loan transfer agreement dated September 27, 1999, the
Lenders party to this Agreement became the only lenders under the Prior
Loan Agreement entitled to be paid the entirety of the Advances (as
defined in the Prior Loan Agreement) payable under the Prior Loan
Agreement.
L. The Prior Borrowers requested the Lenders to reallocate the amounts
available under the then existing Revolver Facility and Term Facility
(each as defined in the Prior Loan Agreement) by reducing the Revolver
Facility to Cdn.$75,000,000 and increasing the Term Facility to
Cdn.$200,000,000 and allow Gerdau Steel to become a Borrower. The increase
in the existing Credit Facilities (as defined in the Prior Loan Agreement)
was requested by the Prior Borrowers and Gerdau Steel to permit them to
finance the acquisition of 176 issued and outstanding shares of common
stock in FLS Holdings, Inc. (representing 88% of all such issued and
outstanding common stock), which in turn owns 9,000,000 issued and
outstanding shares of common stock in AmeriSteel Corporation (representing
approximately 85% of all such issued and outstanding common stock).
M. In response to the request from the Prior Borrowers and Gerdau Steel, the
Lenders amended and restated the terms and conditions of the Prior Loan
Agreement to provide the Credit Facilities outlined in more detail in the
existing Amended and Restated Loan Agreement dated as of September 27,
1999 (the "Existing Loan Agreement").
N. The parties have agreed to certain minor modifications to the Existing
Loan Agreement so that it reads in its entirety in the form of this
Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
covenants and agreements herein contained and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree to amend and restate the terms of the Credit Facilities as
referred to and defined in the Prior Loan Agreement in the manner set out in
this amended and restated loan agreement, subject to the following terms and
conditions:
ARTICLE 1.
INTERPRETATION
1.1. Definitions
For the purposes of this Agreement:
"Acceptance Date" means, with respect to any Bankers' Acceptance, the date
upon which the Bankers' Acceptance is issued, being the first day of the
relevant term for such Bankers' Acceptance;
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"Acceptance Fee" means the acceptance fee payable on the amount of each
Bankers' Acceptance, calculated and payable in the manner provided for in
Section 7.5.8;
"Acceptance Proceeds" for any Lender means the net cash proceeds realized
on the purchase by the Lender of its participation in an issue of Bankers'
Acceptances pursuant to this Agreement after deduction of the applicable
Acceptance Fee payable thereon;
"Advance" means any amount of credit advanced or to be advanced (as the
context requires) by the Lenders to a Borrower pursuant to this Agreement,
whether by way of cash advance, acceptance of drafts or issue of a Standby
Credit, or any relevant portion thereof (as the context requires);
"Affected Lender" has the defined meaning assigned to it in Section 5.3,
7.7, 7.8 or 14.10.1, as applicable;
"Affiliate" means any Person which is not a Gerdau Canada Group Member and
(i) which, directly or indirectly, Controls, is Controlled by or is under
common Control with, any Gerdau Canada Group Member, (ii) which
beneficially owns or Controls 10% or more of the Voting Capital Stock, on
a fully diluted basis, of any Gerdau Canada Group Member, (iii) of which
10% or more of the Voting Capital Stock, on a fully diluted basis, is
beneficially owned or Controlled by any Gerdau Canada Group Member or (iv)
any Senior Officer or director of any Person referred to in any of clauses
(i), (ii) and (iii) of this definition;
"Agency Fee Agreement" means the agency fee agreement between Gerdau Steel
and the Agent dated as of September 27, 1999 providing for the payment of
certain agency fees to the Agent;
"Agent" means TD acting for its own benefit and in its capacity as
administration agent for the ratable benefit of the Lenders, or (as the
context requires) any replacement administration agent that is a Lender
and is appointed pursuant to the provisions of Section 13.15.1;
"Agreement" means this amended and restated loan agreement, or (as the
context requires) the Prior Loan Agreement, as amended and restated by
this amended and restated loan agreement; the expressions "hereof",
"herein", "hereto", "hereunder", "hereby" and similar expressions refer to
this Agreement as a whole and not to any particular article, section,
schedule or other portion hereof, and the expression "article" and
"section" followed by a number or by a number and letter, and "schedule"
followed by a letter, mean and refer to the specified article or section
of or schedule to this Agreement, except as otherwise specifically
provided herein;
"Amending Agreement No. 1" means the agreement dated June 27, 1995 between
Courtice and TD amending the Courtice Debenture;
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"Amending Agreement No. 2" means the agreement dated June 27, 1995 between
Courtice and TD amending the Courtice Supplemental Debenture;
"Amending Agreement No. 3" means the agreement dated November 8, 1996
between Courtice and TD amending the Courtice Debenture as amended by
Amending Agreement No. 1;
"Amending Agreement No. 4" means the agreement dated November 8, 1996
between MRM and TD amending the MRM Debenture;
"AmeriSteel" means AmeriSteel Corporation, a Florida corporation at
September 27, 1999, and any successor of it;
"Applicable Law" means, in respect of any Person, property, transaction or
event, all applicable treaties, laws, statutes, codes, rules, by-laws and
regulations, and all applicable official directives, orders, guidelines,
policies, Permits, judgments and decrees of Governmental Bodies;
"Applicable Margin" means, at any time, the rate per annum (expressed as a
percentage per annum on the basis of a 360 day year, in the case of LIBOR
Loans, on the basis of a 365 day year, in the case of Bankers'
Acceptances, and on the basis of a 365 or 366 day year, as applicable, in
each other case) determined in accordance with the table set forth below
with reference to the Total Debt/EBITDA Ratio most recently certified to
the Lenders pursuant to Section 6.2.3.11 or 00.0.0.00:
LIBOR Loan,
Standby Credit &
Prime Rate & Bankers'
Total Debt/ Base Rate Loan Acceptance Commitment Fee
EBITDA Ratio Applicable Margin Applicable Margin Applicable Margin
------------ ----------------- ----------------- -----------------
< = 1.50:1 1.25% 2.25% 0.50%
> 1.50:1 < = 2.50:1 1.75% 2.75% 0.75%
> 2.50:1 2.25% 3.25% 0.875%
The Total Debt/EBITDA Ratio as at September 27, 1999 is set forth in the
Compliance Certificate delivered pursuant to Section 6.2.13.11 with
reference to the four Fiscal Quarters ending on June 30, 1999. The
Applicable Margin as from September 27, 1999 shall be determined
accordingly. Changes in the Applicable Margin shall take effect as
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of the third Banking Day following the date Gerdau Steel delivers a
Compliance Certificate to the Lenders pursuant to Section 11.1.1.10 which,
when delivered, discloses a Total Debt/EBITDA Ratio giving rise to such
changes. If Gerdau Steel fails to deliver a Compliance Certificate by the
date required to do so under Section 11.1.1.10, the Total Debt/EBITDA
Ratio shall be deemed to be greater than 2.50:1 until such failure is
cured;
"Auditors" means Ernst & Young or such other firm of chartered accountants
not unacceptable to the Agent, acting reasonably, as the Borrowers may
designate to the Agent in writing from time to time;
"Availability Period" means the period from and including the Term
Drawdown Date to, but excluding the Revolver Facility Due Date;
"Award" means any judgment, decree, injunction, rule, award or order of
any Governmental Body or arbitrator;
"Bankers' Acceptance" means a draft (either a xxxx of exchange or
depository xxxx) in Canadian dollars (in such form as a Lender may
require) drawn by a Borrower and accepted by a Lender for delivery in
accordance with this Agreement;
"Banking Day" means a day on which banks are generally open for business
and on which dealings in foreign currency and exchange between banks may
be carried on in Toronto, Ontario and New York, New York and, in respect
of LIBOR Loans, in London, England;
"BA Reference Rate" means (i) for each Lender that is a Schedule I
Canadian chartered bank, the CDOR BA Rate and (ii) for each Lender that is
not a Schedule I Canadian chartered bank, the CDOR BA Rate plus one-tenth
percent (0.10%) per annum;
"Base Rate" means the rate determined by the Agent to be the greater of
(i) the annual rate of interest (expressed as a percentage per annum on
the basis of a 365 or 366 day year, as applicable) established by the
Swing Line Lender as the reference rate of interest for the determination
of interest rates that the Swing Line Lender charges to customers of
varying degrees of creditworthiness for U.S. dollar loans made by it in
Canada and (ii) the sum of (A) the Federal Funds Rate plus (B) 1.00%. On
request, the Agent shall determine and give notice to a Borrower of the
Base Rate from time to time and such notice shall be conclusive and
binding on the parties hereto for all purposes, absent manifest error;
"Base Rate Loan" means an Advance made by way of loan in U.S. dollars
bearing interest based on the Base Rate;
"Borrowers" means Gerdau Steel, Courtice and MRM;
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"Borrower's Counsel" means (i) in the Province of Ontario, Tory Xxxx
XxxXxxxxxxx & Xxxxxxxxxx, (ii) in the State of New York, Xxxxxxxxx
Traurig, (iii) in England, Allen & Overy, (iv) in each other relevant
jurisdiction, such firm of solicitors of recognized local standing as
Gerdau Steel may select and (v) each additional or replacement firm of
solicitors of recognized local standing as Gerdau Steel may select from
time to time;
"Borrowing" means a Conversion, Drawdown or Rollover as the context
requires;
"Borrowing Base" at any time means an amount equal to the sum of the
Receivables Borrowing Base and the Inventories Borrowing Base, as
determined from the most current Borrowing Base Report;
"Borrowing Base Report" at any time means a report of Gerdau Steel
substantially in the form of Schedule G signed by a Senior Officer of
Gerdau Steel setting out a statement as at such time of: (i) the
Receivables Borrowing Base; (ii) the Inventories Borrowing Base; and (iii)
the calculation of the Borrowing Base;
"Borrowing Date" means a Conversion Date, Drawdown Date or Rollover Date,
as the context requires;
"Borrowing Notice" means a Conversion Notice, Drawdown Notice or Rollover
Notice, as the context requires;
"Branch of Account" means (i) with respect to the Agent, such branch or
office as the Agent shall designate in writing to Gerdau Steel and the
other Lenders to be the Agent's Branch of Account for the purposes of this
Agreement and (ii) with respect to the Issuing Bank, the Swing Line Lender
or a Hedging Lender, such branch or office as such Lender shall designate
in writing to Gerdau Steel and the Agent to be such Lender's Branch of
Account for the purposes of this Agreement;
"Business" means (i) in relation to Courtice or any Subsidiary of
Courtice, the principal business carried on by it and its Subsidiaries
which is comprised of the steel products manufacturing and fabricating
business, (ii) in relation to MRM or any Subsidiary of MRM, the principal
business carried on by it and its Subsidiaries which is comprised of the
steel products manufacturing and fabricating business and the scrap metal
recycling business, (iii) in relation to Gerdau Steel, the only business
carried on by it which is the holding of Capital Stock in its
Subsidiaries, and (iv) in relation to any Subsidiary of Gerdau Steel, the
applicable businesses identified in (i), (ii) or (iii);
"Business Affairs" means the Business Assets, affairs, liabilities,
financial condition, prospects and results of operations of a specified
Person;
"Business Assets" means the business, operations, undertaking, property
and assets of a specified Person;
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"Canadian dollars", "Cdn. $", "dollars" or "$" means lawful currency of
Canada;
"Canadian Dollar Value" means, in relation to any amount of money or any
particular Advance at any time, the value thereof at such time in Canadian
dollars, determined as follows:
(a) for an amount or Advance which is denominated in Canadian dollars,
the Canadian dollar amount thereof; and
(b) for an amount or Advance which is denominated in foreign currency,
the Equivalent Amount thereof in Canadian dollars;
"Capital Expenditure Limit" means (i) for the 1999 Fiscal Year,
Cdn.$45,000,000, (ii) for the 2000 Fiscal Year, the sum of (A)
Cdn.$25,000,000 plus (B) the lesser of (1) Cdn.$10,000,000 or (2) the
amount, if any, by which (x) Cdn.$45,000,000 exceeds (y) the actual
aggregate amount of all Capital Expenditures made by the Gerdau Canada
Group during the 1999 Fiscal Year or, if (x) does not exceed (y), nil and
(iii) for any Fiscal Year subsequent to the 2000 Fiscal Year, the sum of
(A) Cdn.$25,000,000 plus (B) the lesser of (1) Cdn.$10,000,000 or (2) the
amount, if any, by which (x) Cdn.$25,000,000 exceeds (y) the actual
aggregate amount of all Capital Expenditures made by the Gerdau Canada
Group during the immediately prior Fiscal Year or, if (x) does not exceed
(y), nil;
"Capital Expenditures" for any accounting period of Gerdau Steel means
(without duplication) any expenditure (whether payable in cash or other
property or accrued as a liability) that, in conformity with GAAP, would
be required to be classified as a capital expenditure. For certainty,
Capital Expenditures includes (i) the cost of assets acquired under
capital leases and (ii) expenditures for equipment which is purchased
simultaneously with the trade-in of existing equipment owned by any Gerdau
Canada Group Member, to the extent the gross purchase price of the
purchased equipment exceeds the book value of the equipment being traded
in at such time. Capital Expenditures, however, excludes expenditures made
in connection with the replacement or restoration of buildings, fixtures
or equipment to the extent reimbursed or financed from insurance or
expropriation proceeds;
"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, limited or general partnership interests in a partnership or any
other equivalent such ownership interest;
"Cash Collateral Account" has the defined meaning assigned to it in
Section 7.6.10;
"Cash Equivalent Investments" means (i) short-term obligations of, or
fully guaranteed by, the government of the United States of America or
Canada, (ii) commercial paper
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rated A-1 or better by S&P or P-1 or better by Moody's, (iii) demand
deposit accounts maintained in the ordinary course of business, and (iv)
certificates of deposit issued by and time deposits with commercial banks
(whether domestic or foreign) having capital and surplus in excess of
$1,000,000,000; provided in each case that the same provides for payment
of both principal and interest (and not principal alone or interest alone)
and is not subject to any contingency regarding the payment of principal
or interest;
"Cash Interest Expense" for any accounting period of Gerdau Steel means
the sum (without duplication) of (i) total consolidated interest expense
of the Gerdau Canada Group plus (ii) all dividends payable on Preferred
Shares of any Gerdau Canada Group Member to any Person that is not a
Gerdau Canada Group Member, in each case, actually paid in respect of such
accounting period;
"CDOR BA Rate" means the yearly rate of interest determined by the Agent
to be equivalent to the average of the discount rates (rounded up to two
decimal places) applicable to banker's acceptances denominated in Canadian
Dollars for any specified maturity quoted on the Reuters Money Market CDOR
page on the day of determination (or on the preceding day, if such day is
not a Banking Day). If the Agent is unable to determine such an average
rate, the CDOR BA Rate will be determined by the Agent with reference to
such rate or the average of such rates (rounded up to two decimal places)
quoted by such Reference Lender or Reference Lenders as the Agent may
select;
"Certificate" from any Person means a written certificate of the Person
signed by a Senior Officer;
"Change in Law" means the introduction of, any change in, or the coming
into effect of, any Applicable Law (whether or not having the force of
law), or any change in the interpretation, administration or application
thereof by any Governmental Body, or compliance by any Lender (or any
Holding Body Corporate of any Lender) with any Applicable Law or the
request or direction of any Governmental Body (whether or not having the
force of law);
"Clean-Up" means the remediation, containment, removal, treatment,
neutralization or inactivation of any Contaminant;
"Commitment" of any Lender means the Lenders' Revolver Commitment or Term
Commitment, or both of them, as applicable;
"Commitment Fee" means the commitment fee payable pursuant to Section 8.1;
"Commitment Letter" means the commitment letter dated September 21, 1999
between the Joint Arrangers and Joint Bookrunners, the Agent, the Lenders
and the Borrowers pursuant to which this Agreement is being entered into;
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"Compliance Certificate" in respect of an accounting period of Gerdau
Steel means a Certificate of Gerdau Steel substantially in the form
attached as Schedule I setting out, among other things, a statement for
such accounting period of the calculations of the financial tests set out
in Section 11.1.1.13;
"Confirmed Loan Documents" means the Loan Documents (as defined in the
Prior Loan Agreement);
"Contaminant" means any solid, liquid, gas, odour, heat, sound, vibration,
radiation or combination of any of them that may (i) impair the quality of
the environment for any use that can be made of it, (ii) injure or damage
property or plant or animal life, (iii) harm or materially discomfort any
Person, (iv) adversely affect the health of any individual, (v) impair the
safety of any individual, (vi) render any property or plant or animal life
unfit for use by man, (vii) cause loss of enjoyment of normal use of
property, or (viii) interfere with the normal course of business, and
includes any "Contaminant" within the meaning assigned to such term in any
Environmental Law;
"Control", "Controls" and "Controlled" when used with respect to any
Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of Voting
Capital Stock, by contract or otherwise;
"Co-Syndication Agents" means The Chase Manhattan Bank of Canada and
Citibank Canada, and any of their respective successors;
"Conversion" means the conversion of the method for calculating interest
or fees on an Advance from one Type to another, and includes a conversion
to or from an issue of Bankers' Acceptances;
"Conversion Date" means, in respect of any Advance, the Banking Day on
which a Conversion thereof is made;
"Conversion Notice" means a notice substantially in the form of Schedule C
given to the Agent in accordance with the terms hereof;
"Core Related Business" means a business activity which in the opinion of
the Majority Lenders acting reasonably, is of the same nature as a
principal business activity carried on by any of the Gerdau Canada Group,
excluding the animal hide business of Xxxxxx, as of September 27, 1999 as
part of their respective Businesses;
"Courtice" means Gerdau Courtice Steel Inc., a corporation continued
pursuant to the laws of the Province of Saskatchewan as at September 27,
1999, such corporation when it was a Canada corporation, or its
successors, as the context requires;
"Courtice Amended and Restated Debenture Delivery Agreement" means the
agreement dated as of November 8, 1996 made between Courtice and the Agent
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confirming the delivery to the Agent of the Courtice Debenture, as amended
by Amending Agreement No. 1 and Amending Agreement No. 3, and the Courtice
Supplemental Debenture, as amended by Amending Agreement No. 2, as amended
and restated as of September 27, 1999;
"Courtice Debenture" means the Cdn. $50,000,000 secured demand debenture
dated October 31, 1989 granted by Courtice to TD;
"Courtice Debenture Pledge Agreement" means the pledge agreement relating
to the Courtice Debenture dated October 31, 1989 made between Courtice and
TD;
"Courtice/Gerdau Steel Guarantee" means Courtice's guarantee of the
obligations of Gerdau Steel to each Lender under or in respect of this
Agreement, including under the Gerdau Steel Guarantees, initially given by
Courtice to TD pursuant to a guarantee dated June 27, 1995, as amended and
confirmed September 26, 1995, as further amended and confirmed by
amendment and confirmation of guarantee dated as of November 8, 1996
between Courtice and the Agent;
"Courtice/MRM Guarantee" means Courtice's guarantee of MRM's Loan
Obligations to each Lender initially given by Courtice to TD pursuant to a
guarantee dated July 20, 1995, as amended and confirmed September 26,
1995, as further amended and confirmed by amendment and confirmation of
guarantee dated as of November 8, 1996 between Courtice and the Agent;
"Courtice Guarantees" means the Courtice/Gerdau Steel Guarantee and the
Courtice/MRM Guarantee, and "Courtice Guarantee" means one of them;
"Courtice Supplemental Debenture" means the Cdn. $50,000,000 secured
demand debenture dated June 21, 1990 granted by Courtice to TD;
"Credit Facilities" means the Revolver Facility and the Term Facility;
"Currency" means Canadian dollars, U.S. dollars or other foreign currency;
"Debentures" means the Courtice Debenture, the Courtice Supplemental
Debenture and the MRM Debenture, and "Debenture" means any of them;
"Debenture Delivery Agreements" means the Courtice Amended and Restated
Debenture Delivery Agreement and the MRM Amended and Restated Debenture
Delivery Agreement, collectively, and "Debenture Delivery Agreement" means
one of them;
"Debt" of any Person at any time means liabilities of such Person and its
Subsidiaries which, in accordance with GAAP, would be classified upon the
consolidated balance sheet of such Person prepared as at such time as
indebtedness for borrowed money,
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including bank indebtedness, long-term debt, capital lease obligations and
indebtedness to affiliates or other financial indebtedness;
"Debt Service Cost" for any accounting period of Gerdau Steel means the
sum (without duplication) of the amounts for such accounting period of (i)
Cash Interest Expense, plus (ii) all scheduled repayments of Indebtedness
(which, for certainty, shall exclude repayments under bank indebtedness
(such as the Revolver Facility) which is repayable on demand or within one
year from the date of borrowing) which any Gerdau Canada Group Member is
required to make during such accounting period;
"Debt Service Coverage Ratio" for any accounting period of Gerdau Steel
means the ratio of (i) the sum of (A) EBITDA for such accounting period
minus (B) the aggregate amount of all Capital Expenditures incurred in
respect of such accounting period minus (C) Income Taxes incurred and
actually paid in respect of such accounting period to (ii) the Debt
Service Cost for such accounting period;
"Default" means any event which with the lapse of time, giving of notice,
making of a determination, or any combination thereof, would constitute an
Event of Default;
"Derivative" means any transaction referred to in clause (a) or (b) of the
definition of "Specified Transaction" contained in Section 14 of the
Master ISDA Agreement;
"Derivative Exposure" for any Person at any time means the amount, if any,
which would be payable by such Person to its counterparty (determined by
the Agent or (if it is the relevant counterparty) a Hedging Lender in
accordance with the Agent's or such Hedging Lender's customary practices)
pursuant to Section 6(e) of the Master ISDA Agreement governing such
Derivatives in respect of all Derivatives entered into between such Person
and such counterparty if an Early Termination Date (as defined in Section
14 of the Master ISDA Agreement) were to occur at such time and such
Derivatives were governed by a Master ISDA Agreement;
"Designated Account" means the Canadian dollar or U.S. dollar current
account maintained by the Relevant Borrower at the Branch of Account of
the Swing Line Lender and designated by the Swing Line Lender as such for
the purposes of this Agreement;
"Drawdown" means a fresh Advance which is not derived from a Conversion or
Rollover;
"Drawdown Date" means any Banking Day on which a Drawdown is made;
"Drawdown Notice" means a notice substantially in the form of Schedule B
given to the Agent in accordance with the terms hereof;
"Due Dates" means the Final Term Facility Due Date and the Revolver
Facility Due Date, and "Due Date" means the applicable one of them;
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"EBIT" for any accounting period of Gerdau Steel means the consolidated
net income of Gerdau Steel for such accounting period before interest and
Income Taxes, and before unusual or extraordinary items;
"EBITDA" for any accounting period of Gerdau Steel means the consolidated
net income of Gerdau Steel for such accounting period before interest,
Income Taxes, depreciation and amortization, and before extraordinary and
unusual items;
"Eligible Hedging Instrument" has the defined meaning assigned to it in
Section 4.1.3;
"Eligible Inventory" of any Person means, at any time, that portion of the
Person's inventories determined on a consolidated basis from its most
recent balance sheet comprised of all raw materials, consumables, finished
goods and billets; provided that any inventory that is not subject to the
Security or is subject to a Lien in favour of any other Person, other than
the Syndicate, shall not be taken into account in determining Eligible
Inventory;
"Eligible Receivables" of any Person means, at any time, the aggregate
outstanding balances, net of allowance for credit losses, of all
receivables owned by such Person representing unconditional obligations to
pay, arising from sales, leases or rentals by such Person to any other
Persons in the ordinary course of its business, existing at that time, and
as determined in accordance with GAAP, provided however that the
outstanding balance of any receivable shall not be taken into account in
determining Eligible Receivables if: (i) at that time any amount owing in
respect of the relevant receivable has been outstanding for more than 90
days; (ii) the relevant receivable is from an Affiliate, a Non-Qualifying
Subsidiary or a Xxxxxx X.X. Group Member; (iii) the relevant receivable is
subject to claims of off-set, set-off, counterclaim or cross-claim, in
which event it shall not be taken into account to the extent of the actual
so claimed; (iv) the relevant receivable is owed by a Person in
receivership or bankruptcy or subject to insolvency proceedings; or (v)
the relevant receivable is not subject to the Security or is subject to a
Lien in favour of any other Person, other than the Syndicate;
"Environmental Law" means, in relation to any Person, property,
transaction or event, all treaties, federal, provincial or local laws,
statutes, regulations, municipal by-laws, ordinances, rules, orders,
requirements, guidelines or policies which apply to such Person, property,
transaction or event and which relate to or otherwise impose liability or
standards of conduct concerning health or safety, mining or reclamation of
mined lands, discharges, emissions, releases or threatened releases of
noises, odours, pollutants, Contaminants or Hazardous Substances whether
as matter or energy, into ambient air, water or land, or otherwise relates
to the manufacture, processing, generation, distribution, use, treatment,
storage, disposal, Clean-Up, transport or handling of pollutants,
Contaminants, or hazardous, toxic or other wastes, substances or
materials, or other environmental matters, including The Canadian
Environmental Protection Act (Canada), the Fisheries Act (Canada), The
Transportation of Dangerous Goods Xxxxxxxx
- 00 -
xxx Xxxxxxxxxxxxxx Xxx (Xxxxxx), The Dangerous Goods Transportation Act
(Ontario), The Environmental Protection Act (Ontario), the Ontario Water
Resources Act, The Environment Act (Manitoba), The Dangerous Goods
Handling and Transportation Act (Manitoba), The Ground Water & Water Well
Act (Manitoba), The High-Level Radioactive Waste Act (Manitoba), The Ozone
Depleting Substances Act (Manitoba), The Public Health Act (Manitoba), The
Waste Reduction and Prevention Act (Manitoba), The Workplace Safety and
Health Act (Manitoba), The United States Comprehensive Environmental
Response, Compensation and Liability Act of 1980 and any similar law which
applies to such Person, property, transaction or event in any jurisdiction
in which any of the Business Assets of the Xxxxxx X.X. Group are situated
or any of the Business of the Xxxxxx X.X. Group is conducted;
"Equivalent Amount" on any date means the amount in a specified currency
which would result from the conversion of a specified amount in another
currency at the Spot Rate;
"Event of Default" has the meaning attributed to such term in Section
12.1;
"Federal Funds Rate" for any period means a fluctuating annual rate of
interest (expressed as a percentage per annum on the basis of a 360 day
year) equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the United
States Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a business day in New York,
New York, for the next preceding such business day) in New York, New York
by the Federal Reserve Bank of New York, or if such rate is not so
published for any day which is a business day in New York, New York, the
average of the quotations for such day on such transactions received by
the Agent from three federal funds brokers of recognized standing selected
by the Agent;
"Final Term Facility Due Date" means September 27, 2004 or such earlier
date as the entire balance of the Advances under the Term Facility may
become due whether by acceleration or otherwise;
"First Syndicated Amended and Restated Loan Agreement" has the defined
meaning assigned to it in Recital H of this Agreement;
"Fiscal Quarter" means one of Gerdau Steel's four three-month accounting
periods comprising a Fiscal Year;
"Fiscal Year" means the 12 month accounting period of Gerdau Steel ending
December 31st of each calendar year;
"FLS" means FLS Holdings Inc., a Florida corporation at September 27,
1999, or any successor of it;
- 15 -
"Free Cash Flow" for any accounting period of Gerdau Steel means the sum
determined as (i) EBITDA less (ii) Debt Service Cost less (iii) Income
Taxes incurred and actually paid less (iv) Capital Expenditures incurred,
in each case, in respect of such accounting period;
"GAAP" means generally accepted accounting principles determined in
accordance with Section 1.12;
"Gerdau Canada Group Facilities" means all plants, xxxxx and other
facilities (including all real property on which such facilities are
situated), containment ponds, containers, vehicles, pipelines, rail
transportation systems, rail cars, motor vessels, trailers, storage or
holding tanks, caverns and other machinery and equipment owned, leased,
managed, controlled or operated by any Gerdau Canada Group Member;
"Gerdau Canada Group Member" at any time means any one of Gerdau Steel and
its consolidated Subsidiaries, including each Borrower (whether or not it
remains a Subsidiary of Gerdau Steel), but excluding any Non-Qualifying
Subsidiary; and "Gerdau Canada Group" means all Gerdau Canada Group
Members;
"Xxxxxx X.X." means Xxxxxx X.X., a Brazilian corporation at the date
hereof, and any successor of it;
"Xxxxxx X.X. Group Member" at any time means the Gerdau Canada Group and
Gerdau USA, FLS and AmeriSteel and their respective Subsidiaries;
"Xxxxxx X.X. Guarantee" means the guarantee of Xxxxxx X.X. listed in
Schedule L;
"Xxxxxx X.X. Trust Deeds" means collectively (a) a Trust Deed dated as of
November 23, 1993 (as amended and supplemented) among Metalurgica Xxxxxx
X.X., as issuer, Xxxxxx X.X., as the sole remaining guarantor, and The Law
Debenture Trust Corporation p.l.c., as trustee, providing for the issue of
U.S.$100,000,000 10.25% Notes due 2001, and (b) an Indenture dated as of
May 22, 1996 (as amended and supplemented) among Metalurgica Xxxxxx X.X.,
as issuer, Xxxxxx X.X., as the sole remaining guarantor, the Chase
Manhattan Bank, New York, as trustee, registrar and transfer agent, Chase
Manhattan Bank Luxembourg S.A., as paying agent and transfer agent, and
Chase Trust Bank (Japan) as principal paying agent, providing for the
issue of U.S.$130,000,000 11.25% Notes due 2004;
"Gerdau Steel" means Gerdau Steel Inc., formerly known as Gerdau Canada
Inc., a corporation incorporated pursuant to the laws of Canada at
September 27, 1999, and its successors;
"Gerdau Steel Guarantees" means the Gerdau Steel/Courtice Guarantee and
the Gerdau Steel/MRM Guarantee, and "Gerdau Steel Guarantee" means any one
of them;
- 16 -
"Gerdau Steel/Courtice Guarantee" means Gerdau Steel's guarantee of
Courtice's Loan Obligations to each Lender initially given by Gerdau Steel
to TD pursuant to a guarantee dated June 27, 1995, as amended and
confirmed by amendment and confirmation of guarantee dated as of November
8, 1996 between Gerdau Steel and the Agent;
"Gerdau Steel/MRM Guarantee" means Gerdau Steel's guarantee of MRM's Loan
Obligations to each Lender initially given by Gerdau Steel to TD pursuant
to a guarantee dated June 27, 1995, as amended and confirmed by amendment
and confirmation of guarantee dated as of November 8, 1996 between Gerdau
Steel and the Agent;
"Gerdau USA" means Gerdau USA Inc., a Delaware corporation at September
27, 1999, and its successors;
"Governmental Body" means any international tribunal, body or authority,
government, parliament, legislature or local authority, or any regulatory
authority, ministry, agency, commission, tribunal or board of any
government, parliament, legislature or local authority, or any court or
administrative tribunal or (without limitation to the foregoing) any other
law, regulation or rulemaking entity (including any world, regional or
central bank, fiscal or monetary authority or authority regulating banks),
having or purporting to have jurisdiction in the relevant circumstances,
or any Person acting or purporting to act under the authority of any of
the foregoing;
"Hazardous Substance" means any material, substance or matter which (i)
constitutes a hazardous substance, hazardous waste, toxic substance,
Contaminant, dangerous good, ozone depleting substance or pollutant within
the meaning of any applicable Environmental Law or (ii) is regulated or
controlled as a hazardous substance, hazardous waste, toxic substance,
pollutant, Contaminant, dangerous good or other regulated or controlled
material, substance or matter pursuant to any Environmental Law;
"Hedging Lenders" means TD and each other Lender as may have agreed with
any of the Borrowers to make Derivatives available to a Borrower in
accordance with the provisions of Article 4, and "Hedging Lender" means
any of them;
"Holding Body Corporate" means, in respect of any body corporate, any
Person which, directly or indirectly, Controls such body corporate;
"Income Taxes" means taxes based on or measured by income or profit of any
nature or kind, including Canadian federal and provincial income taxes and
income taxes of any foreign jurisdiction;
"Indebtedness" means, with respect to any Person at any particular time,
(without duplication) obligations of such Person or any of its
Subsidiaries to pay (in whole or in part) any of the following amounts at
such time:
- 17 -
(i) Debt;
(ii) indebtedness, actual or contingent, arising under or in respect of
any note purchase, purchase of accounts, factoring, securitization
or discounting arrangement;
(iii) the principal amount of, and premiums and capitalized interest
payable in respect of, indebtedness for the deferred purchase
price of property or services;
(iv) the principal amount of, and premiums and capitalized interest
payable in respect of, indebtedness payable under or in respect of
any Lien upon any property acquired (whether or not assumed);
(v) Derivative Exposure;
(vi) the redemption or retraction price of any Preferred Shares;
(vii) the capital portion of any other transaction that is not Debt
having the commercial effect of borrowing; or
(viii) any amount payable under any direct or indirect guarantee of any
amount of the nature described in any of clauses (i) to (vii)
above,
and for greater certainty, trade payables, expenses (other than capital
lease payments) accrued in the ordinary course of business and customer
advance payments and deposits received in the ordinary course of business
shall not constitute Indebtedness;
"Intellectual Property Rights" means any rights under any contract or
Applicable Law, including the Patent Act (Canada), Copyright Act (Canada)
and Trade-Xxxx Act (Canada), which provides a right to any Gerdau Canada
Group Member in either (i) ideas, formulae, algorithms, concepts,
inventions or know-how generally, including trade secret law, or (ii) the
expression or use of such ideas, formulae, algorithms, concepts,
inventions or know-how;
"Interest Payment Date" means:
(a) with respect to each Prime Rate Loan and Base Rate Loan and any
period of time elapsed in any calendar month, each day on which a
principal payment of such Loan is due hereunder and, in addition
thereto, the first Banking Day of the immediately following calendar
month; and
(b) with respect to each LIBOR Loan, the last day of each Interest
Period applicable thereto and, with respect to each LIBOR Loan with
an Interest Period longer than three months, the day which falls
three months after the relevant Borrowing Date
- 18 -
of the LIBOR Loan and each day which falls every three months
thereafter (or the next following Banking Day if any such day is not
a Banking Day);
"Interest Period" means with respect to each LIBOR Loan, (i) each of the
periods for which a LIBOR Loan is outstanding, being, subject to
availability, one, two, three or six months, as selected by the Relevant
Borrower, the first of which Interest Periods will start on and include
the relevant Borrowing Date of the LIBOR Loan, and the remainder of which
will start on and include the last day of the preceding Interest Period,
(ii) any Interest Period which would otherwise end on a day which is not a
Banking Day shall be extended until the next Banking Day unless such
Banking Day falls in another calendar month, in which case it will end on
the preceding Banking Day and (iii) the Agent may extend or shorten
Interest Periods in accordance with its prevailing market practice for
LIBOR Loans or to ensure that any scheduled repayment or mandatory
prepayment of LIBOR Loans takes place on the last day of an Interest
Period; provided that in any case the last day of each Interest Period
shall also be the first day of the next Interest Period; and further
provided that the last day of each Interest Period hereunder shall be on
or prior to the applicable Due Date of such Loan;
"Inventories Borrowing Base" as at any time means the lesser of (i)
Cdn.$40,000,000 or (ii) the amount equal to 50% of the Canadian Dollar
Value (determined at the lower of cost on a first-in, first-out basis or
market value) of Eligible Inventory, subject to adjustment in accordance
with Section 2.1.4;
"Investment" means any loan, advance (other than commission, travel and
similar advances to officers and employees made in the ordinary course of
business), extension of credit (other than accounts receivable arising in
the ordinary course of business) or contribution of capital to any other
Person or any acquisition of Capital Stock, deposit accounts, certificates
of deposit, mutual funds, bonds, notes, debentures or other securities of
any other Person or any structured notes or Derivatives;
"Issuing Bank" means TD or (as the context requires) any replacement of
such issuing bank that is a Lender and is appointed pursuant to the
provisions of Section 13.15.3;
"Joint Arrangers and Joint Bookrunners" means Chase Securities Inc.,
Xxxxxxx Xxxxx Xxxxxx Inc. and The Toronto-Dominion Bank, and any of their
respective successors;
"Lenders" means any one or more or all (as the context requires) of the
financial institutions listed as such in Schedule A (as amended and
replaced from time to time in accordance with Section 14.5.5), and
"Lender" means any of them;
"Lenders' Brazilian Counsel" means Veirano e Advogados Associados of Rio
de Janeiro, Brazil or such other counsel as the Agent may designate;
- 19 -
"Lenders' Counsel" means Lenders' Brazilian Counsel, Lenders' Manitoba
Counsel, Lenders' Ontario Counsel, Lenders' Quebec Counsel, Lenders'
Saskatchewan Counsel, Lenders' U.S. Counsel and such other counsel in such
other jurisdictions as the Agent may designate;
"Lender's Own Taxes" means Income Taxes or capital or franchise taxes
imposed on a Lender by a Governmental Body of a jurisdiction in which the
Lender is subject to taxation because the Lender is incorporated, has a
permanent establishment or a fixed place of business in such jurisdiction
or is resident or engaged in a trade or business in such jurisdiction for
reasons other than it has executed, delivered, performed its obligations
under, has received or is entitled to receive payments under, or has
enforced any Loan Document;
"Lenders' Manitoba Counsel" means Xxxxxxxx Xxxxxxx Xxxxxxxx or such other
counsel as the Agent may designate;
"Lenders' Ontario Counsel" means Fasken Xxxxxxxx Xxxxxxx of Toronto,
Ontario or such other counsel as the Agent may designate;
"Lenders' Quebec Counsel" means Xxxxxxxxx Xxxxxx of Montreal, Quebec or
such other counsel as the Agent may designate;
"Lenders' Saskatchewan Counsel" means XxXxxxxxx, XxXxxxxxx & Xxxxxxxx or
such other counsel as the Agent may designate;
"Lenders' U.S. Counsel" means Winston & Xxxxxx or such other counsel as
the Agent may designate;
"Lending Office" of a Lender means the office of the Lenders set out in
Schedule A (as amended and replaced from time to time in accordance with
Section 14.5.5);
"LIBO Rate" means, for any Interest Period and LIBOR Loan, the rate of
interest (expressed as a percentage per annum on the basis of a 360 day
year) as determined by the Agent to be the average of the rates of
interest (rounded up to the next higher multiple of one-sixteenth percent
(0.0625%)) for deposits in U.S. dollars in a representative amount which
appears on the Page 3750 of the Dow Xxxxx Telerate Service (or any similar
such reference service selected by the Agent) as of 11:00 a.m. (London
time) on the second London Banking Day prior to the first day of such
Interest Period and for a period similar to such Interest Period. If the
Agent is unable to determine such an average rate, LIBO Rate will be
determined by the Agent with reference to the rate or the average of the
rates of interest (rounded up to the next higher multiple of one-sixteenth
percent (0.0625%)) at which the Reference Lender or Reference Lenders
selected by the Agent are offering U.S. Dollar deposits in a
representative amount to prime banks in the London interbank market for
such Interest Period;
- 20 -
"LIBOR Loan" means an Advance made by way of loan in U.S. dollars bearing
interest based on the LIBO Rate;
"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;
"Litigation" means any grievance, investigation, litigation, legal action,
lawsuit or other proceeding (whether civil, administrative, quasi-criminal
or criminal) by or before any Governmental Body or arbitrator;
"Loan" means a Prime Rate Loan, LIBOR Loan or Base Rate Loan, as the
context requires;
"Loan Documents" means the Prior Security, the Confirmed Loan Documents,
the New Loan Documents, and each other agreement, document or instrument
executed and delivered to any of the Lenders under or pursuant to any
thereof, and "Loan Document" means any one of the Loan Documents;
"Loan Obligations" means the Indebtedness and other obligations of each
Borrower owing to the Syndicate incurred under or pursuant to this
Agreement or any other Loan Document, and any item or part of any thereof;
"Loan Transfer Agreement" has the defined meaning assigned in Subsection
14.5.4;
"Long Term Debt" means all Indebtedness of Gerdau Steel on a consolidated
basis, other than (i) Indebtedness payable on demand or maturing within 12
months after the date as of which determination is made, but includes
Indebtedness which is not payable on demand and which may at the option of
the debtor be extended or renewed so as to mature 12 months or more from
the date of determination and (ii) Subordinated Debt. Notwithstanding the
foregoing, the current portion of Long Term Debt will not be included in
Long Term Debt;
"London Banking Day" means a day on which dealings in U.S. Dollar deposits
may be transacted in the London interbank market;
"Majority Lenders" means Lenders whose Commitments amount to at least
66-2/3% of the Total Commitment, unless an Event of Default has occurred
which has not been waived by the Required Lenders, in which event
"Majority Lenders" means Lenders whose Rateable Shares in outstanding
Advances under the Credit Facilities amounts to at least 66-2/3% of the
total Outstanding Amount of such Advances;
- 21 -
"Material Adverse Change" means any change, effect, event, occurrence or
change in the state of facts that has or could reasonably be expected to
have a Material Adverse Effect;
"Material Adverse Effect" means an effect which, in the judgment of the
Majority Lenders, (i) impairs, in a material adverse way, any Xxxxxx X.X.
Group Member's or any other Person's ability to perform its obligations
under any Loan Document to which it is a party, (ii) prejudices, restricts
or renders unenforceable or ineffective, in a material adverse way, any
Security or any of the rights intended or purported to be granted under or
pursuant to any Loan Document to or for the benefit of the Syndicate, or
(iii) results in a material adverse change in any of the Business Affairs
of Xxxxxx X.X. or the Gerdau Canada Group taken as a whole or (iv) results
in a material loss, diminution or destruction of the Business or any
substantial part of the Business Assets (either physically or in value) of
Xxxxxx X.X. or the Gerdau Canada Group taken as a whole which is not
substantially compensated for by insurance or expropriation proceeds;
"Master ISDA Agreement" has the defined meaning assigned to it in Section
4.1.4;
"Maturity Date" means the last day of an Interest Period applicable to a
LIBOR Loan or of the term of any Banker's Acceptance or the expiry date of
a Standby Credit (as applicable);
"Maximum Amount" in the case of the Revolver Facility, means the Revolver
Amount and in the case of the Term Facility, means the Maximum Term
Amount;
"Maximum Term Amount" means Cdn. $200,000,000, as such amount may be
modified or reduced from time to time pursuant to the provisions of this
Agreement;
"Moody's" means Xxxxx'x Investors Service, Inc.;
"Mortgaged Property" means all of the property, assets and undertaking of
each Xxxxxx X.X. Group Member of every nature and kind, both present and
future, real and personal, tangible and intangible, including all proceeds
of any such property, assets or undertaking to the extent the same is
intended to be subject to the Liens constituted by the Security by the
express terms of the Security or this Agreement, and any item or part
thereof;
"MRM" means Gerdau MRM Steel Inc., a corporation continued pursuant to the
laws of the Province of Saskatchewan as at September 27, 1999, such
corporation when it was a Canada corporation, or its successors, as the
context requires;
"MRM Debenture" means the Cdn. $80,000,000 secured demand debenture dated
June 27, 1995 granted by MRM to TD;
- 22 -
"MRM Debenture Delivery Agreement" means the agreement dated as of
November 8, 1996 made between MRM and the Agent confirming the delivery to
the Agent of the MRM Debenture, as amended by Amending Agreement No. 4, as
amended and restated as of September 27, 1999;
"MRM/Courtice Guarantee" means MRM's guarantee of Courtice's Loan
Obligations to each Lender initially given by MRM to TD pursuant to a
guarantee dated June 27, 1995, as amended and confirmed September 26,
1995, as further amended and confirmed by amendment and confirmation of
guarantee dated as of November 8, 1996 between MRM and the Agent;
"MRM/Gerdau Steel Guarantee" means MRM's guarantee of the obligations of
Gerdau Steel to each Lender under or in respect of this Agreement,
including under the Gerdau Steel Guarantees, initially given by MRM to TD
pursuant to a guarantee dated June 27, 1995, as amended and confirmed
September 26, 1995, as further amended and confirmed by amendment and
confirmation of guarantee dated as of November 8, 1996 between MRM and the
Agent;
"MRM Guarantees" means the MRM/Courtice Guarantee and the MRM/Gerdau Steel
Guarantee, and "MRM Guarantee" means any one of them;
"MRM Holdings" means Gerdau MRM Holdings Inc., a corporation incorporated
pursuant to the laws of Canada, and its successors;
"MRM Holdings/Gerdau Steel Guarantee" means MRM Holdings' guarantee of the
obligations of Gerdau Steel to each Lender under or in respect of this
Agreement, including under the Gerdau Steel Guarantees, initially given by
MRM Holdings to TD pursuant to a guarantee dated June 27, 1995, as amended
and confirmed September 26, 1995, as further amended and confirmed by
amendment and confirmation of guarantee dated November 8, 1996 between MRM
Holdings and the Agent;
"MRM Holdings/MRM Guarantee" means MRM Holdings' guarantee of MRM's Loan
Obligations to each Lender initially given by MRM Holdings to TD pursuant
to a guarantee dated June 27, 1995, as amended and confirmed September 26,
1995, as further amended and confirmed by amendment and confirmation of
guarantee dated as of November 8, 1996 between MRM Holdings and the Agent;
"MRM Holdings Guarantees" means the MRM Holdings/Gerdau Steel Guarantee
and the MRM Holdings/MRM Guarantee, and "MRM Holdings Guarantee" means any
one of them;
"MRM Working Capital General Security Agreement" means the general
security agreement dated November 8, 1996 granted by MRM in favour of the
Agent creating a security interest in the working capital of MRM securing
MRM's Loan Obligations, but limited to the amount of the Canadian Dollar
equivalent of U.S. $20,000,000;
- 23 -
"Net Asset Disposal Proceeds" means with respect to any asset disposal,
the sum of cash or Cash Equivalent Investments received from such asset
disposal, net of (i) all costs and expenses incurred in effecting such
disposal, including legal expenses and commissions payable to any Person
that is not a Gerdau Canada Group Member or an Affiliate, (ii) all
payments made on any Indebtedness which is secured by such asset pursuant
to a Permitted Lien upon or with respect to such asset or which must, by
the terms of such Lien, in order to obtain the necessary consent to such
asset disposal, or by Applicable Law, be repaid out of the proceeds from
such asset disposal and (iii) cash or Cash Equivalent Investments derived
from such asset disposal that is reinvested in capital assets within 30
days of such disposal. Notwithstanding the foregoing, if any asset
disposal is made to an Affiliate or if not made at arm's length, Net Asset
Disposal Proceeds shall be the greater of (x) the fair market value of
such asset disposed (net of disposal costs as determined above) as
certified by Gerdau Steel's Auditors or (y) the amount determined in the
preceding sentence of this definition;
"New Loan Documents" means this Agreement and each agreement, document and
instrument executed and delivered to the Agent pursuant to Article 6;
"Non-Qualifying Investment" means (i) any Investment (whether by way of
loan, investment in equity securities or otherwise) made by any Gerdau
Canada Group Member in any Person that is not a Gerdau Canada Group Member
and that is not principally engaged in a Core Related Business or more
than 10% of its assets is not located in Canada or the United States (such
as Siderurgica AZA S.A., a Chilean company as at the date hereof) or (ii)
any purchase of (A) assets which are not used principally in a Core
Related Business or 10% or more of which are not located in Canada or the
United States or (B) a business that is not a Core Related Business or 10%
or more of the assets of which are not located in Canada or the United
States;
"Non-Qualifying Subsidiary" means (i) any Subsidiary of Gerdau Steel that
is a Non-Qualifying Investment and (ii) any of Gerdau USA, FLS, AmeriSteel
and their respective Subsidiaries;
"1989 Term Sheet" has the defined meaning assigned to it in Recital A of
this Agreement;
"1995 Term Sheet" has the defined meaning assigned to it in Recital C of
this Agreement;
"Obligors" means the Borrowers, MRM Holdings, Xxxxxx X.X., FLS, Gerdau
USA, Xxxxxx and any other Person that guarantees payment of the Loan
Obligations, and "Obligor" means any of them;
"Original Amended and Restated Loan Agreement" has the defined meaning
assigned to it in Recital D of this Agreement;
- 24 -
"Outstanding Amount" when used in relation to any outstanding Advance at
any time means (i) its aggregate face amount if it is an issue of Bankers'
Acceptances, (ii) the maximum amount remaining available to be drawn under
it if it is a Standby Credit denominated in Canadian dollars, (iii) the
Canadian Dollar Value in Canadian dollars of the maximum amount remaining
available to be drawn under it if it is a Standby Credit denominated in
any Currency other than Canadian dollars, (iv) its outstanding principal
balance if it is a Prime Rate Loan and (v) the Canadian Dollar Value in
Canadian dollars of its outstanding principal balance if it is a LIBOR
Loan or a Base Rate Loan; and when used in relation to a Lender's share in
any outstanding Advance at any time it means such Lender's Rateable Share
of the Outstanding Amount of such Advance;
"Participant" has the defined meaning assigned to it in Section 14.5.3;
"Permits" means authorizations, exemptions, permits, licences, approvals,
franchises, no-action letters, rulings, filings and registrations;
"Permitted Liens" means, in relation to any Xxxxxx X.X. Group Member, the
following:
(i) liens in respect of vacation pay, worker's compensation,
unemployment insurance, source deductions, unremitted sales or
goods and services taxes or similar statutory obligations, but
only if the obligations secured by such liens are not overdue;
(ii) liens for assessments or governmental charges or levies not at the
time overdue or, if overdue, the validity or amount of which is
being contested in good faith by appropriate proceedings and in
respect of which adequate steps have been taken in the opinion of
the Majority Lenders (which may include cash being paid to or
pledged with the relevant Governmental Body) to prevent penalties,
interest and enforcement proceedings and adequate reserves in
accordance with GAAP have been recorded on the consolidated
balance sheet of Gerdau Steel;
(iii) rights reserved to or vested in any governmental body by the terms
of any lease, licence, franchise, grant or permit, or by any
statutory provision, to terminate the same, to take action which
results in an expropriation, to designate a purchaser of any
property or to require annual or other payments as a condition to
the continuance thereof;
(iv) construction, mechanics', carriers', warehousemen's and
materialmen's liens and liens in respect of vacation pay, workers'
compensation, unemployment insurance or similar statutory
obligations, provided the obligations secured by such liens are
not yet due and payable and, in the case of construction liens,
which have not yet been filed or for which such Xxxxxx X.X. Group
Member has not received written notice of a lien;
- 25 -
(v) liens arising from court or arbitral proceedings, provided that
the claims secured thereby are being contested in good faith by
such Xxxxxx X.X. Group Member, execution thereon has been stayed
and continues to be stayed and such liens do not, in the
aggregate, materially detract from the value of such Xxxxxx X.X.
Group Member's property in the aggregate or materially impair the
use thereof in its Business;
(vi) good faith deposits made in the ordinary course of business to
secure the performance of bids, tenders, contracts (other than
contracts of Indebtedness), leases, surety, customs, performance
bonds (relating to obligations that do not constitute
Indebtedness) and other similar obligations;
(vii) deposits to secure public or statutory obligations or in
connection with any matter giving rise to a lien described in (iv)
above;
(viii) deposits of cash securities in connection with any appeal, review
or contestation of any security or lien, or any matter giving rise
to any security or lien, described in (ii) or (v) above;
(ix) zoning restrictions, easements, rights of way, leases or other
similar encumbrances or privileges in respect of real property
which in the aggregate do not materially impair the use of such
property by such Xxxxxx X.X. Group Member in the operation of its
Business;
(x) Purchase Money Mortgages securing up to Cdn.$10,000,000, or the
Equivalent Amount in foreign currency, of Indebtedness in the
aggregate for the entire Gerdau Canada Group outstanding at any
time;
(xi) security given by such Xxxxxx X.X. Group Member to a public
utility or any governmental body, when required by such utility or
governmental body in connection with the operations of such Xxxxxx
X.X. Group Member in the ordinary course of its Business;
(xii) the reservation in any original grants from the Crown or other
Governmental Body of any land or interest therein and statutory
exceptions to title;
(xiii) defects or irregularities of title to real property which are of a
minor nature and which will not in the aggregate materially impair
the value of the real property of such Xxxxxx X.X. Group Member or
interfere in any material respect with the use of such real
property for the purposes for which it is held;
(xiv) the reversionary interests of landlords under leases of real
property that are not capital leases with a Xxxxxx X.X. Group
Member as tenant;
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(xv) the tenancy rights of tenants under leases of real property with a
Xxxxxx X.X. Group Member as landlord;
(xvi) the interests (including security interests) of lessors under
operating leases of personal property which do not constitute
Indebtedness of a Xxxxxx X.X. Group Member;
(xvii) any security or lien, other than a construction lien, payment of
which has been provided for by deposit with the Agent of an amount
in cash, or the obtaining of a surety bond or standby credit
satisfactory to the Agent, sufficient in either case to pay or
discharge such security or lien or upon other terms satisfactory
to the Agent;
(xviii) any Lien granted to TD or the Agent in connection with the
Security; and
(xix) any other lien which the Agent approves in writing as a Permitted
Lien;
"Person" means any individual, partnership, limited partnership, joint
venture, syndicate, sole proprietorship, 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;
"Xxxxxx" means Xxxxxx Bros. Corporation, a corporation incorporated
pursuant to the laws of North Dakota at the date hereof, and its
successors;
"Xxxxxx Guarantee" means the guarantee of MRM's Loan Obligations to each
Lender initially given by Xxxxxx in favour of the Agent, dated June 27,
1995, as amended September 26, 1995, as amended and confirmed by amendment
and confirmation of guarantee dated as of November 8, 1996 between Xxxxxx
and the Agent;
"Preferred Shares" means Capital Stock of a specified Person that may be
redeemed on or before the Due Date of either Credit Facility or that are
retractable at the option of the holder at any time on or before either
such Due Date;
"Prime Rate" means the rate determined by the Agent (rounded up to two
decimal places) to be the greater of (i) the annual rate of interest
(expressed as a percentage per annum on the basis of a 365 or 366 day
year, as applicable) established by the Swing Line Lender from time to
time as the reference rate of interest for determination of interest rates
that the Swing Line Lender charges to customers of varying degrees of
creditworthiness in Canada for Canadian dollar loans made by it in Canada
and (ii) the sum of (A) the yearly rate of interest to which the one month
CDOR Rate is equivalent plus (B) 1.00%. On request, the Agent shall give
notice to the Borrowers of the Prime Rate from time to time and such
notice shall be conclusive and binding on the parties hereto for all
purposes absent manifest error;
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"Prime Rate Loan" means an Advance made by way of loan which bears
interest based upon the Prime Rate;
"Prior Borrower" has the defined meaning assigned to it in Recital I of
this Agreement;
"Prior Lenders" has the defined meaning assigned to it in the Recital I of
this Agreement;
"Prior Loan Agreement" has the defined meaning assigned to it in the
recitals to this Agreement;
"Prior Security" means the Courtice Debenture, as amended by Amending
Agreement No. 1 and Amending Agreement No. 3, the Courtice Supplemental
Debenture, as amended by Amending Agreement No. 2 , the MRM Debenture, as
amended by Amending Agreement No. 4 and the MRM Working Capital General
Security Agreement and the other Security constituted by the other New
Loan Documents (as defined in the Prior Loan Agreement);
"Purchase Money Mortgage" means any Lien created, issued or assumed by any
Gerdau Canada Group Member to secure Indebtedness assumed by such Gerdau
Canada Group Member as part of or issued or incurred to provide funds to
pay the purchase price (including installation cost) of, any real or
personal property that is limited to the property so acquired and is
created, issued or assumed substantially concurrently with the acquisition
of such property (or in connection with the refinancing of an existing
Purchase Money Mortgage, if the principal amount has not increased and the
Lien continues to be limited to such property);
"Rateable Share" of any Lender means:
(i) in relation to any outstanding Advance, the proportion borne by
such Lender's share of the Advance to the full amount of such
Advance;
(ii) in relation to the Revolver Facility, the proportion of such
Lender's Revolver Commitment to the Total Revolver Commitment;
(iii) in relation to the Term Facility, the proportion of such Lender's
Term Commitment to the Total Term Commitment; and
(iv) in relation to any other matter, the proportion borne by (A) the
sum of (1) such Lender's Term Commitment plus (2) such Lender's
Revolver Commitment to (B) the sum of (1) the Total Term
Commitment plus (2) the Total Revolver Commitment;
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"Receivables Borrowing Base" at any time means an amount equal to 80% of
the face amount of all Eligible Receivables. In determining the
Receivables Borrowing Base, receivables denominated in foreign currency
will be calculated at their Equivalent Amount in Canadian Dollars at the
date of determination and any receivable may be excluded in accordance
with Section 2.1.4;
"Real Estate" means, in relation to any Person, all real property at any
time owned, leased, managed, controlled or operated by the Person,
including the Gerdau Canada Group Facilities and Third Party Facilities
thereon and appurtenances comprising or used in connection therewith, and
any item or part thereof;
"Real Property" means the real property owned by Courtice more
particularly described in Schedule J and the real property owned by MRM
and more particularly described in Schedule K;
"Reference Lender" means TD acting in its capacity as reference lender
under this Agreement, or (as the context requires) any replacement of such
reference lender appointed pursuant to the provisions of Section 13.15.2;
"Registration" means any notice to or filing, recording or registration
with any Governmental Body having jurisdiction with respect to any
specified Person, transaction or event, or any of such Person's Business
Affairs;
"Regulation D" means Regulation D of the Board of Governors of the U.S.
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of
the U.S. Federal Reserve System;
"Regulation U" means Regulation U of the Board of Governors of the U.S.
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing
or carrying margin stocks applicable to member banks of the U.S. Federal
Reserve System;
"Relevant Borrower" means, in relation to any Borrowing, the Borrower that
delivered the Borrowing Notice for such Borrowing to the Agent and to whom
such Borrowing has been or is to be made (as the context requires) by the
Lenders pursuant to this Agreement;
"Repayment Notice" means a notice in the form of or to substantially
similar effect as Schedule M, given to the Agent by the Relevant Borrower
pursuant to any relevant provision of this Agreement;
"Required Lenders" means the Majority Lenders or all Lenders (as the
context requires);
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"Revolver Amount" means Cdn. $75,000,000, as such amount may be reduced
from time to time pursuant to the provisions of this Agreement;
"Revolver Commitment" of any Lender means the proportion of the Revolver
Facility set forth opposite the Lenders' name in Schedule A (as amended
and replaced from time to time in accordance with Section 15.5.6) which
such Lender has severally agreed to make available to the Borrowers
pursuant to this Agreement, and "Total Revolver Commitments" of Lenders
means the total sum of them for such Lenders;
"Revolver Facility" means the revolving credit facility made available to
the Borrowers pursuant to Article 2;
"Revolver Facility Due Date" in respect of any Lender means September 25,
2000 or any extension of such date made pursuant to Section 2.6 provided
that, if any such day is not a Banking Day, the Revolver Facility Due Date
shall be the preceding Banking Day;
"Rollover" means the continuation of a LIBOR Loan (or any portion thereof)
for a succeeding Interest Period, or a new issue of Bankers' Acceptances
on the Maturity Date of a maturing issue of Bankers' Acceptances, in
accordance with the provisions hereof;
"Rollover Date" means a Banking Day on which a Rollover of all or a
portion of an Advance is made;
"Rollover Notice" means a notice substantially in the form of Schedule D
given to the Agent in accordance with the terms hereof;
"S&P" means Standard and Poor's Ratings Services, a division of The McGraw
Hill Companies, Inc.;
"Sales Taxes" means sales, transfer, turnover or value added taxes of any
nature or kind, including Canadian goods and services taxes and state and
provincial sales taxes;
"Security" means the Liens and guarantees held from time to time by the
Syndicate securing or intended to secure the payment or performance of the
Loan Obligations (including any guarantee thereof) pursuant to the
Security Documents, including the security constituted by the Prior
Security;
"Security Documents" at any time means the agreements, documents and
instruments listed in Schedule L and each additional agreement, document
and instrument delivered to or for the benefit of the Syndicate at or
before such time to secure or guarantee, directly or indirectly, the
payment or performance of any of the Loan Obligations;
"Senior Officer" of any Person means the Chief Executive Officer, the
Chief Operating Officer, the President, the Chief Financial Officer, the
Treasurer, a Senior Vice President,
- 30 -
a Vice President, the Secretary or the Controller of such Person, or any
other officer of such Person who performs the function normally expected
of an individual holding any of the aforesaid offices;
"Solvent" means, when used with respect to a Person, that (i) the fair
saleable value of the assets of such Person is in excess of the total
amount of the present value of its liabilities (including for purposes of
this definition all liabilities (including loss reserves as determined by
such Person), whether or not reflected on a balance sheet prepared in
accordance with GAAP and whether direct or indirect, fixed or contingent,
secured or unsecured, disputed or undisputed), (ii) such Person is able to
pay its debts or obligations in the ordinary course as they mature and
(iii) such Person does not have unreasonably small capital to carry out
its business as conducted and as proposed to be conducted. "Solvency"
shall have a correlative meaning;
"Spot Rate" as at any date with respect to the conversion of an amount in
one currency (the "original currency") to another currency (the "other
currency") means the Bank of Canada noon rate of exchange on the
immediately preceding date for the purchase of such original currency with
such other currency (and if neither currency is Canadian Dollars,
purchasing Canadian Dollars first with such other currency and using the
Canadian Dollars purchased to purchase the original currency);
"Standby Credit" means a documentary credit, letter of guarantee or
standby letter of credit, as the context requires;
"Standby Credit Disbursement" means any amount paid by the Issuing Bank
under or otherwise in respect of any Standby Credit, including all amounts
which the Relevant Borrower is obligated to indemnify the Issuing Bank
against pursuant to Section 7.6.4.2;
"Subordinated Debt" means obligations of the nature referred to in clause
(i) of the definition "Indebtedness" of any Xxxxxx X.X. Group Member, the
payment and performance of which have been postponed and subordinated to
the payment of the Loan Obligations pursuant to a postponement and
subordination agreement with the Syndicate in form and substance
satisfactory to the Agent (acting on instructions of the Majority Lenders
acting reasonably);
"Subsidiary" of any Person means any Person (i) which is Controlled by
such first Person or (ii) a majority of whose Voting Capital Stock, on a
fully diluted basis, is owned beneficially or Controlled by such first
Person;
"Substantial Portion" means, with respect to the assets of any Xxxxxx X.X.
Group Member, assets which (i) represents more than 10% of the
consolidated assets of the Xxxxxx X.X. Group Member as would be shown in
the consolidated financial statements of the Xxxxxx X.X. Group Member as
at the beginning of the twelve-month period ending with the month in which
such determination is made, or (ii) are responsible for more than
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10% of the consolidated net sales or of the consolidated net income of the
Xxxxxx X.X. Group Member as reflected in the financial statements referred
to in clause (i) above;
"Supplemental Debenture Pledge Agreement" means the pledge agreement
relating to the Courtice Supplemental Debenture dated June 21, 1990
between Courtice and TD;
"Swing Line" means the portion of the Revolver Facility made available to
the Borrowers pursuant to Section 2.9;
"Swing Line Advance" means an Advance made pursuant to the Swing Line;
"Swing Line Amount" means Cdn.$10,000,000 as such amount may be reduced
from time to time pursuant to the provisions of this Agreement;
"Swing Line Commitment" means the portion of the Swing Line Lender's
Revolver Commitment which the Swing Line Lender has agreed to make
available to the Borrowers pursuant to the Swing Line in the Swing Line
Amount;
"Swing Line Lender" means TD acting in its capacity as the swing line
lender or (as the context requires) any replacement of such swing line
lender that is a Lender and is appointed pursuant to Section 13.15.3;
"Swing Line Loan" means a Loan owing to the Swing Line Lender pursuant to
Section 2.9 under the Swing Line;
"Syndicate" means the Agent and the Lenders, or (as the context so admits)
each and any of them;
"Syndication Offer" has the defined meaning assigned to it in Recital G of
this Agreement;
"Tangible Net Worth" means the sum of (1) the paid up share capital of
Gerdau Steel plus (2) the retained earnings of Gerdau Steel plus (3) the
amount of any deferred translation gain plus (4) the principal amount of
all Subordinated Debt of Gerdau Steel minus (5) any retained earnings
deficit minus (6) the amount of any deferred translation loss minus (7)
the amount of all intangibles of each Gerdau Canada Group Member minus (8)
the amount of all deferred charges (including deferred income taxes) minus
(9) the amount of all Indebtedness owing to any Gerdau Canada Group Member
by an Affiliate minus (10) all Non-Qualifying Investments, as each such
amount (to the extent applicable) would be expressed on a consolidated
balance sheet of Gerdau Steel.
"Target Shares" means 88% of the 9,000,000 issued and outstanding shares
in the capital stock of AmeriSteel owned by FLS;
- 32 -
"Taxes" means all taxes of any kind or nature whatsoever including federal
large corporation taxes, provincial capital taxes, realty taxes (including
utility charges which are collectible like realty taxes), business taxes,
property transfer taxes, Income Taxes, Sales Taxes, levies, stamp taxes,
royalties, duties, and all fees, deductions, compulsory loans and
withholdings imposed, levied, collected, withheld or assessed as of the
date hereof or at any time in the future, by any Governmental Body of or
within Canada, or any other jurisdiction whatsoever having power to tax,
together with penalties, fines, additions to tax and interest thereon;
"TD" means The Toronto-Dominion Bank, and its successors;
"Tellib" means Tellib Trade Corp. Ltd., a company incorporated under the
laws of the British Virgin Islands at the date hereof, and its successors
and assigns;
"Tellib Advance" has the defined meaning assigned to it in Recital E of
this Agreement;
"Term Commitment" of any Lender means the proportion of the Term Facility
set forth opposite the Lender's name in Schedule A (as amended and
replaced from time to time pursuant to Section 14.5.5) which such Lender
has severally agreed to make available to the Borrowers pursuant to this
Agreement, and "Total Term Commitments" of Lenders means the total sum of
them for such Lenders;
"Term Drawdown Date" means September 27, 1999, or such later date as the
Lenders may in their discretion consent to;
"Term Facility" means the term credit facility made available to the
Borrowers pursuant to Article 3;
"Third Party Facilities" means all plants, xxxxx and other facilities
(including all real property on which such facilities are situated),
containers, vehicles, rail cars, motor vessels, trailers, storage or
holding tanks and other machinery and equipment owned, leased, managed,
controlled or operated by any agent of any Gerdau Canada Group Member or
any third party contracting with any Gerdau Canada Group Member in which
inventory, Hazardous Materials or Waste owned, managed or controlled by
any Gerdau Canada Group Member is manufactured, processed, generated,
received, stored, treated, transported, otherwise handled or disposed of;
"Total Commitment" means the sum of the Total Term Commitment and the
Total Revolver Commitment;
"Total Debt/EBITDA Ratio" for any accounting period of four consecutive
Fiscal Quarters ending after the date hereof means the ratio of (i) the
sum of (A) the total amount of all Debt of Gerdau Steel as at the end of
such accounting period less (B) all
- 33 -
Subordinated Debt of Gerdau Steel as at such time to (ii) EBITDA for such
accounting period;
"Transferee" has the defined meaning assigned in Subsection 14.5.4;
"Type" means, with respect to any Advance, other than a Standby Credit,
its nature as a Prime Rate Loan, LIBOR Loan, Base Rate Loan or an issue of
Bankers' Acceptances;
"United States" means the continental United States of America, Alaska and
Hawaii;
"U.S. dollars" or "U.S. $" means lawful money of the United States of
America;
"U.S. Dollar Equivalent" means, in relation to any particular amount of
money in Canadian dollars at any particular time, the value thereof at
such time in U.S. dollars determined at the Spot Rate;
"Voting Capital Stock" means Capital Stock of a Person which carries
voting rights or the right to Control such Person under any circumstances,
provided that Capital Stock which carries the right to vote or Control
conditionally upon the happening of an event shall not be considered
Voting Capital Stock until the occurrence of such event and then only
during the continuance of such event;
"Waste" means ashes, garbage and refuse and includes domestic waste,
industrial waste, municipal refuse or such other wastes as are designated
as such under any Environmental Law;
"Wholly-Owned Subsidiary" of a Person means any Subsidiary, all of the
outstanding Capital Stock of which, shall at the time be owned or
Controlled, directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or
more Wholly-Owned Subsidiaries of such Person;
"Withholding Tax" means any Tax that is imposed by Applicable Law in
respect of any payment made pursuant to this Agreement, other than any
Lender's Own Taxes; and
"$" means Cdn.$ or U.S.$, as the context requires.
1.2. Additional References
To the extent the context so admits, any reference in this Agreement
to:
"affiliate" shall be construed in the same manner it is used in the
Business Corporations Act (Ontario);
- 34 -
"arm's length" shall be construed in the same manner it is used in the
Income Tax Act (Canada);
"dispose" shall be construed as lease, sell, transfer or otherwise dispose
of any property, whether in a single transaction or in a series of related
transactions (other than the payment of money), and "disposed" and
"disposal" shall be construed in like manner;
"fair market value" shall be construed as the highest price, expressed in
terms of money and moneys worth, available in an open and unrestricted
market between informed and prudent parties, each acting at arm's length,
where neither party is under any compulsion to act;
"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 services
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 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;
"losses and expenses" shall be construed as losses, costs, expenses,
damages, penalties, causes of action, actions, judgments, suits,
proceedings, claims, claims over, demands and liabilities, including any
applicable court costs and legal fees and disbursements on a solicitor and
client scale, and "loss and expense" shall be construed in like manner;
"rate of exchange" shall be construed so as to include any premiums or
costs payable in connection with any currency conversion being effected;
"rights" shall be construed as rights, 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
- 35 -
"successor" of a body corporate shall be construed so as to include (i)
any amalgamated or other corporation of which such body corporate or any
of its successors is one of the amalgamating or merging corporations, (ii)
any corporation resulting from any court approved arrangement of which
such body corporate or any of its successors is party, (iii) any
corporation resulting from the continuance of such body corporate or any
successor of it under the laws of another jurisdiction of incorporation
and (iv) any successor (determined as aforesaid or in any similar or
comparable procedure under the laws of any other jurisdiction) of any
corporation referred to in clause (i), (ii) or (iii).
1.3. Gender and Number
In this Agreement, words importing the singular (including defined
terms) include the plural and vice versa (the necessary changes being made to
fit the context) and words importing gender include all genders.
1.4. Interest Act
For purposes of the Interest Act (Canada): (i) where in any Loan
Document a rate of interest is calculated on a basis other than a full calendar
year, the yearly rate of interest to which that rate is equivalent may be
determined by multiplying such rate by a fraction, the numerator of which is the
actual number of days in the relevant year and the denominator of which is the
number of days comprising such other basis; (ii) the annual rate of interest to
which each Acceptance Fee, CDOR BA Rate or BA Reference Rate or other rate of
interest calculated with reference to bankers' acceptances referred to in this
Agreement is equivalent is such Acceptance Fee, CDOR BA Rate or BA Reference
Rate or other rate multiplied by a fraction, the numerator of which is the
actual number of days in the relevant year and the denominator of which is 365
and (iii) the annual rate of interest to which each LIBO Rate or Federal Funds
Rate referred to in this Agreement is equivalent, is such LIBO Rate or Federal
Funds Rate multiplied by a fraction, the numerator of which is the actual number
of days in the relevant year and the denominator of which is 360.
1.5. Invalidity, etc.
Each of the provisions contained in any Loan Document is distinct
and severable and a declaration of invalidity, illegality or unenforceability of
any such provision or part thereof by a court of competent jurisdiction shall
not affect the validity or enforceability of any other provision of such Loan
Document or of any other Loan Document.
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1.6. Headings, etc.
The division of this Agreement into articles and sections, the
inclusion of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.7. 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.
1.8. Attornment
Each of the Borrowers and MRM Holdings irrevocably submits and
attorns to the non-exclusive jurisdiction of the courts of the Provinces of
Ontario, Manitoba and Saskatchewan for all matters arising out of or in
connection with any of this Agreement and the other Loan Documents. Each of the
Borrowers and MRM Holdings irrevocably waives (i) any objection which it may
have at any time to the laying of venue of any suit, action or proceeding
arising out of or relating to any Loan Document brought in any such court
("Local Proceeding"), (ii) any claim that any Local Proceeding has been brought
in an inconvenient forum and (iii) the right to object, with respect to any
Local Proceeding that such court does not have jurisdiction over such party.
Nothing in any Loan Document will be interpreted or applied to preclude any
Lender from bringing a suit, action or proceeding in respect of any Loan
Document in any other jurisdiction. Each of the Borrowers and MRM Holdings
irrevocably designates and appoints each of Courtice and MRM as its agent
("Process Agent") to accept and acknowledge on its behalf any and all process
which may be served in connection any Local Proceeding, such service being
conclusively acknowledged by it to be effective and binding service on it in
every respect whether or not it shall be doing or shall have at any time done
business in Ontario, Manitoba or Saskatchewan. Each of the Borrowers and MRM
Holdings conclusively acknowledges and agrees that service of process in any
Local Proceeding by leaving a copy of such process with an officer, director or
agent of the Process Agent or with any person who appears to be in control or
management of any place of business of the Process Agent shall be good and
sufficient personal service of such process on such Gerdau Canada Group Member.
Each of the Borrowers and MRM Holdings further irrevocably consents to the
service of process out of the Ontario, Manitoba or Saskatchewan courts by
mailing a copy thereof, by registered mail, postage prepaid to such Gerdau
Canada Group Member at the address, or by sending a telecopy thereof to such
Gerdau Canada Group Member at the telecopier number, for the time being
prescribed by Section 16.4. Each Borrower confirms to the Syndicate that it has
accepted its appointment to act as process agent on behalf of each other Xxxxxx
X.X. Group Member contained in any Loan Document to which each such other Xxxxxx
X.X. Group Member is party which may be served in connection with any Local
Proceeding arising out of or relating to any such other Loan Document. So long
as any Loan Obligations remain payable or any Borrower
- 37 -
may be or become entitled to any Drawdown, each Borrower covenants and agrees to
maintain each such appointment as such process agent.
1.9. References
Except as otherwise specifically provided, reference in this
Agreement to any contract, agreement or any other instrument shall be deemed to
include references to the same as amended, supplemented, restated, amended and
restated or novated from time to time provided that, in the case of any Loan
Document, the Agent or Lender party thereto has given its written consent to
each such amendment, supplement, restatement, amendment and restatement or
novation. Reference in this Agreement to any enactment, including any statute,
law, by-law, regulation, ordinance, code or order, shall be deemed to include
references to such enactment as re-enacted, amended or extended from time to
time.
1.10. Currency
Except as otherwise specifically provided herein, all monetary
amounts in this Agreement are stated in Canadian dollars.
1.11. This Agreement to Govern
If there is any inconsistency between the terms of this Agreement
and the terms of any other Loan Document, the provisions hereof shall govern and
apply to the extent of the inconsistency. Notwithstanding the foregoing, this
Section shall not apply to limit, restrict, prejudice or otherwise affect or
impair in any way the rights of any Lender under the terms of any of the
Security after the Liens thereby constituted shall have become enforceable in
accordance with the terms thereof. For greater certainty, notwithstanding that
any other Loan Document may provide for payment on demand, the Loan Obligations
shall only be payable as stipulated herein.
1.12. Generally Accepted Accounting Principles
Except as otherwise specifically provided herein, all accounting
terms shall be applied and construed in accordance with generally accepted
accounting principles consistently applied. References herein to "generally
accepted accounting principles" and "GAAP" mean, for all principles stated from
time to time in the Handbook of the Canadian Institute of Chartered Accountants,
such principles so stated; save and except that, for the purposes of all
computations required to be made pursuant to this Agreement to determine each of
the financial tests contained in Section 11.1.1.13 including each defined term
and component item taken into account in
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determining such financial tests shall be computed solely with reference to the
Gerdau Canada Group, and shall disregard Non-Qualifying Investments and
Non-Qualifying Subsidiaries.
1.13. Computation of Time Periods
Except as otherwise specifically provided herein, in the computation
of a period of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding".
1.14. Actions on Days Other Than Banking Days
Except as otherwise specifically provided herein, where any payment
is required to be made or any other action is required to be taken on a
particular day and such day is not a Banking Day and, as a result, such payment
cannot be made or action cannot be taken on such day, then this Agreement shall
be deemed to provide that such payment shall be made or such action shall be
taken on the first Banking Day after such day; provided that if such deferral
would cause such payment to be made or such action to be taken during the
following calendar month, such payment shall be made or such action shall be
taken on the next preceding Banking Day. If the payment of any amount is
deferred for any period under this Section, then such period shall, unless
otherwise provided herein, be included for purposes of the computation of any
interest or fees payable hereunder.
1.15. Verbal Instructions
Notwithstanding any other provision herein regarding the delivery of
notices by a Borrower, the Agent shall in its sole discretion be entitled to act
upon the verbal instructions of the Relevant Borrower, or any Person reasonably
believed by the Agent to be a Person authorized by the Relevant Borrower to give
instructions, regarding any request for a Drawdown, Conversion or Rollover. All
such verbal instructions shall be at the risk of the Relevant Borrower and must
be confirmed in writing by the Relevant Borrower forthwith after the verbal
instruction is given. The Agent shall not be responsible for any error or
omission in such instructions or in the performance thereof except in the case
of gross negligence or willful misconduct by the Agent.
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ARTICLE 2.
REVOLVER FACILITY
2.1. Establishment of Revolver Facility
2.1.1. The Lenders severally confirm, on the terms and conditions set
out herein, the establishment of a revolving credit facility
(the "Revolver Facility") in favour of the Borrowers in the
amount equal to the lesser of (a) the Borrowing Base or (b)
the Revolver Amount, to be used by each Borrower to finance in
part the indirect acquisition of the Target Shares, as well as
for other general corporate purposes of the Gerdau Canada
Group. Each Lender agrees to participate in each Drawdown,
Conversion and Rollover under the Revolver Facility in
accordance with its Rateable Share. However, except for
temporary excesses arising from the Agent's allocation of
Bankers' Acceptances comprised in any issue of Bankers'
Acceptances made in accordance with Section 13.20.1, the
aggregate Outstanding Amount of a Lender's participation in
all Advances under the Revolver Facility shall not exceed its
Revolver Commitment.
2.1.2. The Revolver Facility is available, at the option of a
Borrower, by way of: (i) Prime Rate Loans in Canadian dollars;
(ii) Bankers' Acceptances in Canadian dollars; (iii) Base Rate
Loans in U.S. dollars; (iv) LIBOR Loans in U.S. dollars; and
(v) subject to the provisions of Section 7.6, Standby Credits
in Canadian dollars or U.S. dollars.
2.1.3. On the Term Drawdown Date, (i) the Revolver Facility will be
treated as having been drawn by the Relevant Borrower by way
of all Advances outstanding under the Revolver Facility (as
referred to and defined in the Prior Loan Agreement) and (ii)
each such Advance shall be treated as an Advance made by the
Lenders to the Relevant Borrower under this Agreement, of the
same Type and tenor, under the Revolver Facility.
2.1.4 Following receipt of a Borrowing Base Report, the Majority
Lenders may disallow any particular receivable or inventory
included in the calculation of the Borrowing Base, which in
the credit judgment of the Majority Lenders, does not qualify
as an Eligible Receivable or Eligible Inventory and the
Borrowing Base shall be adjusted accordingly. If the Borrowing
Base (whether by reason of any such adjustment or otherwise)
is less than the Outstanding Amount of all Advances under the
Revolver Facility, the Borrowers shall immediately pay to the
Lenders an amount (or the Equivalent Amount in Canadian
Dollars) which is greater than or equal to such excess to be
applied by the Lenders in the manner stipulated in Section
2.5.2.
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2.2. Availability and Revolving Nature of Revolver Facility
During the Availability Period, a Borrower may borrow, repay and
reborrow Advances under the Revolver Facility on a revolving basis, subject to
the terms and conditions set out herein; provided that Gerdau Steel shall ensure
that the aggregate Outstanding Amount of all Advances under the Revolver
Facility does not exceed the Revolver Amount at any time and the aggregate
Outstanding Amount of all outstanding Standby Credits does not exceed Cdn.
$4,000,000.
2.3. Interest and Acceptance Fees on Advances under the Revolver Facility
Interest on Prime Rate Loans shall be payable in Canadian dollars on
each Interest Payment Date applicable thereto on the outstanding principal
amount of all Prime Rate Loans made under the Revolver Facility at a rate per
annum equal to the Prime Rate in effect from time to time plus the Applicable
Margin. Acceptance Fees shall be payable in Canadian dollars on the relevant
Borrowing Date based on the face amount of the Bankers' Acceptance issued under
the Revolver Facility at a rate per annum equal to the Applicable Margin.
Interest on Base Rate Loans shall be payable in U.S. dollars on each Interest
Payment Date applicable thereto on the outstanding principal amount of all Base
Rate Loans made under the Revolver Facility at a rate per annum equal to the
Base Rate plus the Applicable Margin. Interest on LIBOR Loans shall be payable
in U.S. dollars on each Interest Payment Date applicable thereto on each LIBOR
Loan made under the Revolver Facility at a rate per annum equal to the LIBO Rate
for each applicable Interest Period plus the Applicable Margin.
2.4. Repayment under Revolver Facility
Subject to Section 12.2, all Advances remaining outstanding under
the Revolver Facility are due and payable on the Due Date of the Revolver
Facility, together with all interest and other amounts accrued and unpaid
thereon.
2.5. Mandatory Repayment
2.5.1. In the event the Outstanding Amount of all Advances
outstanding under the Revolver Facility at any time exceeds
the lesser of (i) the Revolver Amount or (ii) the Borrowing
Base, (the "Facility Limit"), the Borrowers, without the Agent
being required to make demand therefor, shall forthwith make
the necessary payments or repayments to the Lenders to reduce
the Outstanding Amount of the Advances outstanding under the
Revolver Facility to an amount equal to or less than the
Facility Limit.
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2.5.2. On the date of each reduction of each Lender's Revolver
Commitment pursuant to Section 2.7, each Borrower shall repay
to such Lender such amount on account of such Lender's
Rateable Share of Advances made to such Borrower under the
Revolver Facility as may be required to ensure that the
Outstanding Amount of such Lender's Rateable Share of all
Advances under the Revolver Facility does not exceed its
Revolver Commitment at that time after giving effect to that
reduction. Such Lender shall apply any such amount so repaid
as follows:
(a) first, to repay its Rateable Share of Loans under the
Revolver Facility;
(b) second, to prepay to the Lender the obligations of each
Relevant Borrower under Section 7.5.9 in respect of
Bankers' Acceptances issued for such Borrower's account
under the Revolver Facility; and
(c) third, to be credited to the Cash Collateral Account and
held as cash collateral by the Agent to secure the
payment and performance of the Relevant Borrower's
obligations under Section 7.6 in respect of outstanding
Standby Credits until such Standby Credits expire or are
drawn upon, whereupon the amounts so credited will be
applied by the Agent to pay such obligations in respect
of such drawing or (if not so required by the Majority
Lenders), subject to Section 12.2, returned to the
Relevant Borrower.
2.6. Annual Review
Provided that no Event of Default shall have occurred and be
continuing, Gerdau Steel may, by notice in writing to the Agent given no more
than 60 days but no less than 30 days before the then effective Due Date for the
Revolver Facility (the "Current Maturity Date"), request an extension of the
Current Maturity Date by a period of 364 days. Promptly upon receipt of an
Extension Request the Agent shall notify each Lender and shall request each
Lender to approve the Extension Request within 30 days. Each Lender may, within
30 days from the date of receipt of such notice from the Agent, notify the Agent
in writing of its election to extend or not extend the Current Maturity Date as
requested by the Borrowers, which election shall be in the sole and absolute
discretion of each Lender. If a Lender agrees to an extension of the Current
Maturity Date requested by the Borrowers, the Revolver Facility Due Date shall
automatically and without any further action by any Person be extended by a
period of 364 days for that Lender, except in the circumstances described below.
If, within such 30 days a Lender does not approve in writing the extension of
the Current Maturity Date (a "Non-Extending Lender"), the Revolver Facility Due
Date shall not be so extended for that Lender, but shall remain as the Current
Maturity Date then in effect for that Lender. Any other Lender or new Lender
selected by the Borrowers (in consultation with the Agent) may, subject to
Section 14.5, take up the Revolver Commitment of a Non-Extending Lender
effective from the Current Maturity Date. Notwithstanding the foregoing, if in
relation to any extension request less than the Majority
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Lenders agree to extend the Revolver Facility Due Date, then the then Current
Maturity Date for all Lenders shall not be extended, but shall remain as the
Revolver Facility Due Date then in effect. For greater certainty, the Borrowers
may request extensions under this Section every 364 days from the Current
Maturity Date.
2.7. Prepayment and Cancellation of Revolver Facility
2.7.1. Prepayment. Subject to the terms and conditions of this
Agreement, each Borrower may from time to time by giving not
less than three Banking Days express written notice to the
Agent, prepay Advances (other than Bankers' Acceptances and
Standby Credits) outstanding under the Revolver Facility,
without penalty, except that LIBOR Loans may not be prepaid
prior to the end of their applicable Interest Periods unless
the Borrower compensates the Lenders in accordance with
Section 8.3.
2.7.2. Cancellation. Gerdau Steel shall have the right at any time
and from time to time to cancel all or any portion of the
Revolver Commitment. Such right may only be exercised by
Gerdau Steel delivering a notice to the Agent specifying the
proposed effective date of such cancellation (which must be no
less than 30 days thereafter) and the amount of the Total
Revolver Commitment to be cancelled (which must be in a
principal amount of Cdn.$5,000,000 or a multiple of
Cdn.$1,000,000 in excess thereof. The Revolver Commitment
shall be permanently reduced on the effective date of each
such cancellation in the amount so cancelled.
2.8. Minimum Advance
Unless the Agent otherwise agrees, an Advance (or any portion
thereof) by way of Prime Rate Loan under the Revolver Facility (other than any
Swing Line Advance) shall be for a minimum principal amount of Cdn.$5,000,000 or
a higher principal amount which is a whole number multiple of Cdn.$1,000,000. An
Advance (or any portion thereof) by way of an issue of Bankers' Acceptances
under the Revolver Facility shall be in a minimum aggregate face amount (subject
to availability) of Cdn. $5,000,000 and in whole number multiples of
Cdn.$1,000,000. An Advance (or any portion thereof) by way of Base Rate Loan
(other than any Swing Line Advance) or LIBOR Loan shall be in a minimum
principal amount (subject to availability) of U.S.$5,000,000. Each Advance under
the Revolver Facility (other than any Swing Line Advance) will be made pursuant
to a notice received from a Borrower complying with the provisions of Section
7.4.
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2.9. Swing Line Advances
2.9.1. Commitment. The Swing Line Lender establishes a committed
revolving operating credit facility in favour of the Borrowers
to finance the day-to-day working capital requirement for the
Borrowers and other Gerdau Canada Group Members arising in the
ordinary course of their operations, as well as for other
general corporate purposes of the Gerdau Canada Group. Each
Borrower shall so apply all amounts borrowed by it under the
Swing Line Facility.
2.9.2. Overdrafts. Each Advance (other than a Standby Credit) under the
Swing Line shall be made by the Swing Line Lender on an
overdraft basis by debiting the Canadian dollar or U.S. dollar
Designated Account of the Relevant Borrower. The amount of such
overdraft from time to time shall be deemed to be a Prime Rate
Loan (to the extent of the debit balance in the Canadian dollar
Designated Account) and a Base Rate Loan (to the extent of the
debit balance in the U.S. dollar Designated Account). The
Borrowers shall ensure that the aggregate Outstanding Amount of
all outstanding Advances made by the Swing Line Lender under
this Section does not exceed the Swing Line Amount at any time.
2.9.3. Standby Credit Disbursements. Upon making any Standby Credit
Disbursement, the Swing Line Lender will promptly notify the
Agent and the Relevant Borrower of the Swing Line Loan resulting
from that payment pursuant to Section 7.6.4.2;
2.9.4. Relationship to Revolver Commitment. Except as otherwise
provided in Section 13.26, for the purposes of each other
Section of this Agreement, the amount of the Revolver Commitment
of the Swing Line Lender and the Total Revolver Commitment shall
be reduced by the Swing Line Amount and the Rateable Shares of
the Lenders in each Borrowing made under the Revolver Facility
(excluding the Swing Line) shall be adjusted proportionately.
2.9.5. Reduction of Swing Line Amount. If the Revolver Commitment of
the Swing Line Lender determined in accordance with Subsection
2.9.4 is reduced to nil, each further reduction of the Revolver
Commitment of the Swing Line Lender determined without regard
for Section 2.9.4 will reduce the Swing Line Amount by the
amount of such reduction.
2.9.6. Transitional Provision: On the Term Drawdown Date, (i) the Swing
Line will be treated as having been drawn by the Relevant
Borrower by each outstanding Swing Line Loan (as referred to and
defined in the Prior Loan Agreement) and (ii) each Swing Line
Loan shall be treated as a Swing Line Advance made by the Swing
Line Lender to the Relevant Borrower of the same Type and tenor
under this Agreement.
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2.10. Advances
Any Advance from the Lenders requested by a Borrower in accordance
with Section 2.8 will, subject to the terms and conditions herein, be made by
the Lenders pursuant to this Section 2.10 and shall be made up of any
combination of any of the following Advances:
2.10.1. by way of Prime Rate Loans, each in a minimum principal amount
of Cdn.$5,000,000;
2.10.2. by way of Bankers' Acceptances, each issue in a minimum
aggregate face amount (subject to availability) of
Cdn.$5,000,000;
2.10.3. by way of Base Rate Loans, each in a minimum principal amount of
U.S.$5,000,000; and
2.10.4. by way of LIBOR Loans, each in a minimum principal amount
(subject to availability) of U.S.$5,000,000.
ARTICLE 3.
TERM FACILITY
3.1. Establishment of Term Facility
3.1.1. The Lenders severally confirm, on the terms and conditions set
out herein, the establishment of a non-revolving term credit
facility (the "Term Facility") in favour of the Borrowers in the
amount of the Maximum Term Amount to be used by each Borrower to
finance in part the acquisition of the Target Shares. Each
Lender agrees to participate in each Drawdown, Conversion and
Rollover under the Term Facility in accordance with its Rateable
Share. However, except for temporary excesses arising from the
Agent's allocation of Bankers' Acceptances comprised in any
issue of Bankers' Acceptances made in accordance with Section
13.20.1, the aggregate Outstanding Amount of a Lender's
participation in all Advances under the Term Facility shall not
exceed its Term Commitment.
3.1.2. The Term Facility is available, at the option of a Borrower, by
way of: (i) Prime Rate Loans in Canadian dollars; (ii) Bankers'
Acceptances in Canadian dollars; (iii) Base Rate Loans in U.S.
dollars and (iv) LIBOR Loans in U.S. dollars.
3.1.3. On the Term Drawdown Date, (i) the Term Facility will be treated
as having been drawn by the Relevant Borrower by way of all
Advances outstanding under the Term Facility (as referred to and
defined in the Prior Loan Agreement) and (ii) each such Advance
shall be treated as an Advance made by the Lenders to the
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Relevant Borrower under this Agreement of the same Type and
tenor under the Term Facility.
3.2. Availability and Non-Revolving Nature of Term Facility
Each Borrower may, subject to the terms and conditions of this
Agreement, borrow Advances under the Term Facility on the Term Drawdown Date on
a non-revolving basis having an initial Outstanding Amount which, when added to
the Outstanding Amount of all other Advances referred to in Section 3.1.3, does
not exceed the Maximum Term Amount. Any part of an Advance under the Term
Facility which is repaid may not be reborrowed and (other than any such
repayment pursuant to Section 7.9) shall constitute a permanent reduction of the
Term Facility. Each such repayment shall, to the extent thereof, reduce the Term
Commitments of the Lenders pro rata.
3.3. Repayment of Term Facility
Subject to Section 12.2, all Loans outstanding under the Term
Facility shall be repaid by the Borrowers making the following instalment
payments to the Agent for the account of the Lenders:
3.3.1. Reductions. The Total Term Commitment shall permanently reduce
at the end of the Term Drawdown Date by the amount, if any, by
which the Total Term Commitment exceeds the Outstanding Amount
of all Advances outstanding under the Term Facility on such
date. The Borrowers shall not be entitled to any further
Drawdowns under the Term Facility after the Term Drawdown Date.
3.3.2. Scheduled Instalments. Subject to Section 12.2, the Borrowers
shall repay all Advances outstanding under the Term Facility in
consecutive semi-annual instalments on each day falling 12, 18,
24, 30, 36, 42, 48, 54 and 60 months after the Term Drawdown
Date in the following Outstanding Amounts (and the Total Term
Commitment shall permanently reduce on each such date by each
such amount):
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Outstanding Amount
Instalment of Repayment Instalment
---------- -----------------------
1 Cdn.$30,000,000
2 Cdn.$17,500,000
3 Cdn.$17,500,000
4 Cdn.$17,500,000
5 Cdn.$17,500,000
6 Cdn.$17,500,000
7 Cdn.$17,500,000
8 Cdn.$32,500,000
9 Cdn.$32,500,000
3.3.3. Free Cash Flow Reductions. On the 30th Banking Day falling after
the day Gerdau Steel delivers the audited annual financial
statements of Gerdau Steel to the Agent for each Fiscal Year
starting with the 2000 Fiscal Year pursuant to Section
11.1.1.10.1, the Relevant Borrowers with Advances under the Term
Facility shall repay Advances in the Outstanding Amount equal to
(i) seventy-five percent (75%) of Free Cash Flow if such Fiscal
Year is the 2000 Fiscal Year and (ii) fifty percent (50%) of
Free Cash Flow if such Fiscal Year is after the 2000 Fiscal
Year, and the Total Term Commitment shall be permanently reduced
on such date in like amount.
3.3.4. Capital Asset Dispositions. The Total Term Commitment shall
permanently reduce on each day on which any Gerdau Canada Group
Member disposes of any capital assets having a book value
exceeding Cdn.$5,000,000 by an amount equal to the Net Asset
Disposal Proceeds of such disposal. If Gerdau Canada Group
disposes of capital assets having an aggregate book value
exceeding Cdn.$5,000,000 during any period of four consecutive
Fiscal Quarters, then on the thirtieth day after the end of the
last Fiscal Quarter in such period, the Total Term Commitment
shall permanently reduce by the amount, if any, by which Net
Asset Disposition Proceeds derived from such disposals exceeds
the aggregate amount, if any, of each prior reduction to the
Total Term Commitment made pursuant to this Section 3.3.4 in
respect of capital asset disposals made during such four
consecutive Fiscal Quarter period. The Borrowers shall promptly
notify the Agent of full particulars pertaining to any capital
asset disposal contemplated by this Section 3.3.4 and of any
required repayment under this Section 3.3.4.
3.3.5. Indebtedness Reductions. The Total Term Commitment shall
permanently reduce on each day on which any Gerdau Canada Group
Member incurs new Indebtedness, other than Indebtedness referred
to in clause (x) of the definition of "Permitted Liens" and
other than Indebtedness to any Person that is either Xxxxxx X.X.
or another Gerdau Canada Group Member, by an amount equal to the
sum of
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all cash and Cash Equivalent Investments received from such
Indebtedness net of all costs and expenses incurred in effecting
such Indebtedness, including legal expenses and underwriting
fees and commissions payable to any Person that is not a Gerdau
Canada Group Member or an Affiliate.
3.3.6. Rights Offering Reductions. The Total Term Commitment shall
permanently reduce on each day on which any Gerdau Canada Group
Member issues Capital Stock, or any rights to acquire Capital
Stock, (a "Rights Offering") to any Person that is not either
Xxxxxx X.X. or another Gerdau Canada Group Member by an amount
equal to the sum of all cash and Cash Equivalent Investments
received from such Rights Offering net of all costs and expenses
incurred in effecting such Rights Offering, including legal
expenses and underwriting fees and commissions payable to any
Person that is not a Gerdau Canada Group Member or an Affiliate.
3.3.7. Voluntary Reductions. The Borrowers shall have the right at any
time and from time to time to prepay and permanently cancel,
without premium or penalty, all or any portion of the Total Term
Commitment. Such right may only be exercised by Gerdau Steel
delivering a notice to the Agent specifying the proposed
effective date of prepayment and cancellation (which must be no
less than three Banking Days thereafter) and the amount of the
Total Term Commitment to be cancelled (which must be in a
principal amount of Cdn.$5,000,000 or a multiple of
Cdn.$1,000,000 in excess thereof). The Total Term Commitment
shall be permanently reduced on the effective date of each such
cancellation in the amount so cancelled.
3.3.8. Prepayment of Affected Lenders. Gerdau Steel shall have the
right to permanently cancel without premium or penalty all, but
not part, of the Revolver Commitment and Term Commitment of each
Affected Lender provided that no Default or Event of Default has
occurred. Such right may only be exercised by Gerdau Steel
delivering a notice to the Agent advising of such cancellation
and specifying the effective date of cancellation which must be
no less than five Banking Days after and no later than 30 days
after the relevant Lender became an Affected Lender. Each
Relevant Borrower shall prepay the Affected Lender's Rateable
Share of all outstanding Advances on such effective date of
cancellation and such Affected Lender shall be released from its
obligations to lend hereunder.
3.3.9. Mandatory Prepayments. On the date of each reduction of each
Lender's Term Commitment pursuant to the foregoing provisions of
this Article 3, each Borrower shall repay to each Lender such
amount on account of such Lender's Rateable Share of Advances
made to such Borrower under the Term Facility as may be required
to ensure that the Outstanding Amount of such Lender's Rateable
Share of all Advances under the Term Facility does not exceed
its Term Commitment at that time after giving effect to that
reduction. Such Lender shall apply any such amount so repaid as
follows:
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(a) first, to repay its Rateable Share of Loans under the Term
Facility; and
(b) second, to prepay to the Lender the obligations of each Relevant
Borrower under Section 7.5.9 in respect of Bankers' Acceptances
issued for such Borrower's account under the Term Facility.
3.4. Interest and Acceptance Fees on Advances under the Term Facility
Interest on Prime Rate Loans shall be payable in Canadian dollars on
each Interest Payment Date applicable thereto on the outstanding principal
amount of all Prime Rate Loans made under the Term Facility at a rate per annum
equal to the Prime Rate in effect from time to time plus the Applicable Margin.
Acceptance Fees shall be payable in Canadian dollars on the relevant Borrowing
Date based on the face amount of Bankers' Acceptances under the Term Facility at
a rate per annum equal to the Applicable Margin. Interest on Base Rate Loans
shall be payable in U.S. dollars on each Interest Payment Date applicable
thereto on the outstanding principal amount of all Base Rate Loans made under
the Term Facility at a rate per annum equal to the Base Rate plus the Applicable
Margin. Interest on LIBOR Loans shall be payable in U.S. dollars on each
Interest Payment Date applicable thereto on the outstanding principal amount of
each LIBOR Loan made under the Term Facility at a rate per annum equal to the
LIBO Rate for each applicable Interest Period plus the Applicable Margin.
3.5. Prepayment of Term Facility
Subject to the terms and conditions of this Agreement, each Borrower
may from time to time by giving not less than three Banking Days express written
notice to the Agent, prepay Prime Rate Loans and Base Rate Loans (but not
Bankers' Acceptances) outstanding under the Term Facility, without penalty or
prepay LIBOR Loans outstanding under the Term Facility, except that LIBOR Loans
may not be prepaid prior to the end of their respective Interest Periods unless
the Borrower compensates the Lenders in accordance with Section 8.3.
3.6. Minimum Advance
Each Advance under the Term Facility shall be for a minimum
aggregate amount of $10,000,000 (Canadian or U.S., as applicable) made up of any
combination of the following Advances:
3.6.1. by way of Prime Rate Loans, each in a minimum principal amount
of Cdn.$5,000,000;
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3.6.2. by way of Bankers' Acceptances, each issue in a minimum
aggregate face amount (subject to availability) of
Cdn.$5,000,000 and in whole number multiples of Cdn. $100,000;
3.6.3. by way of Base Rate Loans, each in a minimum principal amount of
U.S.$5,000,000; and
3.6.4. by way of LIBOR Loans, each in a minimum principal amount
(subject to availability) of U.S.$10,000,000.
3.7. Consolidation of Loans
If for any reason (including payments and prepayments) the principal
or aggregate face amount of any Advance made pursuant to the Term Facility falls
below the minimum prescribed in Section 3.6 (a "Small Term Loan"), the Borrowers
will cooperate with the Agent in consolidating such Small Term Loan with such
other Advance under the Term Facility as the Agent may designate to form one
Advance having an aggregate principal or face amount satisfying the requirements
for Advances imposed under Section 3.6. Alternatively, the Relevant Borrower
will immediately prepay Small Term Loans pursuant to Section 3.5.
ARTICLE 4.
HEDGING FACILITIES
4.1. Prior Hedging Facility
4.1.1. TD has established a discretionary hedging facility in favour of
the Borrowers to be used by each Borrower for hedging its
interest rate and Currency exposures on Advances under the
Credit Facilities and for foreign exchange contracts, and for
any other purpose permitted under this Agreement. TD is the only
Hedging Lender as at the date of this Agreement.
4.1.2. Any other Lender may establish a discretionary hedging facility
in favour of the Borrowers to be used by each Borrower for
hedging its interest rate and Currency exposures on Advances
under the Credit Facilities and for foreign exchange contracts,
and for any other purpose permitted under this Agreement. Upon
such establishment, the Lender concerned shall forthwith notify
the Agent, whereupon it will become a Hedging Lender for the
purposes of this Agreement.
4.1.3. Each Hedging Instrument entered into between a Borrower and a
Hedging Lender for a purpose permitted under this Agreement is
referred to in this Agreement as an "Eligible Hedging
Instrument".
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4.1.4. Each Hedging Instrument must be governed by a master netting
agreement in the form published by the International Swaps and
Derivatives Association, Inc. under which the Full Two Way
Payments (as referred to and defined therein) method of
termination applies, or in such other form as the Agent may
approve (a "Master ISDA Agreement").
4.1.5. As at the Term Drawdown, each Hedging Lender and Eligible
Hedging Instrument under the Prior Loan Agreement shall be
considered as a Hedging Lender and Eligible Hedging Instrument
under this Agreement.
ARTICLE 5.
PAYMENT
5.1. Place of Payment
All funds made available by the Lenders pursuant to the Credit
Facilities shall be made or delivered to the Agent at the Agent's Branch of
Account and then, subject to Sections 7.5.7 and 13.20, transferred to the
relevant Designated Account. All payments of principal, interest and fees or
other amounts payable by each Borrower to the Lenders hereunder shall be made or
delivered to the Agent at the Agent's Branch of Account and then transferred to
each Lender's Lending Office in accordance with each Lender's Rateable Share.
All payments of principal, interest and fees or other amounts payable by each
Borrower to the Swing Line Lender shall be made or delivered to the Swing Line
Lender at its Branch of Account.
5.2. Application of Payments and Prepayments
Before any Default or Event of Default occurs, the Agent shall
appropriate and apply each payment made by a Borrower under this Agreement in
and towards payment of such Loan Obligations as such Borrower shall designate to
the Agent at the time of such payment or, failing such designation, in and
towards such indebtedness or Loan Obligations of such Borrower as the Agent
shall designate. After a Default or an Event of Default occurs, the Agent shall
be entitled, subject to Article 13, to appropriate and apply each payment made
by each Borrower under this Agreement in and towards payment of such
indebtedness or Loan Obligations of a Borrower as the Agent shall designate,
notwithstanding any designation made by a Borrower. Any amount of the Term
Facility repaid pursuant to Section 3.3 or prepaid pursuant to Section 3.5
shall, to the extent thereof, satisfy the Borrower's repayment obligations under
Section 3.3.2 in inverse order of maturity.
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5.3. Change in Circumstances
If the introduction of or any Change in Law:
5.3.1. subjects any Lender (or its Holding Body Corporate) to, or
causes the withdrawal or termination of a previously granted
exemption with respect to, any Taxes or changes the basis of
taxation of payments on any Lender (or its Holding Body
Corporate) due to the Lenders (or its Holding Body Corporate) or
increases any existing Taxes on payments of the Loan Obligations
(other than the Lender's Own Taxes (or those of its Holding Body
Corporate));
5.3.2. imposes, modifies or deems applicable reserve, liquidity, cash,
margin, capital, special deposit, deposit insurance or
assessment, or any other regulatory or similar requirement
against assets held by, or deposits in or for the account of, or
loans by, or any other acquisition of funds for loans by, any
Lender (or those of its Holding Body Corporate), or any
unutilized portion of any Credit Facility or any obligations of
any Lender under any Loan Document;
5.3.3. imposes on any Lender (or its Holding Body Corporate) any Taxes
on reserves or deemed reserves in respect of the undrawn portion
of any Credit Facility;
5.3.4. imposes on any Lender (or its Holding Body Corporate) or
requires there to be maintained by any Lender (or its Holding
Body Corporate) any capital adequacy or additional capital
requirement (including a requirement which affects the Lenders'
(or its Holding Body Corporate's) allocation of capital
resources to its obligations) in respect of any Credit Facility,
any Advance, any Derivative, this Agreement or the Lenders'
obligations hereunder or imposes any other condition or
requirement with respect to the maintenance by any Lender of a
contingent liability with respect to any Credit Facility, any
Advance or any Derivative hereunder; or
5.3.5. imposes on any Lender (or its Holding Body Corporate) any other
condition or requirement with respect to this Agreement or a
Credit Facility (other than the Lender's Own Taxes (or those of
its Holding Body Corporate));
and, in the sole determination of such Lender (the "Affected Lender"), such
occurrence has the effect of:
5.3.6. increasing the cost to the Affected Lender (or its Holding Body
Corporate) of the Affected Lender agreeing to make or making,
maintaining or funding a Credit Facility, any Advance, any
Derivative or any portion of any thereof;
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5.3.7. reducing the amount of the Loan Obligations or the net income
received by the Affected Lender in respect of this Agreement, a
Credit Facility, any Advance, any Derivative, or any portion of
any thereof;
5.3.8. directly or indirectly reducing the effective return to the
Affected Lender (or its Holding Body Corporate) under this
Agreement on its overall capital as a result of entering into
this Agreement or as a result of any of the transactions or
obligations contemplated by this Agreement (other than a
reduction resulting from a higher rate of Income Tax being
imposed on the Affected Lender's (or its Holding Body
Corporate's) overall income); or
5.3.9. causing the Affected Lender to make any payment or to forego any
interest, fees or other return on or calculated by reference to
any sum received or receivable by the Affected Lender hereunder,
then, upon demand from time to time being made to the Relevant Borrowers by the
Agent on behalf of the Affected Lender, accompanied in each case by a
certificate of the Affected Lender documenting the relevant calculations of the
compensation being claimed by the Affected Lender (which certificate shall be
conclusive and binding on the parties hereto for all purposes, absent manifest
error), the Borrowers shall forthwith pay to the Agent for the account of the
Affected Lender such additional amounts as are set out in each such certificate
in order to fully compensate the Affected Lender (or its Holding Body Corporate)
for such additional cost, reduction, payment, foregone interest or other return.
The amount payable by each Borrower under this Section 5.3 shall be made in
proportion to its share of the aggregate Outstanding Amount of all outstanding
Advances under the Credit Facilities, unless the Agent otherwise agrees.
5.4. Payments Generally
All payments to be made by a Borrower in respect of Advances (in
respect of principal, interest, fees or otherwise) shall be made by the Relevant
Borrower to the Agent for the account of the Lender or Lenders concerned or to
the Swing Line Lender (as applicable) no later than 11:00 a.m. (Toronto time) on
the due date thereof (i) to the accounts of the Agent specified therefor by the
Agent at the Agent's Branch of Account or (ii) to the Swing Line Lender by
transfer to the Designated Accounts, in each case at the applicable Branch of
Account, or, in any such case, to such other accounts as may be specified by
such Lender to the Relevant Borrower from time to time. If a payment is not made
by such time it shall be considered to have been made on the next Banking Day,
unless the Lender concerned agrees, in its sole discretion, to accept a payment
at a later time as being effective on the date it is made. All payments to be
made by a Borrower shall be made by way of certified cheque, bank draft or other
immediately available funds, freely transferable, cleared funds for value on the
due date.
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5.5. Repayment Notice
Each Relevant Borrower shall deliver a Repayment Notice to the Agent
at least five Banking Days before any required repayment is made pursuant to any
provision of this Agreement.
5.6. Netting of Payments
If on any date amounts would be payable under this Agreement in the
same currency by the Relevant Borrower to the Lenders and by the Lenders to the
Relevant Borrower, then, on such date, upon notice from the Agent stating that
netting is to apply to such payments, each such party's obligations to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by the Relevant
Borrower to the Lenders exceeds the aggregate amount that would otherwise have
been payable by the Lenders to the Relevant Borrower or vice versa, such
obligations shall be replaced by an obligation upon the Relevant Borrower or the
Lenders by whom the larger aggregate amount would have been payable to pay to
the other the excess of the larger aggregate amount over the smaller aggregate
amount.
ARTICLE 6.
CONDITIONS TO ADVANCES
6.1. General
No Borrower shall be entitled to obtain an Advance under any Credit
Facility pursuant to this Agreement until an Implementation Notice is given and
then only upon satisfaction of and compliance with the following terms and
conditions:
6.1.1. the representations and warranties set forth in Article 10 are
true and accurate in all material respects on the date of
execution and delivery of this Agreement and all continue to be
true and accurate in all material respects on the date of the
Advance in question and, in respect of an Advance under the Term
Facility, the Agent shall have received a Certificate of Gerdau
Steel to such effect;
6.1.2. no Default or Event of Default shall have occurred and be
continuing on the requested date of Advance and, in respect of
an Advance under the Term Facility, the Agent shall have
received a Certificate of Gerdau Steel to such effect;
6.1.3. the Agent shall have received any required Drawdown Notice in
accordance with Section 7.4; and
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6.1.4. the aggregate Outstanding Amount of all Advances outstanding
under a Credit Facility, following the making of the Advance in
question and having regard to any repayments of principal to be
made on the date of the Advance in question, shall not exceed
the Maximum Amount of such Credit Facility.
6.2. Conditions Precedent
The amendments to and restatement of the Prior Loan Agreement set
out in this Agreement shall not take effect unless and until the Agent confirms
in writing to the Borrowers (the "Implementation Notice") that the Agent has
received each of the following agreements, documents and instruments (each in
form and substance satisfactory to the Agent), or it has received some, but not
all, of them and it is prepared to waive receipt of the balance of them for the
purposes of allowing such amendments and restatement to take effect:
6.2.1. the Agent shall have received a duly executed copy of this
Agreement and each of the agreements. documents and instruments
listed in Schedule L, together with any Mortgaged Property being
delivered to the Agent pursuant to any Security comprised
therein, (including share certificates representing the Gerdau
USA shares, FLS shares and the Target Shares);
6.2.2. the Agent shall have received an opinion of Borrowers' Counsel
addressed to the Lenders and Lenders' Counsel regarding the
Xxxxxx X.X. Group Members, this Agreement and the other Loan
Documents to which each of the Xxxxxx X.X. Group Members is
party, each in form and substance satisfactory to the Agent;
6.2.3. the Agent shall have received the following in form and
substance satisfactory to the Agent:
6.2.3.1. a Certificate of each Borrower dated the date of this
Agreement certifying that attached thereto are true
and correct copies of the following documents, and
that such documents are in full force and effect,
unamended:
6.2.3.1.1. the articles and by-laws of each
Borrower and any unanimous shareholder
agreement pertaining to each Borrower;
6.2.3.1.2. a certificate of incumbency, including
sample signatures of officers and
directors, of each Borrower; and
6.2.3.1.3. the resolutions or other documentation
evidencing that all necessary action,
corporate or otherwise, has been taken
by each Borrower to authorize the
execution, delivery and
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performance of the New Loan Documents to
which it is a party;
provided that in lieu of attaching the documents
described in Subsections 6.2.3.1.1 and 6.2.3.1.2 a
Certificate may confirm that the previous copies of
such documents delivered to the Lenders pursuant to
the Prior Loan Agreement are in full force and
effect, unamended;
6.2.3.2. a certificate of compliance or status (as applicable)
in respect of each Gerdau Canada Group Member dated
on or about the date of this Agreement;
6.2.3.3. certificates for each other Xxxxxx X.X. Group Member
that is providing Security to the Syndicate
substantially equivalent or analogous to the
certificates of Gerdau Steel (including attachments)
referred to in paragraphs 6.2.3.1 and 6.2.3.2 above;
6.2.3.4. certified copies of the insurance policies evidencing
the insurance required to be maintained by each
Gerdau Canada Group Member under Section 9.6;
6.2.3.5. certified copies of all Permits required to enable
the Borrowers and each other Xxxxxx X.X. Group Member
providing Security to the Syndicate to execute,
deliver, incur and perform its obligations under each
Loan Document to which it is a party and consummate
the transactions contemplated thereby;
6.2.3.6. evidence that all Registrations and other actions as
may be necessary or desirable in the judgment of the
Lenders' Counsel to perfect, preserve and protect the
Security and its priority have been effected;
6.2.3.7. copies of the amendments to the Xxxxxx X.X. Trust
Deeds which permit the creation of the Indebtedness
hereunder and the Liens constituted by the Security;
6.2.3.8. evidence that at least US$32,000,000 has been
advanced to Gerdau Steel by Affiliates by way of
subscription for Capital Stock of Gerdau Steel for
the purpose of financing in part the purchase price
of the Target Shares;
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6.2.3.9. evidence that the balance of sale owing to Kyoei
Steel, Ltd. in respect of the Target Shares has been
secured in a manner satisfactory to Kyoei Steel, Ltd.
and the Lenders;
6.2.3.10. opinions from the Borrower's Counsel in respect of
each Xxxxxx X.X. Group Member providing Security to
the Syndicate, addressed to the Syndicate and the
Lenders' Counsel, in respect of the laws of such
jurisdictions, the Loan Documents, the Xxxxxx X.X.
Trust Deeds and as to such matters and in such form
as the Lenders may require;
6.2.3.11. a Compliance Certificate for the period of four
consecutive Fiscal Quarters ending June 30, 1999;
6.2.3.12. a Borrowing Base Report prepared as at August 31,
1999;
6.2.3.13. an updated environmental questionnaire completed by
each Borrower;
6.2.3.14. satisfactory evidence that the New Loan Documents
shall, if necessary or desirable, have been filed,
registered and recorded where appropriate and as to
the continued validity and priority of the Prior
Security;
6.2.3.15. such other agreements, documents and instruments as
the Agent or the Swing Line Lender may reasonably
require;
6.2.3.16. a Certificate of each Borrower dated the date of the
Implementation Notice confirming satisfaction of and
compliance with the terms and conditions set out in
this Section 6.2 as well as Sections 6.1.1 and 6.1.2;
6.2.3.17. a Certificate of Gerdau Steel certifying that all of
the conditions contained in paragraphs 6.1.1, 6.1.2
and 6.1.3 inclusive of Section 6.1 have been
satisfied;
6.2.3.18. a favourable report from the Lenders' Counsel to the
Lenders as to all legal aspects in this transaction
on which the Agent requires a report, including with
respect to this Agreement, the Security, the other
New Loan Documents and the opinions of the Borrowers'
Counsel.
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6.3. Effective Time
The Credit Facilities set out in this Agreement shall only become
available to the Borrowers pursuant to this Agreement if and when the Agent
issues the Implementation Notice.
6.4. Effectiveness
Upon the Agent delivering the Implementation Notice to the
Borrowers, this Agreement shall amend and restate the Prior Loan Agreement in
its entirety. The Prior Loan Agreement as amended and restated by this Agreement
shall constitute one agreement, and the Prior Loan Agreement as so amended and
restated is hereby ratified and confirmed by the parties hereto.
6.5. Provisions Taking Immediate Effect
Notwithstanding any other provision of this Agreement, this
Section 6.5 and Section 8.2 of this Agreement shall take effect immediately upon
the execution and delivery of this Agreement whether or not the Implementation
Notice is ever issued.
6.6. Rights Unaffected
This Agreement shall not waive, prejudice, delay or impair any
rights of the Lenders or the Borrowers arising under the Prior Loan Agreement,
the Security or otherwise, at law or in equity, which have accrued to the
Lenders or the Borrowers, as the case may be, before the time the Implementation
Notice is issued. All interest, fees and other amounts (other than principal)
due or becoming due or owing as at the time the Implementation Notice is issued
shall be paid after such time to the Lenders in accordance with the terms and
conditions of this Agreement.
6.7. Date of Agreement
References in this Agreement to the date of this Agreement, the date
hereof and similar expressions shall be construed as references to the date this
Agreement is executed and delivered by the parties hereto, namely September 27,
1999.
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ARTICLE 7.
ADVANCES
7.1. Advance and Interest Payment Dates
Upon timely fulfillment of and compliance with all applicable terms
and conditions as set forth in this Agreement, the Agent (to the extent it has
received funds from the Lenders) on behalf of the Lenders will make the
requested amount of any Advance by way of Prime Rate Loan, Base Rate Loan or
LIBOR Loan requested by the Relevant Borrower available to the Relevant Borrower
on the Drawdown Date by crediting its Designated Account with such amount. The
Relevant Borrower shall pay interest to the Swing Line Lender or to the Agent
for the account of the Lenders (as applicable) at such Lender's Branch of
Account on each Loan borrowed by the Relevant Borrower which is outstanding from
time to time hereunder at the rate of interest applicable to such Loan as set
out in this Agreement.
Interest on each Prime Rate Loan, Base Rate Loan and LIBOR Loan
shall be payable on each Interest Payment Date applicable thereto. All interest
shall accrue from day to day and shall be payable in arrears for the actual
number of days elapsed from and including the Borrowing Date of such Loan or the
previous date on which interest was payable, as the case may be, to but
excluding the date on which interest is payable, or the end of the Interest
Period, as the case may be, both before and after maturity, default and
judgment, with interest on overdue interest at the same rate payable on demand.
Overdue interest with respect to a LIBOR Loan made under a Credit Facility
shall, upon the expiry of the Interest Period applicable to such LIBOR Loan,
bear interest, payable on demand, calculated at the rates and in the manner
applicable to Base Rate Loans made under the same Credit Facility.
Interest calculated with reference to the Prime Rate or the Base
Rate shall be calculated daily and compounded monthly on the basis of a year of
365 or 366 days, as applicable. Interest calculated with reference to the LIBO
Rate shall be calculated daily and compounded at the end of the Interest Period
applicable thereto, and if the Interest Period is longer than three months,
every three months on the basis of a year of 360 days.
7.2. Payment of Interest
Each Borrower shall pay to the Agent for the account of the
applicable Lenders interest on each Loan borrowed by it in the manner and at the
rates per annum determined in accordance with this Agreement. Interest payable
hereunder shall be payable both before and after maturity, default and/or
judgment, if any, until payment in full thereof, and interest shall accrue on
overdue interest, if any, at the same rate, except as otherwise provided in
Section 7.1. Changes in the Prime Rate or the Base Rate shall cause an immediate
adjustment of the interest payable hereunder with respect to Prime Rate Loans
and Base Rate Loans, respectively, without the necessity of any notice to the
Borrowers.
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7.3. Conversions
Subject to the other terms of this Agreement, the Relevant Borrower
may from time to time convert all or any part of the outstanding amount of any
Advance under the Term Facility (other than any Advance by way of Standby Credit
or any Swing Line Loan) on its Maturity Date (in the case of a LIBOR Loan or an
issue of Bankers' Acceptance) or at any time (in the case of Prime Rate Loan or
a Base Rate Loan) into another form of Advance denominated in the same Currency
under the Term Facility permitted by this Agreement by giving the Agent a
Conversion Notice in accordance with Section 7.4 provided that any part of an
Advance that is not converted and the resulting new Advance each comply with the
amounts specified below:
7.3.1. in the case of a Prime Rate Loan or Base Rate Loan, a minimum
principal amount of $5,000,000 (Cdn. or U.S., as applicable);
7.3.2. in the case of a LIBOR Loan, a minimum principal amount (subject
to availability) of U.S.$10,000,000; and
7.3.3. in the case of an issue of Bankers' Acceptances, a minimum
aggregate face amount (subject to availability) of Cdn.
$5,000,000 and in whole number multiples of Cdn. $1,000,000.
7.4. Notice of Advances, Payments, Conversions and Rollovers
Each Borrowing Notice and Repayment Notice, as the case may be,
shall be given no later than:
7.4.1. on the third Banking Day prior to any Borrowing Date or payment
date, in respect of any Prime Rate Loan or Base Rate Loan in an
amount of $50,000,000 (Cdn. or U.S., as applicable) or more;
7.4.2. on the second Banking Day prior to any Borrowing Date or payment
date, in respect of any Prime Rate Loan or Base Rate Loan in an
amount of $10,000,000 (Cdn. or U.S., as applicable) or more but
less than $25,000,000 (Cdn. or U.S., as applicable);
7.4.3. on the Banking Day before the Borrowing Date of any Prime Rate
Loan or Base Rate Loan or payment date, in respect of any Prime
Rate Loan or Base Rate Loan in an amount less than $10,000,000
(Cdn. or U.S., as applicable);
7.4.4. on the third Banking Day prior to the Borrowing Date or payment
date of any LIBOR Loan; and
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7.4.5. on the second Banking Day prior to the Borrowing Date of any
Bankers' Acceptances.
Notices shall be given not later than 10:00 a.m. (Toronto time) on the last
available date for notice. If a notice is not given by such time, it shall be
deemed to have been given on the next Banking Day. If a Conversion Notice is not
given by 10:00 a.m. on the second Banking Day prior to a proposed Conversion,
the Lenders may, in the case of a proposed Conversion to Bankers' Acceptances,
decline to accept such Bankers' Acceptances and in the case of a proposed
Conversion to a Prime Rate Loan, may charge, as liquidated damages, interest on
the resulting Prime Rate Loan at a rate equal to 115% of the rate of interest
otherwise applicable to such Prime Rate Loan under this Agreement for a period
of two Banking Days from the maturity of the Bankers' Acceptances. Thereafter
the rate of interest applicable to such Prime Rate Loan shall be the rate of
interest otherwise applicable to such Loan, as set out in this Agreement. The
foregoing provisions shall also apply if a Borrower requests a Rollover of
Bankers' Acceptances to take place on the Maturity Date of another issue of
Bankers' Acceptances but does not give a Rollover Notice by 10:00 a.m. on the
second Banking Day prior to such Maturity Date. The Relevant Borrower agrees
that such additional interest is a reasonable pre-estimate of loss to each
Lender and not a penalty. Such increased interest is payable for the
administrative expense incurred by each Lender and for the loss of protection
against future interest rate risks suffered by each Lender as a result of a
Borrower's failure to give any of these notices.
7.5. Bankers' Acceptances
The following provisions shall apply to Advances obtained by way of
the issuance of Bankers' Acceptances:
7.5.1. all drafts required to be accepted by a Lender pursuant to this
Agreement shall be in the form requested by such Lender, and,
shall be executed and drawn by such Lender on behalf of the
Relevant Borrower pursuant to the power of attorney contained in
Section 7.5.3;
7.5.2. any Borrowing Notice requesting an issue of Bankers' Acceptances
shall include instructions from the Relevant Borrower stating
that it wishes to have drafts accepted as Bankers' Acceptances
under this Agreement and stating the aggregate face amount of
and the term (being, subject to availability, one, two, three or
six months) applicable to such drafts. The Relevant Borrower may
notify the Agent by telephone of its instructions with respect
to Bankers' Acceptances, provided it shall immediately
thereafter confirm its telephone instructions given pursuant to
this paragraph by a Borrowing Notice;
7.5.3. each Borrower authorizes each Lender, and for this purpose
appoints each Lender the lawful attorney of such Borrower, to
complete, sign and endorse drafts on its
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behalf in handwritten or by facsimile or mechanical signature in
accordance with each Borrowing Notice and, once so completed,
signed and endorsed, and following acceptance of them as a
Bankers' Acceptance under this Agreement, then purchase,
discount or negotiate such Bankers' Acceptances in accordance
with the provisions of this Section 7.5. Drafts so completed,
signed and endorsed and negotiated on behalf of each Borrower
shall bind such Borrower as if so performed by an authorized
officer of such Borrower;
7.5.4. the face amount of each Bankers' Acceptance to be accepted by a
Lender shall be a whole number multiple of Cdn. $100,000;
7.5.5. the Agent shall have the discretion to restrict the term and the
Maturity Date of an issue of Bankers' Acceptances. The Maturity
Date of each issue of Bankers' Acceptances must be no later than
the Due Date of the relevant Credit Facility. There shall not be
more than ten (10) issues of Bankers' Acceptances maturing
during any single calendar month under the Credit Facilities,
unless the Agent otherwise agrees;
7.5.6. each Lender shall purchase each Bankers' Acceptance accepted by
it at a discount to yield (excluding the Acceptance Fee) an
interest rate per annum equal to such Lender's BA Reference Rate
on each Acceptance Date of Bankers' Acceptances issued pursuant
to this Agreement. The obligation of the Relevant Borrower to
pay to a Lender the face amount of each Bankers' Acceptance so
purchased by it upon the maturity of such Bankers' Acceptance
shall continue in full force and effect notwithstanding such
purchase. A Lender may at any time and from time to time hold,
sell, rediscount or otherwise dispose of any Bankers' Acceptance
purchased by it;
7.5.7. when Bankers' Acceptances are being issued, each Lender shall
transfer to the Agent at the Agent's Branch of Account for value
on the Acceptance Date immediately available Canadian dollars in
an amount equal to the net proceeds of sale of all Bankers'
Acceptances purchased by it on such Acceptance Date, net of the
applicable Acceptance Fee in respect of such Bankers'
Acceptances. Subject to Section 7.9, the Agent will transfer
such amounts to the Relevant Borrower by depositing the same for
value on the applicable Acceptance Date to the Designated
Account of the Relevant Borrower;
7.5.8. the Acceptance Fee applicable to each Bankers' Acceptance shall
be calculated upon the principal face amount of such Bankers'
Acceptance for the duration of its term on the basis of the
actual number of days from the date of its acceptance by a
Lender up to the Maturity Date of the Bankers' Acceptance
calculated on the basis of a 365 day year at the rates per annum
provided for in Section 2.3 or 3.4, as applicable;
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7.5.9. the Relevant Borrower shall provide for the payment to the
Lenders at the Agent's Branch of Account of the full face amount
of each issue of Bankers' Acceptance on its Maturity Date or, on
the occurrence of an Event of Default, prior to its Maturity
Date forthwith pursuant to Section 12.3. The Relevant Borrower
shall not be entitled to prepay any Bankers' Acceptances. Where
an issue of Bankers' Acceptances matures and the Relevant
Borrower does not provide for payment or otherwise designate the
manner in which payment is to be made in accordance with the
provisions of this Agreement, the Borrower shall be deemed to
have provided for payment of the aggregate face amount of such
Bankers' Acceptances by Conversion into a Prime Rate Loan under
the Credit Facility pursuant to which the Bankers' Acceptances
were issued in a principal amount equal to the aggregate face
amount of the Bankers' Acceptances on their Maturity Date;
7.5.10. the Relevant Borrower shall not claim from any Lender any days
of grace for the payment at maturity of any Bankers' Acceptances
presented and accepted by the Lender pursuant to this Agreement.
In addition, the Relevant Borrower waives any demand,
presentment for payment, protest, noting of protest, dishonour,
notice of dishonour and any other notice or defence to payment
which might otherwise exist if for any reason a Bankers'
Acceptance is held by the Lender in its own right at the
maturity thereof and the Relevant Borrower shall pay the Agent
for the account of such Lender the face amount of any such
Bankers' Acceptance on its Maturity Date;
7.5.11. any executed drafts to be used as Bankers' Acceptances which are
held by the Agent or a Lender need only be held in safekeeping
with the same degree of care as if they were such Lender's own
property and such Lender was keeping them at the place at which
they are to be held. Each Borrower shall, by written notice to
the Agent, designate the Persons authorized to give the Agent
instructions regarding the manner in which drafts are to be
completed and the time at which they are to be issued;
7.5.12. the Relevant Borrower agrees to forthwith reimburse each Lender
in full any amount paid by the Lender in respect of any Bankers'
Acceptance accepted by the Lender hereunder on its behalf;
however, the Relevant Borrower shall not be obliged to indemnify
any Lender for any fees or expenses caused by the gross
negligence or willful misconduct of such Lender;
7.5.13. the obligations of each Borrower under this Section 7.5 are
unconditional, shall not be subject to any qualification or
exception whatsoever and shall be fulfilled strictly in
accordance with the terms of this Agreement under all
circumstances including the following:
7.5.13.1. any lack of validity or enforceability of any draft
accepted by any Lender as a Bankers' Acceptance; or
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7.5.13.2. the existence of any claim, set-off, defence or
otherwise which the Relevant Borrower may have at any
time against the holder of a Bankers' Acceptance, any
Lender or any other Person or entity whether in
connection with this Agreement or otherwise;
7.5.14. each Borrower shall execute and deliver such bankers'
acceptances agreements, indemnities, directions, powers of
attorney and other assurances as any Lender may reasonably
require from time to time with respect to any issue of Bankers'
Acceptances. Such documents shall take effect subject to Section
1.11;
7.5.15. if any provision of this Agreement has the effect of requiring a
Bankers' Acceptance to be prepaid, such prepayment is effected
by paying to the Agent an amount in Canadian dollars equal to
the face amount of such Bankers' Acceptance and the Agent paying
the amount so received by it into an interest bearing account
with it in the name of the Relevant Borrower from which the only
withdrawal which may be made is to pay the Lender accepting such
Bankers' Acceptance the face amount of such Bankers' Acceptance
on its Maturity Date.
7.5.16. If a Lender is not permitted by Applicable Law, or does not by
virtue of customary market practice, accept drafts for the
purpose of subsequent sale as a bankers' acceptance (a
"Non-Acceptance Lender"), each time a Relevant Borrower gives a
Borrowing Request for an issue of Bankers' Acceptances, such
Non-Acceptance Lender shall, in lieu of accepting and purchasing
Bankers' Acceptances pursuant to this Section 7.5, make an
advance in Canadian dollars to the Relevant Borrower (a "B/A
Equivalent Advance") in the amount equal to the Acceptance
Proceeds which would be derived from a hypothetical sale of
drafts accepted by it ("Notional Acceptances") in the aggregate
face amount of its Rateable Share of such requested issue of
Bankers' Acceptances at a discount rate that yields to such
Non-Acceptance Lender (excluding the Acceptance Fee) an interest
rate per annum equal to such Lender's BA Reference Rate. Any B/A
Equivalent Advance shall be repayable on the maturity of such
issue of Bankers' Acceptances. A Non-Acceptance Lender shall be
entitled to deduct from the amount of its B/A Equivalent Advance
to be paid to the Agent pursuant to Section 7.5.7 an amount
equal to the Acceptance Fee determined in accordance with
Section 7.5.8 that would have been payable to it with respect to
the Notional Acceptances corresponding to the B/A Equivalent
Advance. For the purposes of this Agreement each reference to an
issue of Bankers' Acceptances shall be deemed to include, where
relevant, B/A Equivalent Advances, with the necessary changes
being made to fit the context.
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7.6. Standby Credits
The following provisions apply to Advances obtained by way of
issuance of Standby Credits:
7.6.1. A Standby Credit may be requested by a Borrower to be issued by
the Issuing Bank under the Swing Line in Canadian dollars or
U.S. dollars or, with the prior consent of the Agent and the
Issuing Bank, any other Currency;
7.6.2. The Issuing Bank shall have the right, in its sole discretion,
to limit the Maturity Date of any Standby Credit. Following the
occurrence of a Default or Event of Default, the Issuing Bank
shall have the right, in its sole discretion, to extend the
Maturity Date of any Standby Credit whether or not any other
party requests or objects to such extension;
7.6.3. Notwithstanding any other provision of this Section 7.6, no
Borrower may request the issuance of any Standby Credit (i) if
the aggregate Outstanding Amount of all Standby Credits
outstanding under the Revolver Facility would, after the
issuance of the Standby Credit in question, exceed Cdn.
$4,000,000; or (ii) having a term which would extend beyond the
Revolver Facility Due Date;
7.6.4. Reimbursement
7.6.4.1. The Relevant Borrower unconditionally and irrevocably
authorizes the Issuing Bank to pay the amount of any
demand made on the Issuing Bank in accordance with
the terms of any Standby Credit issued for its
account on demand without requiring proof of the
Relevant Borrower's agreement that the amount so
demanded was due and notwithstanding that the
Relevant Borrower may dispute the validity of any
such demand or payment;
7.6.4.2. The Relevant Borrower shall indemnify and save the
Issuing Bank harmless from and against any and all
payments and losses and expenses (other than lost
profits) which it may suffer or incur arising in any
manner whatsoever out of the issuance of any Standby
Credit, including the making of, or refusal to make,
any payments demanded thereunder (including any court
costs and legal costs on a solicitor and client scale
incurred in connection with any proceedings to
restrain the Issuing Bank from making, or to compel
the Issuing Bank to make, any such payment). This
indemnity shall be unconditional, shall not be
subject to any qualification or exception whatsoever
and shall not be lessened, invalidated or otherwise
prejudiced for any reason whatsoever including by
reason of (i) any lack of validity or enforceability
of the Standby Credit, (ii) any claim, set-off,
defence or
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other right the Relevant Borrower may have
against the beneficiary of the Standby Credit,
including any claim that a demand for payment under
the Standby Credit is fraudulent or (iii) any of the
matters referred to in Section 7.6.5.
7.6.5. Issuing Bank Not Liable
7.6.5.1. The Issuing Bank shall not have any responsibility or
liability for, or duty to inquire into, the
sufficiency, authorization, execution, signature,
endorsement, correctness, genuineness or legal effect
of any certificate or other document presented to it
pursuant to any Standby Credit and the Relevant
Borrower for whom such Standby Credit was issued
fully and unconditionally assumes all risks with
respect to the same and, without limiting the
generality of the foregoing, all risks of the acts or
omissions of any beneficiary of any Standby Credit
with respect to the use by any beneficiary of any
Standby Credit. The Issuing Bank shall not be
responsible:
7.6.5.1.1. for the validity or genuineness of
certificates or other documents
delivered under or in connection with
any Standby Credit that appear on their
face to be in order, even if such
certificates or other documents should
in fact prove to be invalid, fraudulent
or forged;
7.6.5.1.2. for errors, omissions, interruptions or
delays in transmission or delivery of
any messages by mail, cable, telegraph,
telefax, wireless or otherwise, whether
or not they are in code;
7.6.5.1.3. for errors in translation or for errors
in interpretation of technical terms or
for errors in the calculation of amounts
demanded under any Standby Credit;
7.6.5.1.4. for any failure or inability by the
Issuing Bank or anyone else to make
payment under any Standby Credit as a
result of any Applicable Law or by
reason of any control or restriction
rightfully or wrongfully exercised by
any Person asserting or exercising
governmental or paramount powers;
7.6.5.1.5. for any other consequences arising from
causes beyond the control of the Issuing
Bank; or
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7.6.5.1.6. any error, neglect or default of any
correspondent of the Issuing Bank, or of
any advising, confirming, negotiating or
paying bank,
and none of the above shall lessen, invalidate or
otherwise prejudice any of the rights of the Issuing
Bank hereunder or the obligations of the Relevant
Borrower under Section 7.6.4.2. In furtherance and
not in limitation of the foregoing provisions, it is
agreed that any payment made by the Issuing Bank in
good faith in response to any demand for payment
under a Standby Credit shall be deemed to have been
properly made and shall be binding upon all parties
hereto and shall not result in any liability of the
Issuing Bank to the other parties hereto and shall
not lessen, invalidate or otherwise prejudice the
obligations of the Relevant Borrower under Section
7.6.4.2.
7.6.5.2. Notwithstanding the provisions of this Section 7.6.5,
no Borrower shall be responsible for, and the Issuing
Bank shall not be relieved of responsibility for, any
willful misconduct or gross negligence of or by the
Issuing Bank.
7.6.6. Payments Under Standby Credits: Each payment made by the Issuing
Bank under or otherwise in respect of a Standby Credit which is
not reimbursed to the Issuing Bank pursuant to Section 7.6.4.2
on the date such payment is made shall be deemed to constitute
an Advance under the Swing Line on the date such payment is made
and shall be repaid by the Relevant Borrower to the Swing Line
Lender accordingly. Each such payment made in Canadian dollars
shall be treated as a Prime Rate Loan. Each such payment made in
U.S. dollars shall be treated as a Base Rate Loan. Each such
payment made in any other Currency shall be treated as a Prime
Rate Loan in the amount of the Canadian Dollar Value of such
payment.
7.6.7. Standby Credit Fees: The Relevant Borrower shall pay a fee to
the Issuing Bank in advance on the date of issuance of each
Standby Credit for the period from and including the date of
issuance of the Standby Credit to and including the stated
expiry date thereof, based on the stated amount of the Standby
Credit on such issuance date. Such fee shall be payable in the
Currency in which the applicable Standby Credit is denominated.
The fee payable shall be determined as the product obtained by
multiplying (i) the stated amount of such Standby Credit by (ii)
the Applicable Margin and by (iii) the fraction of the number of
days from the date of issue until the Maturity Date of such
Standby Credit divided by the actual number of days in the year.
In addition, the Relevant Borrower shall pay the Issuing Bank's
prevailing scheduled rates for services (including advices,
amendments and renewals) provided by the Issuing Bank pertaining
to outstanding Standby Credits. All amounts paid to the Issuing
Bank pursuant to this Section 7.6.7 shall be retained by the
Issuing Bank for its own account.
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7.6.8. Acceleration: On the Revolver Facility Due Date or upon the
Agent making a declaration under Section 12.2.2, the maximum
amount of the contingent liability of the Issuing Bank under any
Standby Credit which is then outstanding shall immediately
become due and payable notwithstanding that the Issuing Bank has
not at such date been required to make payment under any such
Standby Credit. Any such amount shall be paid to the Agent and
shall be credited to the Cash Collateral Account and held in the
manner contemplated by Section 7.6.10 as security for the
repayment of future indebtedness of that Borrower to the Issuing
Bank in respect of each Standby Credit issued for its account
which are drawn down, and, pending the expiry of all such
outstanding Standby Credits, any such amounts held by the Agent
shall bear interest at the rate established by the Agent from
time to time as that payable in respect of 30 day term deposits
of the Agent for monies of like amount.
7.6.9. Conflict: Each Standby Credit shall be subject to the Issuing
Bank's customary Standby Credit terms and procedures from time
to time in effect and shall be in a form acceptable to the
Issuing Bank. Each Borrower shall execute and deliver such
standard form indemnities, bonds and other assurances as the
Issuing Bank may reasonably require from time to time with
respect to Standby Credits and such standard form indemnities,
bonds and other assurances shall take effect subject to Section
1.11. A Standby Credit shall in no event contain provisions
requiring the Issuing Bank to satisfy itself, prior to payment
thereunder, as to any conditions for a drawing thereunder other
than the presentation of prescribed documents.
7.6.10. Prepayment: If any provision of this Agreement has the effect of
requiring a Standby Credit to be prepaid, such prepayment is
effected by providing the Agent with cash cover in the Currency
in which that Standby Credit is denominated, by reducing,
whether by partial cancellation or otherwise, (in accordance
with the terms of this Agreement and the relevant Standby
Credit) the amount that may be demanded under that Standby
Credit (or by such amount automatically reducing in accordance
with the terms of the relevant Standby Credit) or by canceling
that Standby Credit by returning the original to the Issuing
Bank together with written confirmation (in form and substance
satisfactory to the Issuing Bank) from the beneficiary that the
Issuing Bank has no further liability under that Standby Credit.
"cash cover" is provided, in whole or in part, in respect of a
Standby Credit at any time by paying an amount, in the Currency
in which that Standby Credit is denominated, equal to the whole
or a part of the maximum amount which may be drawn under such
Standby Credit at such time to the Agent, to be held by the
Agent pursuant to the Relevant Borrower's debenture listed in
Schedule L and the Agent paying the amount so received by it
into an interest bearing account with it in the name of the
Relevant Borrower (a "Cash Collateral Account") from which the
only withdrawals which may be made until the relevant Standby
Credit is otherwise cancelled or expires or prepaid in its
entirety
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are withdrawals to pay the Agent amounts due and payable to it
under this Agreement following any payment made by it under such
Standby Credit. If a Standby Credit is cancelled or expires or
is returned to the Issuing Bank by the beneficiary for
cancellation without payment, then, so long as no Event of
Default has occurred, the Relevant Borrower shall thereafter be
free to withdraw any remaining credit balance in the Cash
Collateral Account.
7.7. LIBOR Loans - Market Disruption
If at any time prior to the commencement of any Interest Period, any
Lender (an "Affected Lender") shall have determined and gives notice to the
Agent (which will promptly notify the Borrowers and the other Lenders) that it
has become unlawful or impossible for that Lender to make, maintain or fund any
LIBOR Loan or that the Lender's ability to make, maintain or fund such LIBOR
Loan has been materially adversely affected because:
7.7.1. of circumstances affecting the London interbank market or
elsewhere which result in there not existing adequate and fair
means for ascertaining the rate of interest applicable to such
LIBOR Loan during such Interest Period;
7.7.2. deposits in U.S. dollars are not being offered to a Lender in
the London interbank market or elsewhere in sufficient amounts
in the ordinary course of business; or
7.7.3. any Change in Law or any change in national or international,
financial, political or economic conditions or currency exchange
rates or exchange control,
then, from and after the date of such determination for so long as such
condition shall continue to exist, no Borrower shall have the right to obtain or
maintain a participation in any LIBOR Loan from the Affected Lender. When the
Affected Lender has made any such determination, upon notice thereof by the
Agent to the Relevant Borrower, the Relevant Borrower shall on the last day of
the then current Interest Period applicable to the participation of the Affected
Lender in any LIBOR Loan owing by the Relevant Borrower to such Lender either
(i) repay to the Affected Lender its participation in such LIBOR Loan together
with all unpaid interest accrued thereon to the date of repayment and all other
amounts payable to the Affected Lender hereunder in respect of such LIBOR Loan
or (ii) convert its participation in such LIBOR Loan to another form of Loan
under the same Credit Facility in the same Currency.
7.8. Illegality
If any Change in Law shall make it unlawful or impossible for any
Lender (an "Affected Lender") to make, maintain or fund its participation in any
Advance, such Affected Lender shall promptly give notice to the Agent which will
promptly give notice to the Borrowers and the other Lenders. Upon the Agent
giving such notice the obligation of the Affected Lender
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to make or continue its participation in such Advances, which it would be
unlawful or impossible for such Lender to make or continue, shall be suspended
for so long as such condition shall exist. Upon receipt of such notice the
Relevant Borrower shall either (i) convert each participation of the Affected
Lender in each affected Advance to another Type of Advance under the same Credit
Facility in the same Currency or (ii) repay the Affected Lender's participation
in such Advance together with all unpaid interest accrued thereon to the date of
repayment and all other amounts payable hereunder to such Affected Lender in
respect of such Advance, in either case (A) on the Maturity Date applicable to
each such Advance, if the Affected Lender may lawfully continue to maintain and
fund its participation in such Advance to such date, or (B) immediately if the
Affected Lender may not lawfully continue to fund and maintain its participation
in such Advance to such dates and the Relevant Borrower promptly shall pay any
compensation owing to such Lender under Section 8.3 in consequence thereof. If
the Relevant Borrower fails to select (i) or (ii), the Relevant Borrower shall
be deemed to have selected to prepay such Affected Lender's participation in any
affected Advance.
7.9. Facility Excesses by Reason of Foreign Currency Fluctuations
If and each time the Agent determines (which determination shall be
conclusive and bind the Borrowers, absent manifest error) that the Outstanding
Amount of all Advances under either Credit Facility exceeds 102% of the Revolver
Commitment or Total Term Commitment, as the case may be, by reason of
fluctuations in exchange rates, the Agent may request (or if such excess is more
than five percent (5%) of the Revolver Commitment or Total Term Commitment, as
applicable, shall request) the Borrowers to repay the excess. Within five
Banking Days of the receipt of any such request, each Relevant Borrower with
Advances outstanding under the relevant Credit Facility shall repay to the
Lenders such Advances outstanding under such Credit Facility as may be required
to ensure that such excess is eliminated.
7.10. Evidence of Indebtedness
7.10.1. The indebtedness of each Borrower to each Lender hereunder
resulting from all Loans shall be evidenced by the loan accounts
which shall be opened and maintained by the Agent. The Agent
shall debit in its accounts the amount of all such indebtedness
and shall credit therein each repayment of such indebtedness by
appropriate entries. Entries recorded by the Agent or its
employees on a loan history statement for each Borrower, shall
be prima facie evidence thereof, absent manifest error. The
failure of the Agent to record any such amount or date shall not
affect the obligation of a Borrower to pay amounts due hereunder
in accordance with this Agreement.
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7.10.2. Any Lender may request that its Rateable Share in Advances be
evidenced by a promissory note (a "Note"). In such event, each
Borrower shall prepare, execute and deliver to such Lender a
Note payable to the order of such Lender in a form supplied by
the Agent. Thereafter, the Rateable Share of such Lender in all
outstanding Advances evidenced by such Note and interest thereon
shall at all times (including after any transfer pursuant to
Section 14.5) be represented by one or more Notes payable to the
order of the payee named therein or any Transferee, except to
the extent that any such Lender or Transferee subsequently
returns any such Note for cancellation and requests that its
Rateable Share on outstanding Advances once again be evidenced
as described in Subsection 7.10.1.
ARTICLE 8.
FEES AND EXPENSES
8.1. Commitment Fee
8.1.1. Gerdau Steel shall pay to the Agent for the account of the
Lenders a commitment fee in respect of the Revolver Facility
calculated at the Applicable Margin. Such Applicable Margin
shall be computed upon the amount by which the Maximum Amount of
the Revolver Facility exceeds the daily aggregate Outstanding
Amount of all Advances under the Revolver Facility.
8.1.2. Gerdau Steel shall pay to the Swing Line Lender for its own
account a commitment fee in respect of the Swing Line calculated
at the Applicable Margin. Such Applicable Margin shall be
computed upon the amount by which the Swing Line Amount exceeds
the daily aggregate Outstanding Amount of all Advances under the
Swing Line.
8.1.3. Each commitment fee payable pursuant to this Section 8.1 shall
be calculated for each calendar quarter from and after the date
hereof until the Revolver Facility Due Date and shall be payable
quarterly in arrears on the third Banking Day of the immediately
following calendar quarter. The first payment of such fee shall
be due and payable on the third Banking Day of the first
calendar quarter commencing after the day the Implementation
Notice is given.
8.2. Payment of Costs and Expenses
Whether or not any Borrower obtains any Advances hereunder,
the Borrowers shall pay to the Syndicate on demand all reasonable out-of-pocket
costs and expenses of the
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Syndicate and each of their respective agents, officers and employees and any
receiver or receiver-manager appointed by the Agent or by a court in connection
with this Agreement or any other Loan Document, including:
8.2.1. the preparation, execution, filing and registration of this
Agreement or any of the other New Loan Documents, any actual or
proposed amendment or modification of any of the Loan Documents
or any waiver hereunder or thereunder and all instruments
supplemental or ancillary thereto;
8.2.2. obtaining advice as to any Lender's rights or obligations under
any of the Loan Documents; and
8.2.3. the defence, establishment, protection or enforcement of any of
the rights of any Lender under any of the Loan Documents
including all costs and expenses of establishing the validity,
enforceability and priority of, or of collection of amounts
owing under, any of the Loan Documents or of any enforcement of
the Security,
and further including all of the fees, expenses and disbursements of the
Lenders' Counsel, on a solicitor and client scale, incurred in connection with
any of the foregoing, and including all Sales Taxes payable by any Lender
(whether refundable or not) on all such fees, costs and expenses.
8.3. Indemnity
The Relevant Borrower shall compensate each Lender for all losses
and expenses including any losses and expenses sustained by any Lender in
connection with the liquidation or re-employment in whole or in part of deposits
or funds borrowed or acquired by the Lender to fund any Advance to the Relevant
Borrower which the Lender may sustain or incur: (i) if for any reason a
Drawdown, Conversion or Rollover does not occur on a date requested by such
Borrower, (ii) if the Relevant Borrower fails to give any notice required to be
given by it hereunder, in the manner and at the time specified herein, (iii) as
a consequence of any failure by the Relevant Borrower to repay any Loan
Obligations when required by the terms of this Agreement, or (iv) if the whole
or any part of any Advance owing by the Relevant Borrower is paid to the Lender
or converted to another form of Advance other than on the Maturity Date thereof.
A certificate of a Lender provided to the Agent setting forth the amounts
claimed by the Lender as compensation under this Section 8.3 in respect of such
losses and expenses shall be conclusive and binding on the parties hereto,
absent manifest error, and the Relevant Borrower shall forthwith pay to the
Agent for the account of the Lender the amount of compensation set out in each
such certificate.
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8.4. Agency Fee
Gerdau shall pay the Agent for its own account the agency fees
stipulated in the Agency Fee Agreement at the times therein provided.
ARTICLE 9.
SECURITY AND INSURANCE
9.1. Security
In addition to the Prior Security, and as security for the due and
punctual payment and performance of all Loan Obligations of each Borrower, the
Borrowers shall deliver or cause to be delivered to and for the benefit of the
Syndicate, the New Loan Documents at or before the Term Drawdown Date.
9.2. Perfection
Each Borrower shall ensure that all the Security referred to in
Section 9.1 is executed and delivered and that the Liens created thereby are
registered, filed, recorded and perfected at or prior to the time the
Implementation Notice is given in all jurisdictions reasonably required by the
Agent.
9.3. Security Effective Notwithstanding Date of Advance
The Liens constituted or required to be created under the Security
shall be effective and the undertakings therein in respect thereto shall be
continuing, whether the monies hereby or thereby secured or any part thereof
shall be advanced before or after or at the same time as the creation of any
such Liens or before or after or upon the date of this Agreement. The Security
shall not be affected by any payments on the Advances, or by the balance of the
Advances fluctuating from time to time, but shall constitute continuing security
to the Lenders for the Loan Obligations from time to time.
9.4. No Merger
The security constituted by the Security shall not merge in any
other security. No judgment obtained by the Agent shall in any way affect any of
the provisions of this Agreement or the Security. For greater certainty, no
judgment obtained by any Lender shall in any way affect the Obligation of any
Borrower to pay interest and fees at the rates, times and in the manner provided
in this Agreement.
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9.5. Prior Security
9.5.1. Each Borrower confirms that the Prior Security shall remain in
full force and effect notwithstanding amendments to the Prior
Loan Agreement reflected in this Agreement and shall continue to
secure the Loan Obligations until repayment in full of all of
the Loan Obligations. For greater certainty, (i) Courtice agrees
with and confirms to the Lenders that as at the time the
Implementation Notice is issued no amount shall have been paid
by it in reduction of the amounts secured under the Courtice
Debenture, as amended by Amending Agreement No. 1 and Amending
Agreement No. 3, or the Courtice Supplemental Debenture, as
amended by Amending Agreement No. 2, and that such Security
collectively shall secure Loan Obligations of Courtice in an
aggregate principal amount of up to Cdn. $100,000,000 plus
interest thereon at a rate of 20% per annum and (ii) MRM agrees
with and confirms to the Lenders that as at the time the
Implementation Notice is issued no amount shall have been paid
by it in reduction of the amounts secured under the MRM
Debenture, as amended by Amending Agreement No. 4, and that the
MRM Debenture, as amended by Amending Agreement No. 4, shall
secure Loan Obligations of MRM in an aggregate principal amount
of up to Cdn. $80,000,000 plus interest thereon at the rate of
25% per annum.
9.5.2. Each of the parties hereto acknowledges that the Lien by way of
floating charge originally created under Section 3.01(b) of the
MRM Debenture to the extent such Lien applied to the personal
and moveable property of MRM that is not property of the nature
described in subsection 3.01(a)(i) to (iv) of the MRM Debenture
has been released.
9.6. Insurance
Each Borrower will insure, with insurance companies and in scope
satisfactory to the Agent, the Mortgaged Property, and during the term of this
Agreement keep the Mortgaged Property so insured to the extent of its full
insurable value, on a replacement cost basis, against "All-Risks", including
loss or damage by fire, boiler explosion and other casualty, such policies to
contain the usual "Extended Coverage" and "Replacement Cost" endorsements and
the Agent shall be noted therein as a named insured and first loss payee. Each
such policy shall bear endorsements and a mortgage clause in form and substance
satisfactory to the Agent making all proceeds payable thereunder payable to the
Agent as first loss payee. Further, each Borrower will at all times maintain
general comprehensive liability insurance, with insurance companies and in scope
satisfactory to the Agent, against, inter alia, claims for personal injury,
death or property damage, such insurance to afford protection in an amount not
less than FIVE MILLION DOLLARS. No Borrower will do or permit anything to be
done whereby any of the
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aforementioned policies may be vitiated and will pay all premiums and sums of
money necessary for maintaining every such insurance as aforesaid, as the same
become due.
9.7. Partial Discharges of Security
Unless an Event of Default has occurred, the Agent will from time to
time upon request of a Borrower execute partial discharges of the Security
prepared by the Borrower (in form and substance satisfactory to the Agent) with
respect to any of its assets disposed of in accordance with Section 11.3.1.9.
9.8. Obligations Secured
The parties acknowledge that certain of the Prior Security and other
Loan Documents are in generic form and have not been customized for purposes of
this transaction. Accordingly, the parties agree that notwithstanding anything
to the contrary contained in such Prior Security or other Loan Documents, such
Prior Security and other Loan Documents secure the applicable Obligor's Loan
Obligations under this Agreement and/or each guarantee of each Borrower's Loan
Obligations under this Agreement.
9.9. Additional Obligations Secured
For the purposes of the Security and Section 13.25, the obligations
owing by each Borrower to each Hedging Lender under each Hedging Instrument
(whether or not it is an Eligible Hedging Instrument) shall be deemed to be Loan
Obligations due and owing under or otherwise in respect of this Agreement and
shall be guaranteed and secured by the Security.
9.10. Redemption of Security
Upon and subject to (a) none of the Lenders being under any
obligation to make advances or provide other financial accommodation to any of
the Borrowers under or pursuant to this Agreement and (b) and the Loan
Obligations having been repaid and discharged in full, as soon as reasonably
practicable thereafter and at the request and cost of the Borrowers, the Agent
shall (but subject to the rights and claims of any Person having prior right
thereto) reassign to the Borrowers any remaining Mortgaged Property held by the
Agent by or pursuant to this Agreement and release or otherwise discharge the
Liens constituted by the Security, or at the specific request and direction of
the Borrowers, assign any remaining Security to any Person designated by the
Borrowers, in each case without representation or warranty of any kind.
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ARTICLE 10.
REPRESENTATIONS AND WARRANTIES
10.1. Representations and Warranties
To induce the Lenders to make the Credit Facilities available to
each Borrower, each Borrower represents and warrants, with respect to itself and
(to the extent the context so admits) each other Xxxxxx X.X. Group Member, to
and in favour of the Syndicate as follows:
10.1.1. Incorporation and Status. It is duly incorporated and validly
existing under the laws of its jurisdiction of incorporation and
up-to-date in the filing of all corporate and similar returns
under the laws of its jurisdiction of incorporation; it has the
corporate power and capacity to own its Business Assets and to
carry on its business as presently carried on by it or as
contemplated hereunder to be carried on by it.
10.1.2. Power and Capacity. It has the corporate power and capacity to
enter into each of the Loan Documents to which it is a party and
to do all acts and things as are required or contemplated under
each Loan Document to be done, observed and performed by it.
10.1.3. Due Authorization. It has taken all necessary corporate action
to authorize the execution, delivery and performance by it of
each of the Loan Documents to which it is a party;
10.1.4. Due Execution. It has duly executed and delivered each Loan
Document to which it is a party.
10.1.5. No Contravention. The execution and delivery by it of each Loan
Document to which it is a party and the performance by it of its
obligations under each such Loan Document (i) does not and will
not contravene, breach or result in any default under its
constating documents or other organizational documents or under
any material mortgage, lease, agreement or other legally binding
instrument, Permit or Applicable Law to which it is a party or
by which it or any of its Business Assets may be bound, (ii)
will not obligate it to grant any Lien to any Person other than
the Syndicate, (iii) will not result in or permit the
acceleration of the maturity of any obligation under any
material mortgage, lease, agreement or other legally binding
instrument of or affecting it or its Business Assets, and (iv)
will not violate any Award which is binding on it.
10.1.6. No Consents Required. No authorization, consent or approval of,
or filing with or notice to, any Person (including any
Governmental Body) is required which has not been obtained in
connection with the execution, delivery or performance by it
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of this Agreement or any of the other Loan Documents to which it
is a party other than as agreed to in writing by the Agent.
10.1.7. Enforceability. Each of the Loan Documents to which it is party
constitutes a legal, valid and binding obligation enforceable
against it, in accordance with its terms, subject only to
bankruptcy, insolvency or other statutes affecting the
enforcement of creditors' rights in general and to general
principles of equity under which specific performance and
injunctive relief may be refused by a court in its discretion.
10.1.8. Title. Subject only to Permitted Liens, it has good and
marketable title to its real and personal property (including in
the case of Courtice, the Real Property owned by it, and, in the
case of MRM, the Real Property owned by it) free and clear of
any Liens and no Person has an agreement or right to acquire any
such property other than inventory in the ordinary course of
business. The Real Property is all of the real property in which
the Borrowers have any freehold interest as at the date hereof.
10.1.9. Zoning and Other Matters Relating to Real Estate. The buildings
and other structures located on the Real Estate owned or leased
by it and the operation and maintenance thereof comply in all
material respects with all Applicable Laws; none of such
buildings or other structures encroaches upon any land not owned
or leased by a Borrower; there are no restrictive covenants or
Applicable Laws which in any way restrict or prohibit the use of
such land, buildings or structures for the purposes for which
they are presently being used, other than Permitted Liens; there
are no expropriation or similar proceedings, actual or
threatened, of which any Borrower has received notice against
the Real Estate owned or leased by it, other than any which have
been disclosed to the Agent in writing within five Banking Days
of such Borrower learning of same.
10.1.10. No Work Orders. It is not aware of any work orders, directions
or notices having been issued before the date hereof pursuant to
any Applicable Law pertaining to its Real Estate or any
environmental matters affecting its Real Estate. No work orders,
directions or notices have been issued pursuant to any
Applicable Law relating to its Real Estate or any environmental
matters affecting its Business or its Real Estate, other than
any which have been disclosed to the Agent in writing within
five Banking Days of such Borrower learning of same. It has not
received any notification from any Governmental Body that any
work, repairs, construction or capital expenditures are required
to be made in respect of any Real Estate or any part thereof
owned or leased by it as a condition of continued compliance
with any Applicable Law or any Permit issued thereunder, other
than any which have been disclosed to the Agent in writing
within five Banking Days of such Borrower learning of same.
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10.1.11. Financial Statements. Each of its most recent financial
statements delivered to the Syndicate pursuant to the provisions
of this Agreement, in the form delivered to the Syndicate, has
(except for its quarterly financial statements) been audited by
its Auditors and has been prepared in accordance with generally
accepted accounting principles consistently applied throughout
the period indicated and fairly, in all material respects,
presents its financial condition or business to which such
financial statements relate and the financial information
presented therein for the period and as at the date thereof. The
notes to such financial statements do not contain any
misstatement of a material fact nor do they omit to state a
material fact required to make any statement contained therein
not untrue or misleading. Since the date of the last financial
statements delivered to the Agent, there has been no development
which has had or will have a Material Adverse Effect.
10.1.12. No Litigation. There is no Litigation against or involving it
whether in progress or, to the best of its knowledge,
threatened, which, if determined adversely to it, would have a
Material Adverse Effect, other than any which has been disclosed
to the Agent in writing within five Banking Days of such
Borrower learning of same. No event has occurred which might
reasonably be expected to give rise to any such proceedings, and
there is no Award outstanding against it which has or could have
a Material Adverse Effect, other than any which has been
disclosed to the Agent in writing within five Banking Days of
such Borrower learning of same.
10.1.13. Permits, etc. It is duly registered and qualified and holds all
Permits necessary or appropriate to carry on Business in all
jurisdictions where the character of the properties owned by it
or the nature of the Business transacted by it makes such
registration or qualification necessary under the laws of such
jurisdiction; all such Permits are in full force and effect; it
is in compliance in all material respects with the terms and
conditions of all such Permits applicable to it; and there are
no proceedings in progress or to the best of its knowledge,
pending or threatened which may reasonably be expected to result
in the revocation, cancellation, suspension or any adverse
modification of any of such Permits.
10.1.14. Hazardous Substances. Its Business is being conducted in
material compliance with Applicable Law of each jurisdiction in
which its Business is carried on and its Business is in material
compliance with applicable Environmental Law and for greater
certainty and without limiting the generality of the foregoing:
10.1.14.1. its Business has been operated and has received,
handled, used, stored, treated, shipped and
disposed of at all times all Hazardous Substances
in material compliance with Environmental Law and
there are no Hazardous Substances located on any of
its Real Estate other than those on such property
in material compliance with Environmental Law;
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10.1.14.2. there are no PCBs, including any monochlorinated
biphenyl or polychlorinated biphenyl, or any
mixture which contains one or more of them, in
excess of concentrations of 50 parts per million or
any equipment or containers containing PCB's in
excess of concentrations of 50 parts per million on
any of its Real Estate;
10.1.14.3. none of the buildings or other structures located
on any of its Real Estate contain any friable
asbestos;
10.1.14.4. there are no underground storage vessels located on
any of its Real Estate; and
10.1.14.5. there have been no unrectified spills, releases,
deposits or discharges of any Hazardous Substances
on or near any of its Real Estate, except in
material compliance with Environmental Law, nor has
any of its Real Estate been used at any time by any
Person as a landfill or waste disposal site, except
for the Real Estate of MRM which is used by MRM and
has been used by MRM's predecessors in title in the
course of metal recycling and steel manufacturing
and fabricating carried out on MRM's Real Estate.
10.1.15. Environmental Matters. Except as disclosed in Schedule N (none
of which matters so disclosed are material):
10.1.15.1. There are no existing, pending or threatened:
10.1.15.1.1. claims, complaints, notices or
requests received by it in writing
or of which it is aware with
respect to any alleged violation of
or alleged liability under any
Environmental Law relating to any
of its Real Estate; or
10.1.15.1.2. governmental or court orders,
including stop, clean up or
preventative orders, directions or
action requests notice of which has
been received by it or which it is
otherwise aware relating to
environmental matters requiring any
works, repairs, remediation, clean
up, construction or capital
expenditures with respect to any of
its Real Estate;
10.1.15.2. except with respect to shredder fluff and electric
arc furnace dust on MRM's Real Estate, to the best
of its knowledge, no condition exists at, on or
under any of its Real Estate which with the passage
of time, the giving of notice, the making of any
determination, or any combination of the foregoing,
has given rise to or is likely to give rise to
material liability under any Environmental Law;
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10.1.15.3. each Borrower has made available for inspection and
review on a confidential basis by representatives
of the Agent and the Co-Syndication Agents all
material environmental or operating documents or
records which it is obliged to maintain under all
Environmental Laws; and
10.1.15.4. except for the Real Estate of MRM in respect of any
period prior to June 23, 1995, all its Real Estate
has been at all times owned, leased, managed,
controlled and operated (as applicable) by it and,
to the best of its knowledge, its predecessors in
title in material compliance with all Environmental
Laws.
10.1.16. All Material Information Supplied. No information furnished by
it to the Syndicate in connection with any of the Loan Documents
contains any material misstatement of fact or omits to state a
material fact necessary to make the statements contained therein
not misleading in light of the circumstances in which they were
made and as of the date made. Each financial forecast and
projection ("Forecast") prepared by it and furnished to the
Syndicate was based upon assumptions believed to be reasonable
by it as of the date of preparation; there has been no material
change in such assumptions or in the information on which such
assumptions are based which has not been disclosed in writing to
the Syndicate; it has no reason to believe that any such
Forecast as it relates to periods ending after its date of
preparation, when read in conjunction with the related
assumptions and other information disclosed in writing to the
Agent, fails to reflect its judgment as the most probable set of
economic conditions its planned courses of action given these
conditions, and such Forecast as it relates to periods already
ended, does not reflect results which are materially higher than
the anticipated actual results for such periods.
10.1.17. No Material Adverse Change. Since the date of its most recent
financial statements of Gerdau Steel furnished to the Syndicate,
there has been no change in any of its Business Affairs which
could have a Material Adverse Effect.
10.1.18. Compliance with Laws. It is in compliance in all material
respects with all Applicable Laws, non-compliance with which
could give rise to a Material Adverse Change. It has obtained
all Permits and made all Registrations necessary for the conduct
of its Business.
10.1.19. Unfunded Pension Liabilities. It does not have any unfunded
liabilities in respect of which it is in default arising out of
any employee pension plan or any other employee benefit plan to
which it is a party or by which it is bound, and all requisite
employer contributions required thereunder to date have been
made. There is no Award outstanding and no pending or,
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to its knowledge, threatened Litigation against any such plan,
any fiduciary thereof, or any Gerdau Canada Group Member with
respect thereto which could have a Material Adverse Effect.
10.1.20. Intellectual Property:
10.1.20.1. Identification. Schedule O:
10.1.20.1.1. contains a complete list of all
patents, subdivided into the
categories (i) developed and owned
by each Gerdau Canada Group Member,
(ii) otherwise owned by each Gerdau
Canada Group Member, (iii) licensed
for use by each Gerdau Canada Group
Member; and
10.1.20.1.2. contains a complete list of all
trade marks subdivided into the
categories (i) registered, owned
and used by each Gerdau Canada
Group Member, (ii) registered,
owned but not currently used by
each Gerdau Canada Group Member,
(iii) unregistered, owned and used
by each Gerdau Canada Group Member,
(4) licensed for use by each Gerdau
Canada Group Member.
10.1.20.2. Ownership.
10.1.20.2.1. except with respect to those rights
in Intellectual Property Rights
owned by third parties granted to a
Gerdau Canada Group Member pursuant
to a license as disclosed in
Schedule O, each Gerdau Canada
Group Member is the sole legal and
beneficial owner of the
Intellectual Property Rights set
out in Schedule O, free and clear
of all Liens whatsoever, except for
Permitted Liens; and
10.1.20.2.2. the Patent and Trade Xxxx
registrations and any copyright
registrations identified in
Schedule O are valid and
subsisting, and are in good
standing, all required filings with
any relevant governmental
intellectual property office have
been made and all required filing
fees have been paid.
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10.1.20.3. Licensing.
10.1.20.3.1. all licenses granted by each Gerdau
Canada Group Member permitting
third parties to use any
Intellectual Property Rights of any
Gerdau Canada Group Member (the
"Licences") are set out in Schedule
O;
10.1.20.3.2. all Licences are in full force and
effect unamended, each Gerdau
Canada Group Member party thereto
has duly observed and performed all
of its covenants and obligations
under each of the Licenses and
there has not been any default
under or breach of any Licenses by
the other parties thereto; and
10.1.20.3.3. no Gerdau Canada Group Member has
granted any Licences to any Person
other than the Licences disclosed
in Schedule O.
10.1.21. Taxes and Claims. It has:
10.1.21.1. delivered or caused to be delivered all Income Tax
and Sales Tax returns and other Tax returns which
are now due to the appropriate Governmental Body;
10.1.21.2. paid and discharged all lawful claims for labour,
material and supplies;
10.1.21.3. paid and discharged all Taxes payable by it;
10.1.21.4. made provision for appropriate amounts in respect
of any Taxes likely to be exigible in accordance
with generally accepted accounting principles;
10.1.21.5. withheld and collected all Taxes required to be
withheld and collected by it and remitted such
Taxes to the appropriate Governmental Body; and
10.1.21.6. paid and discharged all obligations incidental to
any trust imposed upon it by statute which, if
unpaid, might become a Lien upon any of the
Mortgaged Property,
and no assessment, appeal or claim is, as far as it is aware,
being asserted or processed with respect to such claim, Taxes or
obligations;
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10.1.22. Non-Default. It is not in default, in any respect which
materially and adversely affects its Business Affairs in respect
of any Award or demand of any Governmental Body or under any
indenture, mortgage, deed of trust, agreement or other
instrument to which it is a party or by which it is bound and no
Default or Event of Default has occurred and is continuing.
10.1.23. Solvency. Each Xxxxxx X.X. Group Member is Solvent.
10.1.24. Ownership of Subsidiaries. Attached as Schedule E is a chart, as
at the date of this Agreement, identifying all of the direct and
indirect Subsidiaries of Gerdau Steel as well as the number and
percentage of all issued Capital Stock held by Gerdau Steel,
directly or indirectly.
10.1.25. Year 2000 Problem. Each Gerdau Canada Group Member has carefully
reviewed and identified all material aspects of the Gerdau
Canada Group's Business which could be adversely affected by the
"Year 2000 Problem" (ie., the risk that computer applications
may be unable to recognize and properly perform date sensitive
functions for periods ending in the next millennium). The
software used in the Gerdau Canada Group's Business is to the
best of its knowledge Year 2000 Compliant. For this purpose,
"Year 2000 Compliant" means:
10.1.25.1. The software accepts, calculates, compares, sorts,
extracts, sequences, and otherwise processes date
inputs and date values (whether forward or
backward), and returns, generates, processes and
displays date output and date values (collectively,
the "Processes"), accurately, without
interruptions, and in a consistent manner (without
errors or omissions due to date selection),
regardless of the date used, and whether before, on
or after January 1, 2000 and whether or not the
dates are affected by leap years;
10.1.25.2. The software accepts and responds to two-digit
year-date input in a manner that resolves any
ambiguities as to the century in a defined,
predetermined, and appropriate manner; and
10.1.25.3. The software stores, processes and displays date
information (including in user interfaces and data
fields) in ways that are unambiguous as to the
determination of the century in a defined,
predetermined and appropriate manner.
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10.1.26. Employee Relations. There are no strikes, work stoppages or
controversies pending or, to its knowledge, threatened between
any Gerdau Canada Group Member and any of its employees
(including unions representing employees), other than employee
grievances arising in the ordinary course of business which
would not reasonably be likely to result in work stoppages, and
other than those disclosed in writing to the Lenders.
10.1.27. Investment Company; Public Utility Holding Company. No Gerdau
Canada Group Member is, and after giving effect to any Advance
no Gerdau Canada Group Member will be, an "investment company"
or a company "controlled" by an "investment company" within the
meaning of the United States Investment Company Act of 1940, as
amended. No Gerdau Canada Group Member is subject to regulation
under the United States Public Utility Holding Company Act of
1935, as amended.
10.1.28. Federal Reserve Regulations. No Gerdau Canada Group Member is
engaged, directly or indirectly, principally or as one of its
important activities, in the business of extending, or arranging
for the extension of, credit for the purpose of purchasing or
carrying margin stock (as defined in Regulation U). Neither the
borrowing of any Advance hereunder, nor the use of the proceeds
thereof, will (i) be used to purchase or carry any "margin
stock" within the meaning of Regulation U, or (ii) violate or be
inconsistent with the provisions of Regulation U. None of the
assets which are subject to any limitation on sale, pledge or
other restriction under the Loan Documents have been, or will
be, margin stock.
10.1.29. Chief Executive Office. The location of the chief executive
office (as that term is used in Section 7(4) of the Personal
Property Security Act (Ontario) of each Gerdau Canada Group
Member is listed in Schedule P.
10.1.30. Xxxxxx X.X. Trust Deeds: the execution, delivery and creation
and performance of obligations under each Loan Document by each
party thereto and the consummation of the transactions
contemplated in each Loan Document (including the creation of
the Security contemplated thereby) are permitted by, and do not
and will not violate or breach any obligation under or give rise
to any default, Potential Event of Default or Event of Default
(each as defined in each Xxxxxx X.X. Trust Deed) or similar such
event (howsoever described) under either Xxxxxx X.X. Trust Deed.
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10.2. Survival of Representations and Warranties
Each of the Borrowers covenants that the representations and
warranties made by it in this Article 10 shall be true and correct on each day
that this Agreement remains in force and effect, and all such representations
and warranties shall be deemed to be made on each such day with the same effect
as if such representations and warranties had been made and given on and as of
such day, notwithstanding any investigation made at any time by or on behalf of
any Lender; except that if any such representation and warranty is specifically
given in respect of information as of a particular date or particular period of
time and relates only to such information, then such representation and warranty
shall continue to be given as at such date or for such period of time until the
information to which it relates is updated at which point it shall continue to
be given as of such updated date or period of time, and so forth from time to
time.
10.3. Environmental Indemnity
Each Borrower hereby agrees forthwith on demand to indemnify and
save the Syndicate harmless, from and against any and all losses and expenses
which the Syndicate may at any time or from time to time suffer or incur as a
result of, in respect of, or arising out of any and all environmental claims or
liabilities of any kind, including, but not limited to, any claims in nuisance,
negligence, strict liability, or any other cause of action arising out of a
discharge of a Contaminant into the natural environment and (to the extent
permitted by applicable law) any fines or orders of any kind that may be levied
or made pursuant to an Environmental Law, relating to, arising out of or in
respect of any of the Business Assets of any Xxxxxx X.X. Group Member or the
Business and whether or not any of the Syndicate is in charge, management or
control of all or any part of any of the Business Assets of any Xxxxxx X.X.
Group Member or the Business. Each reference above in this Section 10.3 to any
of the Syndicate shall be deemed to include the Syndicate member and its
directors, officers, employees, agents, solicitors, accountants, consultants,
financial advisors and all other representatives, and the Agent shall be
constituted as the trustee of each such Person and shall hold and enforce their
rights under this Section 10.3 for their respective benefits.
ARTICLE 11.
COVENANTS
11.1. Affirmative Covenants
11.1.1. Borrowers' Covenants. So long as any Loan Obligations remain
payable or any Borrower may be or become entitled to any
Drawdown, unless the Majority Lenders otherwise consent in
writing, each Borrower covenants and agrees with the Syndicate
that it will, and (where the context so admits) it will ensure
that
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each Xxxxxx X.X. Group Member will, duly perform and comply with
each of the following affirmative covenants:
11.1.1.1. Punctual Payment. It shall pay or cause to be paid
all Loan Obligations falling due hereunder on the
dates and in the manner specified herein.
11.1.1.2. Conduct of Business. It shall do or cause to be
done all things necessary or desirable to maintain
its corporate existence, in its present
jurisdiction of incorporation, and to maintain its
corporate power and capacity, to own its properties
and assets, wherever located, and for it to carry
on its Business in each jurisdiction in which it
carries on Business or owns, leases, manages,
controls or operates Business Assets.
11.1.1.3. Preservation of Permits. It shall preserve and
maintain all Permits and Registrations necessary or
appropriate for it to carry on its Business or own,
lease, manage, control or operate its Business
Assets in each jurisdiction in which it carries on
Business or owns, leases, manages, controls or
operates Business Assets.
11.1.1.4. Compliance with Applicable Law and Contracts. It
shall comply with the requirements of all
Applicable Law and all obligations which, if
contravened, could give rise to a Lien over any of
the Mortgaged Property or have a Material Adverse
Effect and it shall comply with all insurance
policies and all contracts to which it is a party
or by which it or any of its Business Assets are
bound, non-compliance with which would, singly or
in the aggregate, have a Material Adverse Effect.
11.1.1.5. Accounting Methods. It shall maintain a system of
accounting which is established and administered in
accordance with GAAP.
11.1.1.6. Financial Records. It shall keep adequate records
and books of account in which accurate and complete
entries shall be made in accordance with GAAP
reflecting all transactions required to be
reflected by GAAP and keep accurate and complete
records of any property owned or leased by it.
11.1.1.7. Maintenance of Mortgaged Property. It shall
maintain its Mortgaged Property in good repair,
working order and condition (reasonable wear and
tear excepted) and from time to time make or cause
to be made all necessary and appropriate repairs,
renewals, replacements, additions and improvements
thereto.
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11.1.1.8. Payment of Taxes and Claims. It shall:
11.1.1.8.1. pay and discharge all lawful claims
for labour, material and supplies;
11.1.1.8.2. deliver or cause to be delivered
all Income Tax, Sales Tax and other
Tax returns when they are due to
the appropriate Governmental Body;
11.1.1.8.3. pay and discharge all Taxes payable
by it;
11.1.1.8.4. withhold and collect all Taxes
required to be withheld and
collected by it and remit such
Taxes to the appropriate
Governmental Body at the time and
in the manner required; and
11.1.1.8.5. pay and discharge all obligations
incidental to any trust imposed
upon it by statute which, if
unpaid, might become a Lien upon
any of the Mortgaged Property,
except that no such claim, Taxes (other than Taxes
required to be withheld and remitted pursuant to
the Income Tax Act (Canada), the Excise Tax Act
(Canada) or any provincial legislation of
comparable nature) or obligations need be paid,
collected or remitted if (i) it is being actively
and diligently contested in good faith by
appropriate proceedings, (ii) reserves considered
adequate by it and its Auditors shall have been set
aside therefor on its books, and (iii) such claim,
Taxes, or obligation shall not have resulted in a
Lien other than a Permitted Lien, all enforcement
proceedings shall have been stayed and appropriate
security shall have been given, if required, to
prevent the commencement or continuation of
proceedings.
11.1.1.9. Notice of Litigation and Other Matters. It shall as
soon as it becomes aware of the same, give notice
to the Agent of the following events:
11.1.1.9.1. the commencement of any Litigation
against or in any other way
relating adversely to it, or any of
its Business Assets which, if
adversely determined, could singly
or when aggregated with all other
such Litigation, have a Material
Adverse Effect;
11.1.1.9.2. any amendment of its constating or
other organizational documents;
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11.1.1.9.3. any development which has had or
could have a Material Adverse
Effect upon its Business; and
11.1.1.9.4. any Default or Event of Default, or
the occurrence or nonoccurrence of
any event which constitutes, or
which with the passage of time, the
giving of notice, the making of any
determination, or any combination
thereof, would constitute, a
material default under any other
agreement to which it is a party or
by which any of its Business Assets
may be bound, giving in each case
the details thereof and specifying
the action proposed to be taken
with respect thereto.
11.1.1.10. Delivery of Financial Statements and Information.
It shall deliver or cause to be delivered to the
Agent (in sufficient numbers to provide a copy for
the Agent and each of the Lenders):
11.1.1.10.1. as soon as practicable and in any
event within 90 days after the end
of each Fiscal Year, the annual
consolidated financial statements
of Gerdau Steel audited by its
Auditors and unaudited
consolidating financial statements
of each Gerdau Canada Group Member,
FLS and AmeriSteel for such Fiscal
Year, each prepared in accordance
with GAAP, together with a
Compliance Certificate for such
Fiscal Year, including a
computation of Free Cash Flow;
11.1.1.10.2. as soon as practicable and in any
event within 45 days after the end
of each Fiscal Quarter, the
unaudited quarterly consolidated
financial statements of Gerdau
Steel and consolidating financial
statements of each Gerdau Canada
Group Member, FLS and AmeriSteel
for the current Fiscal Year to such
Fiscal Quarter end, prepared in
accordance with GAAP (subject to
annual audit adjustments)
consisting in each case of a
balance sheet and statements of
income and retained earnings (or
deficit) and of changes in
financial position together with a
Compliance Certificate as at such
Fiscal Quarter end;
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11.1.1.10.3. within 90 days after the
commencement of each Fiscal Year,
the budget and business plan of the
Gerdau Canada Group for such Fiscal
Year and the following four Fiscal
Years, including (A) forecasts of
projected disposals (including
timing and amount thereof) on a
consolidated basis of Gerdau Steel
for each such Fiscal Year, (B)
projected balance sheets and
statements of income and cash flow
and retained earnings (or deficit)
and of changes in financial
position prepared on a quarterly
basis on a consolidated basis for
each Gerdau Canada Group Member and
(C) a qualitative analysis and
commentary from the management on
its proposed activities;
11.1.1.10.4. within 30 days of the close of each
calendar month end, a Borrowing
Base Report prepared as of such
calendar month end attaching (A) an
aged accounts receivable listing,
(B) an inventory listing and (C) an
aged accounts payable listing, in
each case prepared as at such
calendar month end;
11.1.1.10.5. within 45 days after receipt, a
properly completed annual
environmental questionnaire in such
form and requesting details of such
information as the Majority Lenders
may require;
11.1.1.10.6. within 90 days after the end of
each Fiscal Year, revised Schedules
to this Agreement reflecting any
changes occurring during such
Fiscal Year in the information
contained in such Schedules
required to ensure that no
representation or warranty
contained in this Agreement is
false or incorrect in any respect,
and thereafter each reference in
this Agreement to any such Schedule
shall be deemed to refer to such
revised Schedule as from the
earliest of (A) the last day of
such 90 day period or (B) the date
of delivery of such Schedule to the
Agent pursuant to this paragraph;
and
11.1.1.10.7. from time to time, such additional
information regarding any of its
Business Affairs as the Agent may
reasonably request.
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11.1.1.11. Information and Inspection. At any time and from
time to time it shall permit any officer, agent or
other representative of any Lender, at the expense
of Gerdau Steel, to examine and make copies of any
abstracts from the records and books of account of
any Gerdau Canada Group Member and to discuss any
of the Business Affairs of any Gerdau Canada Group
Member with any of its directors, Senior Officers
and with any of its Auditors or other consultants.
11.1.1.12. Arm's Length Arrangements. Only enter into an
agreement, transaction or other arrangement with an
Affiliate if such agreement, transaction or
arrangement is made on commercially reasonable
terms at fair market value and consistent with
commercial relations between Persons that deal at
arm's length.
11.1.1.13. Gerdau Steel Financial Tests. Ensure that the
following financial tests are complied with at all
times:
11.1.1.13.1. Current Ratio. Not permit the ratio
of (A) the consolidated current
assets of Gerdau Steel to (B) the
sum of (1) the consolidated current
liabilities of Gerdau Steel minus
(2) the current portion of Long
Term Debt to be less than 1.00:1 at
any time.
11.1.1.13.2. Debt Service Coverage Ratio. Not
permit the Debt Service Coverage
Ratio for any period of four
consecutive Fiscal Quarters to be
less than 1.1:1 at any time.
11.1.1.13.3. Interest Coverage Ratio. Not permit
the ratio for any period of four
consecutive Fiscal Quarters of (A)
the sum of (1) EBITDA minus (2) the
aggregate amount of all Capital
Expenditures incurred in respect of
such period to (B) Cash Interest
Expense to be less than 2.00:1 at
any time.
11.1.1.13.4. Total Debt/EBITDA Ratio. Not permit
the Total Debt/EBITDA Ratio for any
period of four consecutive Fiscal
Quarters ending on any Fiscal
Quarter end to exceed the ratio
limits set out below:
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Xxxxxx Xxxxxxx Ratio Limit
-------------- -----------
Each of the last 2 Fiscal Quarters of the
1999 Fiscal Year and the first 3 Fiscal
Quarters of the 2000 Fiscal Year 3.25:1
Each of the last Fiscal Quarter of the
2000 Fiscal Year and the first 3 Fiscal
Quarters of the 2001 Fiscal Year 2.75:1
Each of the last Fiscal Quarter of the
2001 Fiscal Year and the first 3 Fiscal
Quarters of the 2002 Fiscal Year 2.50:1
Each Fiscal Quarter ending on or after
December 31, 2002 2.00:1
11.1.1.13.5. Term Debt/Capitalization Ratio. Not
permit the ratio of (A) Long Term
Debt of Gerdau Steel to (B) the sum
of (1) Tangible Net Worth of Gerdau
Steel plus (2) Long-Term Debt of
Gerdau Steel to be greater than (I)
at any time before December 31,
2001, 0.55:1 and (II) at any time
on or after December 31, 2001,
0.40:1.
11.1.1.13.6. Tangible Net Worth. Not permit
Tangible Net Worth to be less than
the sum of (A) Cdn.$175,000,000
plus (B) 50% of the cumulative
consolidated net income of Gerdau
Steel earned after December 31,
1999 plus (C) 100% of the net
proceeds of each Rights Offering
(as defined in Section 3.3.6) at
any time.
11.1.1.14. Comply with Environmental Laws. It shall cause its
agents to (i) manage and operate all of its Real
Estate in material compliance with Environmental
Law, (ii) maintain all material Permits and
Registrations required under Environmental Law in
relation to all its Real Estate and remain in
material compliance therewith and (iii) store,
treat, transport, or otherwise dispose of all
Hazardous Substances owned, managed or controlled
by it in material compliance with Environmental
Law.
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11.1.1.15. Environmental Reports. It shall forthwith notify
the Agent of and:
11.1.1.15.1. promptly provide copies to the
Agent of each environmental report
prepared by or on its behalf in
respect of any of its Real Estate
and filed with any Governmental
Body pursuant to Environmental Law;
and
11.1.1.15.2. promptly make available for
inspection and review by the Agent
(i) each environmental report
prepared by or on its behalf in
accordance with its regular
environmental practices and
procedures and (ii) the report on
any environmental audit conducted
on any of its Real Estate;
11.1.1.16. Environmental Audits. If any information provided
to the Agent leads the Agent to believe on
reasonable grounds that a materially adverse
environmental liability may have arisen, or a
materially adverse change in an existing
environmental condition may have occurred, with
respect to any of its Real Estate, it shall
promptly undertake such environmental audit or
audits in scope, content, form and substance
satisfactory to the Agent by independent
consultants acceptable to the Agent as the Agent
may reasonably request and promptly provide copies
to the Agent of the report on such audit or audits;
provided that, if any Governmental Body has taken
or threatened any proceedings against it in respect
of such environmental liability or condition, then
it shall promptly undertake such audit as may be
reasonably necessary to defend against such
proceedings and properly analyze the nature and
extent of the environmental liability or condition
concerned and allow the Agent and its
representatives to review the resulting report on
such audit on a confidential basis.
11.1.1.17. Work Orders. It will promptly advise the Agent if
it receives notification from any Governmental Body
requiring any work, repairs, construction or
capital expenditures in respect of any of its Real
Estate having an aggregate compliance cost
exceeding Cdn. $200,000 or equivalent in foreign
currency, and it will forthwith commence and
diligently pursue such actions as may be required
to comply with such notification.
11.1.1.18. Lenders Copies. Upon request of the Agent, it will
promptly provide the Agent with copies of the
financial statements, reports, declarations,
forecasts, questionnaires, Certificates and other
information provided
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to the Agent pursuant to this Section 11.1.1 in
sufficient numbers to allow the Agent to distribute
one copy to each Lender.
11.1.1.19. Derivatives. Ensure, on or before November 19,
1999, that at least fifty percent (50%) of the
aggregate Outstanding Amount of all Advances under
the Term Facility are fully hedged to fixed rates
by interest rate swaps or other similar Derivatives
for the first three years of the Term Facility and
at least twenty-five percent (25%) of the aggregate
Outstanding Amount of all Advances under the Term
Facility are fully hedged to fixed interests by
interest rate swaps or other similar Derivatives
for the full term of the Term Facility.
11.2. Agent and Agent Entitled to Perform Covenants
If a Default or an Event of Default has occurred and is continuing
and if any Xxxxxx X.X. Group Member fails to perform any covenant contained in
this Agreement or in any other provision of any Loan Document, the Agent may,
but shall be under no obligation to, perform any such covenant capable of being
performed by such Xxxxxx X.X. Group Member and if any such covenant requires the
payment of money the Agent may make such payments. All sums so expended by the
Agent shall be deemed to be a Prime Rate Loan (if the expenditure was made in
Canadian dollars) or a Base Rate Loan (if the expenditure was made in United
States dollars) under the Revolver Facility to Gerdau Steel and shall be repaid
accordingly.
11.3. Negative Covenants of the Borrowers
11.3.1. Borrowers' Negative Covenants. So long as any Loan Obligations
remain payable or any Borrower may be or become entitled to
obtain any Drawdown, unless the Majority Lenders otherwise
consent in writing, each Borrower covenants and agrees with the
Syndicate that it will, and (where the context so admits) it
will ensure that each Gerdau Canada Group Member will, duly
perform and comply with each of the following negative
covenants:
11.3.1.1. Sale of Assets. Not dispose of any of its Business
Assets, except for (i) dispositions made in the
ordinary course of carrying on its day to day
business for cash or Cash Equivalent Investments
(A) to Person's with whom it deals at arm's length
at fair market value, (B) to an Affiliate in
accordance with Subsection 11.1.1.12 or (C) to any
other Gerdau Canada Group Member in accordance with
Subsection 11.3.1.12 or (ii) disposals of assets in
any period of four consecutive Fiscal Quarters
having an aggregate book value of up to
Cdn.$10,000,000.
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11.3.1.2. Negative Pledge. Not create, incur, assume or
otherwise become liable upon or permit to exist any
Lien on, against or with respect to any part of its
Business Assets, except for Permitted Liens.
11.3.1.3. No Merger; Amalgamations; etc. Not enter into any
merger, amalgamation, arrangement, consolidation,
liquidation, winding-up, dissolution or similar
transaction, except that it may liquidate or
dissolve voluntarily into and may merge,
consolidate or amalgamate with and into any other
Gerdau Canada Group Member so long as no Default or
Event of Default has occurred and is continuing or
would occur after giving effect thereto.
11.3.1.4. Nature of Business. Not change the nature of the
Gerdau Canada Group's Business or cease to carry on
the Gerdau Canada Group's Business or any
substantial part thereof; and not engage in any new
business other than a business principally engaged
in a Core Related Business.
11.3.1.5. Limitation on Investments. Not make any new
Investments, other than:
11.3.1.5.1. Cash Equivalent Investments;
11.3.1.5.2. Investments in Wholly-Owned
Subsidiaries so long as:
(A) such Wholly-Owned Subsidiaries
are engaged in a Core Business
in Canada or the continental
United States of America; and
(B) such Wholly-Owned Subsidiaries
have granted Security to the
Syndicate in form and
substance satisfactory to the
Agent;
11.3.1.5.3. Investments of up to Cdn.$2,000,000
in Xxxxxxx Steel; and
11.3.1.5.4. Subordinated Debt in Gerdau USA to
fund the purchase of FLS shares
pursuant to the FLS shareholder
agreement in an aggregate amount
not to exceed US$15,500,000.
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11.3.1.6. Redemptions and Distributions; Dividends. Not
declare, set apart for payment or pay any dividends
or other distributions to shareholders that are not
Gerdau Canada Group Members on any of its Capital
Stock or redeem, retract, purchase for cancellation
or retire or otherwise acquire for value in any
manner any of its Capital Stock that is not held by
Gerdau Canada Group Members or otherwise reduce its
capital in any manner.
11.3.1.7. Capital Expenditures. Allow Capital Expenditures
for the entire Gerdau Canada Group in any Fiscal
Year to exceed the Capital Expenditure Limit for
that Fiscal Year.
11.3.1.8. Operating Lease Payments. Incur operating lease
obligations requiring payments in excess of
Cdn.$1,500,000 in the aggregate for the entire
Gerdau Canada Group during any period of four
consecutive Fiscal Quarters.
11.3.1.9. Derivatives. Not enter into any Derivative except
for the purpose of paying or hedging its actual or
anticipated normal business operating expenses or
hedging its interest rate or currency exposure on
its long term Debt.
11.3.1.10. No Continuance. Not continue under the laws of any
other jurisdiction.
11.3.1.11. Fiscal Year. Not change its Fiscal Year.
11.3.1.12. Subsidiaries.
11.3.1.12.1. Not dispose of any Capital Stock in
any Subsidiary, or permit any
Subsidiary to issue any Capital
Stock or rights to acquire Capital
Stock to any Person except for
disposals or issues of Capital
Stock to (A) another Gerdau Canada
Group Member or (B) in the case of
any Subsidiary that is a limited
partnership, of non-Voting Capital
Stock in such Subsidiary to any
other Person.
11.3.1.12.2. Not acquire any new Subsidiary (a)
that is a body corporate unless
such new Subsidiary becomes a
Wholly-Owned Subsidiary on
acquisition or (b) that is a
limited or general partnership,
unless all of the Voting Capital
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Stock in such Subsidiary will be
owned by another Gerdau Canada
Group Member on acquisition.
11.3.1.12.3. Not dispose of any of its Business
Assets to any Subsidiary of it, or
any other Gerdau Canada Group
Member, except on commercially
reasonable terms at fair market
value consistent with commercial
relations between Persons that deal
at arm's length.
11.3.1.13. Securitizations. Not dispose of any account, note
receivable or accounts receivable, with or without
recourse, except if such disposal arises from a
dealing in the ordinary course of business with the
account debtor which owes the relevant obligation.
11.3.1.14. Other Benefit Plans. With respect to any benefit
plan referred to in Section 10.1.19.3, not incur
any accumulated funding deficiency or other
unfunded liability in excess of $600,000 in the
aggregate.
11.3.1.15. Change in Control. Not permit any Capital Stock in
Gerdau Steel to be owned and Controlled by any
Person other than Xxxxxx X.X.
11.3.1.16. Financial Assistance. Not provide financial
assistance, by means of Investments, guarantees,
provision of security or otherwise, to any Person
other than to another Gerdau Canada Group Member.
11.3.1.17. Management Contracts. Pay any amount to any
Affiliate under any management agreement or service
contract or for any other reason whatsoever.
ARTICLE 12.
EVENTS OF DEFAULT AND REMEDIES
12.1. Events of Default
The occurrence of any one or more of the following events (each such
event being herein referred to as an "Event of Default") shall constitute a
default under this Agreement:
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12.1.1. Non-Payment of Principal or Interest. Any Borrower fails to pay
any principal or interest amount outstanding hereunder when due.
12.1.2. Non-Payment of Other Amounts. Any Borrower fails to pay any fee
or other amount payable hereunder when due and such failure
continues unremedied for more than three days.
12.1.3. Misrepresentation. Any representation or warranty made or deemed
made by any Gerdau Canada Group Member or Xxxxxx X.X. in any
Loan Document is found to have been false or incorrect in any
material respect.
12.1.4. Financial Tests. Any financial test contained in Section
11.1.1.13 or in the Xxxxxx X.X. Guarantee is not complied with.
12.1.5. Breach of Other Covenants. Any Xxxxxx X.X. Group Member fails to
perform or comply with any provision or obligation contained in
any Loan Document to which it is a party in any material respect
and such failure continues unremedied for a period of 15 Banking
Days after any Borrower or Xxxxxx X.X. knows or ought to have
known of such failure (other than those referred to in
paragraphs 12.1.1, 12.1.2, 12.1.3 or 12.1.4 above).
12.1.6. Cross-Default. Any Gerdau Canada Group Member defaults under any
one or more agreements, documents or instruments relating to
Indebtedness in an aggregate amount exceeding Cdn.$25,000,000
(or the Equivalent Amount in foreign currency). AmeriSteel or
FLS defaults under any one or more agreements, documents or
instruments relating to Indebtedness in an aggregate amount
exceeding US$10,000,000 (or the Equivalent Amount in other
currency). Xxxxxx X.X. defaults under any one or more
agreements, documents or instruments relating to Indebtedness in
an aggregate amount exceeding US$25,000,000 (or the Equivalent
Amount in other currency).
12.1.7. Unsatisfied Judgments. Any one or more Awards for the payment of
money in an aggregate amount exceeding Cdn.$1,000,000 (or the
Equivalent Amount in foreign currency) are rendered against any
Xxxxxx X.X. Group Member and such Awards shall remain
unsatisfied or unstayed for more than 10 Banking Days.
12.1.8. Enforcement of Liens. Any one or more Persons entitled to any
Liens on any property of any Gerdau Canada Group Member,
AmeriSteel or FLS having an aggregate value exceeding
Cdn.$1,000,000 or US$5,000,000 in the case of AmeriSteel take
possession of such property or any one or
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more seizures, executions, garnishments, sequestrations,
distresses, attachments or other equivalent processes are issued
or levied against any property of any Xxxxxx X.X. Group Member
having an aggregate value exceeding Cdn.$1,000,000 or
US$5,000,000 in the case of AmeriSteel and such property is not
released within 10 Banking Days or such shorter period as would
permit such Collateral to be sold, foreclosed upon or forfeited
thereunder.
12.1.9. Impossibility. Any Change in Law occurs which has given rise or
could reasonably be expected to give rise to a Material Adverse
Change.
12.1.10. Insolvency. Any Xxxxxx X.X. Group Member does not generally pay
its debts as they become due or admits its inability to pay its
debts generally or makes a general assignment for the benefit of
creditors or commits an act of bankruptcy (within the meaning of
the Bankruptcy and Insolvency Act (Canada)) or any proceedings
are instituted by or against any Xxxxxx X.X. Group Member
seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding-up, reorganization, compromise,
arrangement, adjustment, protection, relief or composition of it
or of its debts under any Applicable Law relating to bankruptcy,
insolvency or reorganization or relief of debtors or other
similar matters or seeking the appointment of a receiver,
manager, receiver and manager, trustee, custodian or other
similar official for it or for any substantial part of its
Business Assets (excluding proceedings being contested by such
Xxxxxx X.X. Group Member in good faith by appropriate
proceedings so long as enforcement remains stayed, none of the
relief sought is granted (either on an interim or permanent
basis) and such proceedings are dismissed within 15 days of
their commencement); or any Xxxxxx X.X. Group Member takes
corporate action to authorize any of the actions set forth above
in this paragraph.
12.1.11. Cessation of Business. Any Xxxxxx X.X. Group Member ceases or
suspends or threatens to cease or suspend all or a Substantial
Portion of its business.
12.1.12. Security Imperiled. If any Litigation is commenced which, if
determined adversely to any Xxxxxx X.X. Group Member or to the
rights of the Syndicate, could reasonably be expected to give
rise to a Material Adverse Change, or any Xxxxxx X.X. Group
Member or any other person party to any Loan Document denies
that it has any or further obligations thereunder.
12.1.13. Material Adverse Change. Any Material Adverse Change occurs.
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12.1.14. Change of Ownership. Any Person, or more than one Person acting
in concert, (other than Xxxxxx X.X.) acquires ownership or
Control of any Capital Stock of Gerdau Steel, unless the
Majority Lenders consent to such acquisition. Any Gerdau Canada
Group Member (other than Gerdau Steel) ceases to be a
Wholly-Owned Subsidiary of Gerdau Steel or Gerdau Steel ceases
to own and Control, directly or indirectly, all of the Capital
Stock of any Gerdau Canada Group Member that is a general or
limited partnership. Gerdau Steel ceases to own and Control
directly or indirectly, at least eighty-eight percent (88%) of
the Voting Capital Stock of FLS or FLS ceases to own and Control
at least eighty-five percent (85%) of the Voting Capital Stock
of AmeriSteel.
12.1.15. Condemnation. Any court, government or governmental agency shall
condemn, seize, expropriate or otherwise appropriate, or take
custody or control of, all or any Substantial Portion of the
property of any Xxxxxx X.X. Group Member which, when taken
together with all other property of any Xxxxxx X.X. Group Member
so condemned, seized, expropriated, appropriated, or taken
custody or control of, during the twelve-month period ending
with the month in which any such action occurs, constitutes a
Substantial Portion.
12.2. Remedies Upon Default
Upon the occurrence of any Event of Default, the Agent may (or, at
the direction of the Majority Lenders, shall) do any one or more or all of the
following:
12.2.1. declare the whole or any part of the unutilized portion (if any)
of the Credit Facilities to be terminated or reduced, whereupon
the Lenders shall not be required to make any further Drawdowns
or permit any further Conversions or Rollovers (other than
conversions of maturing Bankers' Acceptances to Prime Rate Loans
and LIBOR Loans to Base Rate Loans);
12.2.2. declare all or any item or part of the Loan Obligations to be
immediately due and payable, whereupon they shall become so due
and payable;
12.2.3. suspend any right of a Borrower under any Loan Document;
12.2.4. demand payment under any guarantee comprised in the Security;
12.2.5. realize upon all or part of the Liens constituted under the
Security; and
12.2.6. take any other action, commence any other suit, action or
proceeding or exercise such other right as may be permitted at
law or in equity (whether or not provided
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for herein or in any other Loan Document) at such times and in
such manner as the Agent may consider expedient,
all without, except as may be required by Applicable Law, any additional notice,
presentment, demand, protest, noting of protest, dishonour or any other action.
The rights of the Syndicate hereunder are cumulative and are in addition to and
not in substitution for any other rights or remedies provided by Applicable Law
or by the Security.
12.3. Payment of Bankers' Acceptances
Immediately upon the Agent making a declaration pursuant to Section
12.2.2, the Relevant Borrower shall, without the necessity of further act or
evidence, be and become unconditionally obligated to deposit with the Agent the
aggregate face amount of all Bankers' Acceptances then outstanding for the
Relevant Borrower's account and the Relevant Borrower hereby authorizes each
Lender to debit any then existing credit in its accounts with the amount
required to make such payment to the Agent notwithstanding that any such
Bankers' Acceptances may be held by the Lender in its own right at maturity.
Amounts paid to the Agent pursuant to this Section 12.3 shall bear interest at
the rate offered by the Agent on deposits of similar amounts for similar terms.
All such amounts, together with interest earned thereon, shall be applied
against and shall reduce to the extent of such amounts the Relevant Borrower's
obligations to pay amounts then or thereafter payable under Bankers' Acceptances
at the respective times such amounts become so payable. Any remaining cash being
held by the Agent pursuant to this Section 12.3 shall be applied against any
other Loan Obligations and any excess thereafter shall be released to the
Relevant Borrower or its assigns, but only after all Bankers' Acceptances have
matured and all Loan Obligations have been satisfied in full.
12.4. Lenders' Right of Advance
In the event that a Borrower fails to comply with its Loan
Obligations under Section 12.3 or 7.6.8, each Lender may, at such time, in its
discretion, make an Advance by way of a Prime Rate Loan under the relevant
Credit Facility on behalf of the Relevant Borrower in an amount not exceeding
its participation in the Outstanding Amount of all outstanding Bankers'
Acceptances or the Outstanding Amount of all outstanding Standby Credits under
such Credit Facility (even if such Advance results in such Lender's
participation in the aggregate Outstanding Amount of all Loans under any Credit
Facility exceeding its Revolver Commitment or Term Commitment, as applicable)
and hold the proceeds of such Loan as security for the obligations of the
Relevant Borrower to indemnify such Lender in respect of such Bankers'
Acceptances on their maturity to be applied in accordance with Section 12.3 or
such Standby Credits under Section 7.6.8.
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12.5. Distributions
All distributions under or in respect of any of the Security shall
be held by any Lender on account of the Loan Obligations without prejudice to
any claim by any Lender for any deficiency after such distributions are received
by any Lender and each Borrower shall remain liable for any such deficiency. All
such distributions may be applied to such part of the Loan Obligations as each
Lender may see fit in its sole discretion, and each Lender may at any time
change any appropriation of any such distributions or other moneys received by
it and reapply the same against any other part of the Loan Obligations as each
Lender may see fit, notwithstanding any previous application.
ARTICLE 13.
THE AGENT AND ADMINISTRATION
OF THE CREDIT FACILITIES
13.1. Appointment and Authorization
Each Lender irrevocably appoints and authorizes the Agent to take
such actions as its agent under each Loan Document to which the agent is party
and to exercise such rights under each such Loan Document as are specifically
delegated to the Agent by the terms thereof, together with such rights as are
reasonably incidental thereto.
13.2. Declaration of Agency
The Agent declares that it shall hold the Security, the Collateral
charged thereby and the rights granted to it under each other Loan Document for
its own benefit and in its capacity as agent for the ratable benefit of the
Lenders. The rights vested in the Agent by any Loan Document shall be performed
by the Agent in accordance with this Article Fourteen.
13.3. Protection of Agent
The Agent shall not be liable for any action taken or omitted to be
taken by it under any Loan Document or in connection therewith, except for its
own gross negligence or willful misconduct.
13.4. Interest Holders
The Agent may treat each Lender as the holder of all of the
interests of such Lender in respect of the Credit Facilities until a duly
executed and delivered Loan Transfer Agreement signed by such Lender and the
Transferee, completed in form and substance satisfactory to the Agent, has been
delivered to the Agent and the Agent has been paid its required processing fee
for such loan transfer.
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13.5. Consultation with Professionals
The Agent may engage and consult with the Lenders' Counsel,
accountants, consultants, financial advisors and other experts and the Agent
shall not be liable for any action taken or not taken or suffered by it in good
faith and in accordance with the advice and opinion of the Lenders' Counsel or
such accountants, consultants, financial advisors or other experts.
13.6. Documents
The Agent shall not be under any duty or obligation to examine,
enquire into or pass upon the validity, effectiveness or genuineness of any Loan
Document or any other agreement, document, instrument, or communication
furnished pursuant to or in connection with any Loan Document, and the Agent
shall be entitled to assume that the same are valid, effective and genuine, have
been signed or sent by the proper parties and are what they purport to be.
13.7. Agent and its Subsidiaries and Affiliates
With respect to its Revolver Commitment, its Term Commitment and
those portions of the Credit Facilities made available by it, the Agent shall
have the same rights hereunder as any other Lender and may exercise the same as
though it were not the Agent and the Agent and its Subsidiaries and affiliates
may accept deposits from, lend money to and generally engage in any kind of
business with any Gerdau Canada Group Member and its Affiliates and Persons
doing business with any Gerdau Canada Group Member or any of its Affiliates as
if it were not the Agent and without any obligation to account therefor.
13.8. Responsibility of the Agent
The obligations of the Agent to the Lenders under each Loan Document
are only those expressly set forth in such Loan Document, subject as otherwise
provided in this Article Thirteen. The Agent shall not have any fiduciary
obligation to any Lender. The Agent shall only have those contractual
obligations expressly set forth in each Loan Document. The Agent shall not have
any duty or obligation to investigate whether a Default or an Event of Default
has occurred. The Agent shall be entitled to assume that no Default or Event of
Default has occurred and is continuing, unless any officer of the Agent charged
with the administration of the Loan Documents has actual knowledge or has been
notified by a Borrower of such fact or has been notified by a Lender that such
Lender considers that a Default or Event of Default has occurred and is
continuing, such notification to specify in detail the nature thereof.
13.9. Action by the Agent
13.9.1. The Agent shall be entitled to use its discretion with respect
to exercising or refraining from exercising any rights which may
be vested in it by and with respect to taking or refraining from
taking any action which it may be able to take under or in
respect of any Loan Document, unless the
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Agent has been instructed by the Required Lenders to exercise
such rights or to take or refrain from taking such action;
provided, however, that the Agent shall not release or postpone
any guarantee of any Xxxxxx X.X. Group Member or release,
discharge or subordinate any Lien created under any Security
without the consent of all the Lenders, unless expressly
permitted or required to do so by the provisions of any Loan
Document. The Agent shall not incur any obligations under or in
respect of any Loan Document with respect to anything which it
may do or refrain from doing in the reasonable exercise of its
judgment or which may seem to it to be necessary or desirable in
the circumstances, except for its gross negligence or willful
misconduct.
13.9.2. The Agent shall in all cases be fully protected in acting or
refraining from acting under any Loan Document in accordance
with the instructions of the Required Lenders, and any action
taken or failure to act pursuant to such instructions shall be
binding on all Lenders.
13.9.3. Notwithstanding anything else herein contained, the Agent may
refrain from doing anything which would or might in its opinion
be contrary to any Applicable Law or which would or might
otherwise render it liable to any Person and may do anything
which is, in its opinion, necessary to comply with any
Applicable Law.
13.9.4. Without prejudice to the provisions of any other Loan Document,
the Agent shall have the right, but not the obligation to insure
any of the Collateral or to require any other Person to maintain
any such insurance and it shall not be responsible for any
losses and expenses which may be suffered by any Person as a
result of the lack of or inadequacy or insufficiency of any such
insurance.
13.9.5. The Agent shall have the right to institute, prosecute and
defend any Litigation affecting the Agent, the Collateral or the
Security and to compromise any matter or difference or submit
any such matter or difference to arbitration and to compromise
or compound any debts owing to the Agent as agent or any other
claims against it as such agent upon being provided with such
evidence as shall seem sufficient to the Agent.
13.9.6. The Agent shall have the right to give or enter into any
obligation as it shall, with the approval of the Required
Lenders and subject to all of the provisions of the Loan
Documents, think fit in relation to the Collateral or the
Security.
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13.9.7. Notwithstanding Subsection 13.9.1, the Agent may refrain from
acting in accordance with any instructions of the Required
Lenders to begin any Litigation, or to take management or
control of any Collateral, arising out of or in connection with
any Loan Document until it has received such security as it may
require (whether by way of payment in advance or otherwise) for
all losses and expenses and disbursements which it will or may
expend or incur in complying with such instructions.
13.9.8. Where the Agent is obliged by the provisions of this Article
Thirteen to give any notice or notification "promptly" or
"forthwith", if it gives such notice or notification within two
Banking Days of an officer of it charged with the administration
of this Agreement becoming aware of the subject matter of such
notice or notification, it shall be deemed to have given such
notice or notification promptly or forthwith.
13.10. Notice of Events of Default
In the event that an officer of the Agent charged with the
administration of this Agreement is notified of any Default or Event of Default,
the Agent shall promptly notify the Lenders, and, subject to Section 13.9, the
Agent shall take such action and assert such rights under the Loan Documents as
the Majority Lenders shall request in writing, and the Agent shall not be
subject to any liability by reason of its acting pursuant to any such request.
Prior to receiving any instructions from the Required Lenders in respect of such
Default or Event of Default, the Agent may, but shall not be obliged to, take
such action or assert such rights (other than those matters requiring unanimous
Lender consent under any other provision of this Agreement) as it deems in its
discretion to be advisable for the protection of the Lenders, except that, if
the Required Lenders have instructed the Agent not to take such action or assert
such rights, in no event shall the Agent act contrary to those instructions.
13.11. Responsibility Disclaimed
The Agent in such capacity shall not be under any obligation
whatsoever:
13.11.1. to any Gerdau Canada Group Member as a consequence of any
failure or delay in the performance by, or any breach by, any
Lender of any of its obligations under any Loan Document;
13.11.2. to any Lender, as a consequence of any failure or delay in
performance by, or any breach by, any Xxxxxx X.X. Group Member
of any of its obligations under any Loan Document; or
13.11.3. to any Lender for any statements, representations or warranties
in any Loan Document or any other agreement, document or
instrument contemplated by any Loan Document or in any other
information
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provided pursuant to any Loan Document or any other agreement,
document or instrument contemplated by any Loan Document or for
the validity, effectiveness, enforceability or sufficiency of
any Loan Document or any other agreement, document or instrument
contemplated thereby.
13.12. Indemnification
13.12.1. Each of the Lenders severally agrees to indemnify the Agent (to
the extent not reimbursed by the Relevant Borrower on demand)
pro rata according to their respective Rateable Shares from and
against any and all losses and expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by
or asserted against the Agent in any way relating to or arising
out of any Loan Document or any other agreement, document or
instrument contemplated thereby or any action taken or omitted
by the Agent under any Loan Document or any agreement, document
or instrument contemplated thereby, except that no Lender shall
be liable to the Agent for any portion of such losses and
expenses or disbursements resulting from the gross negligence or
willful misconduct of the Agent.
13.12.2. The Agent may indemnify itself out of the Collateral charged by
the Security, or any funds received by the Agent pursuant to
Section 13.20 against all of the losses and expenses or
disbursements suffered or incurred by the Agent in connection
with any matter or thing done or omitted to be done in any way
relating to any Loan Document.
13.13. Protection of Employees, Etc.
Each reference in Sections 13.1, 13.3, 13.9, 13.10, 13.11, 13.12,
13.15 and 13.20 to the Agent shall (to the extent the context so admits) be
deemed to include the Agent and its directors, officers, employees, agents,
solicitors, accountants, consultants, financial advisors, other experts and all
other representatives and the Agent shall be constituted as agent and bare
trustee of each such Person and shall hold and enforce their rights under those
Sections for their respective benefits.
13.14. Credit Decision
Each Lender represents and warrants to the Agent that:
13.14.1. in making its decision to enter into this Agreement and to make
its Revolver Commitment, Term Commitment and its portion of the
Credit Facilities available to the Borrowers, it has
independently taken whatever steps it considers necessary to
evaluate the financial condition and affairs of each Xxxxxx X.X.
Group Member and that it has made an independent
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credit judgment without reliance upon any information furnished
by the Agent; and
13.14.2. so long as any portion of the Credit Facilities is being
utilized by a Borrower, it will continue to make its own
independent evaluation of the financial condition and affairs of
each Gerdau Canada Group Member.
13.15. Replacement Agent and Reference Lenders
13.15.1. The Agent (a "Resigning Agent") may resign at any time by giving
written notice thereof to the Lenders and Gerdau Steel. Such
resignation will not be effective until a replacement agent is
appointed. Upon receipt of notice of any such intended
resignation, the Majority Lenders and the Borrowers shall have
the right to appoint a replacement to the Resigning Agent who
shall be one of the Lenders. If no replacement to the Resigning
Agent shall have been so appointed and shall have accepted such
appointment within 15 days of receipt of such notice, the
Lenders (excluding the Resigning Agent) shall within the
following 15 days appoint a replacement who may, but need not
be, a Lender. If the Lenders fail to appoint a replacement to
the Resigning Agent within such 15 day period, without
limitation of its rights under this Section, the Resigning Agent
may, on behalf of the Lenders, appoint a replacement Agent which
shall be a financial institution organized under the laws of
Canada (or a Province) which has (or whose Holding Body
Corporate has) combined capital and reserves in excess of Cdn
$1,000,000,000 or the Equivalent Amount in foreign currency and
has an office in Toronto. Upon the resignation of a Resigning
Agent, the replacement administration agent shall thereupon
succeed to and become vested with all the rights and obligations
of the Resigning Agent and the Resigning Agent shall be
discharged from its obligations under the Loan Documents. A
replacement administration agent shall evidence its acceptance
of appointment hereunder by signing and delivering a counterpart
of this Agreement. After any Resigning Agent's resignation or
removal hereunder as Agent the provisions of this Article
Thirteen shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was
acting as Agent.
13.15.2. The Agent may nominate up to three Lenders to act as Reference
Lenders under this Agreement. Any Reference Lender may resign at
any time by giving notice thereof to the Agent. Upon receipt of
such notice, the Agent may appoint a replacement Reference
Lender who shall be one of the Lenders.
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13.15.3. The Swing Line Lender may resign at any time by giving notice
thereof to the Agent. Upon receipt of such notice, the Majority
Lenders shall appoint a replacement Swing Line Lender who shall
be one of the Lenders.
13.16. Delegation
With the prior approval of the Majority Lenders, such approval not
to be unreasonably withheld, the Agent shall have the right to delegate any of
its rights, duties or obligations under the Loan Documents as Agent to any other
Person upon such terms and conditions as the Agent may think fit and the Agent
shall not be bound to supervise the proceedings or be in any way responsible for
any obligations or losses and expenses incurred by reason of any misconduct or
default on the part of any such delegate.
13.17. Required Lender Decisions
Where the Required Lenders are required to consent to any act or
thing under any Loan Document, the Agent shall ask all Lenders for such consent
to do any such act or thing. The foregoing shall not limit the right of the
Required Lenders to consent to any such act or thing. A copy of such consent
shall be sent by the Agent to all the Lenders.
13.18. Waivers and Amendments
13.18.1. The rights of each Lender under each Loan Document shall be
cumulative and not exclusive of any rights which each Lender
would otherwise have, and no failure or delay by any Lender in
exercising any right shall operate as a waiver of it nor shall
any single or partial exercise of any right preclude its further
exercise or the exercise of any other right. Subject as
otherwise provided in Subsections 13.18.2 and 13.18.3, any term,
covenant, agreement, or condition of any Loan Document may only
be amended with the consent of the Relevant Borrower and the
Majority Lenders or compliance therewith may only be waived
(either generally or in a particular instance and either
retroactively or prospectively) by the Majority Lenders.
13.18.2. Without the prior consent of every Lender, no amendment, waiver
or other action referred to in Subsection 13.18.1 shall:
13.18.2.1. increase the aggregate amount of any Credit
Facility, the amount or term of any of the Revolver
Commitments, the Term Commitments or the proportion
represented by the Rateable Share of any Lender;
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13.18.2.2. postpone or defer the time for the payment of
the principal of or interest on any Advance, any
Stamping Fee, Commitment Fee or any other amount
payable hereunder;
13.18.2.3. decrease the rate or amount or change the
currency of any principal, interest or fees
(including Stamping Fees and Commitment Fee)
payable hereunder or the requirement of pro rata
application in accordance with each Lender's
Rateable Share of all amounts received by the
Agent in respect of each Credit Facility;
13.18.2.4. change the definition of "Required Lenders" or
"Majority Lenders";
13.18.2.5. amend Sections 13.22, 13.25 or this Section
13.18; or
13.18.2.6. release or postpone any guarantee of any Gerdau
Canada Group Member under any Loan Document or
release, discharge or subordinate any Lien
created under the Security except as otherwise
expressly permitted or required by the
provisions of any Loan Document.
13.18.3. No amendment or waiver of any provision of any Loan Document
shall affect any of the rights or obligations of the Agent,
the Swing Line Lender or Issuing Bank under any Loan Document
without the prior consent of the Agent, Swing Line Lender or
Issuing Bank.
13.19. Determination by Agent
13.19.1. Good Faith. Any determination to be made by the Agent under
any Loan Document shall be made by the Agent in good faith
and, if so made, shall be conclusive and binding on all
parties, absent manifest error.
13.19.2. Certificate of the Agent as to Rates. A certificate of the
Agent certifying any amount or interest or discount rate shall
be conclusive and binding on the parties hereto for all
purposes, absent manifest error. No provision hereof shall be
construed so as to require the Agent to issue a certificate at
any particular time.
13.19.3. Notification of Rates. Each Reference Lender and Swing Line
Lender (if it is not the same Person as the Agent) shall
promptly notify the Agent of each interest rate that is
required to determine any rate of interest pursuant to this
Agreement. Promptly following receipt of each such
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notice,or promptly after determination if the Agent and the
Reference Lender or Swing Line Lender is the same Person, the
Agent shall promptly notify the Lenders of each interest rate
the Agent is required to determine and report to the Lenders
pursuant to this Agreement.
13.20. Interlender Procedure for Making Advances
13.20.1. Subject to the terms and conditions of this Agreement, each
Credit Facility shall be available to the Relevant Borrower as
follows: upon receipt by the Agent of a Borrowing Request, the
Agent will promptly notify each Lender of the Agent's receipt
of such notice and of such Lender's Rateable Share of such
Borrowing. In the case of an issue of Bankers' Acceptances,
the Agent will round allocations amongst the Lenders to ensure
that each Bankers' Acceptance issued has a face amount which
is a whole number multiple of Cdn.$100,000 (and such rounded
allocations shall constitute the Lenders' respective Rateable
Shares for the purposes of this Agreement). Each Lender will
make its Rateable Share of each Borrowing or its Acceptance
Proceeds available to the Agent by paying, no later than 11:00
a.m. (Toronto time) on the Borrowing Date requested by the
Borrower, its Rateable Share of such Advance or such
Acceptance Proceeds to the Agent's Accounts. The Agent will
make such funds available, upon receipt, to the Relevant
Borrower on the Borrowing Date by bank transfer to the
Relevant Borrower's Accounts.
13.20.2. The obligations of the Agent under this Section 13.20 shall be
limited to taking such steps as are commercially reasonable to
implement the instructions described in Subsection 13.20.1,
and the Agent shall not be liable for any losses and expenses
which may be incurred or suffered by the Relevant Borrower and
occasioned by the failure or delay of funds to reach the
designated destination.
13.20.3. Unless the Agent has been notified by a Lender within two
Banking Days prior to the Borrowing Date requested by a
Borrower that such Lender will not make available to the Agent
its Rateable Share of such Borrowing or its Acceptance
Proceeds, the Agent may assume that such Lender has made such
portion of the Borrowing or such Acceptance Proceeds available
to the Agent on the Borrowing Date in accordance with the
provisions hereof, and the Agent may, in reliance upon such
assumption, make available (to the extent applicable) to the
Relevant Borrower on such date a corresponding amount. If the
Agent has made such assumption, to the extent a Lender has not
so made its Rateable Share of the Borrowing or its Acceptance
Proceeds available to the Agent, such Lender agrees to pay to
the Agent forthwith on demand, to the extent that such amount
is not
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recovered from the Relevant Borrower within seven days of
demand (without in any way obligating the Agent to take legal
action with respect to such collection), such Lender's
Rateable Share of the Borrowing or its Acceptance Proceeds and
all losses and expenses incurred by the Agent in connection
therewith together with interest thereon (at the rate payable
hereunder by the Relevant Borrower in respect of such
Borrowing or at the rate per annum equivalent to the one month
CDOR BA Rate plus the applicable Stamping Fee which would
otherwise have been applicable to such Bankers' Acceptances)
for each day from the date such amount is made available by
the Agent until the date such amount is paid or repaid to the
Agent.
13.20.4. Notwithstanding Subsection 13.20.3, if a Lender fails so to
pay any portion of any Borrowing or its Acceptance Proceeds to
the Agent pursuant to Subsection 13.20.3, the Relevant
Borrower shall, without prejudice to any rights that the
Borrower might have against such Lender, repay such amount to
the Agent within three Banking Days after demand therefor by
the Agent.
13.20.5. Any amount payable to the Agent pursuant to this Section 13.20
(other than Section 13.20.1) shall be set forth in a
certificate delivered by the Agent to the Lender concerned and
Gerdau Steel (which certificate shall contain reasonable
details of how the amount payable is calculated) and shall be
prima facie evidence thereof. If a Lender makes the payment to
the Agent required by this Section 13.20, the amount so paid
shall constitute such Lender's Rateable Share of the Borrowing
or its Acceptance Proceeds for purposes of this Agreement.
13.20.6. The failure of any Lender to make its Rateable Share of any
Borrowing or its Acceptance Proceeds shall not relieve any
other Lender of its obligations, if any, hereunder to make its
Rateable Share of the Borrowing or its Acceptance Proceeds on
the Borrowing Date, but no Lender shall be responsible for the
failure of any other Lender to make available its Rateable
Share of any Borrowing or its Acceptance Proceeds to be made
available by such other Lender on any Borrowing Date.
13.21. Remittance of Payments
Forthwith after receipt of any payment of principal, interest, fees
or other amounts for the benefit of the Lenders pursuant to the provisions
hereof, the Agent shall remit to each Lender, its Rateable Share of such
payment. If the Agent, on the assumption that it will receive, on any particular
date, a payment of principal, interest, fees or other amounts hereunder, remits
to each Lender its Rateable Share of such payment and the Relevant Borrower
fails to make such
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payment, each Lender agrees to repay to the Agent forthwith on demand, to the
extent that such amount is not recovered from the Relevant Borrower within seven
days of demand (without in any way obligating the Agent to take any legal action
with respect to such collection), such Lender's Rateable Share of the payment
made pursuant hereto together with all losses and expenses incurred by the Agent
in connection therewith and interest thereon (at the rate payable hereunder by
the Relevant Borrower in respect of such amount) for each day from the date such
amount is remitted to the Lenders. The exact amount of the repayment required to
be made by the Lenders will be set forth in a certificate delivered by the Agent
to each Lender, which certificate shall be conclusive and binding for all
purposes, absent manifest error.
13.22. Redistribution of Payments
13.22.1. If any Lender shall exercise any right of counter-claim,
set-off or bankers' lien or similar right with respect to the
property of a Gerdau Canada Group Member or if under any
applicable bankruptcy, insolvency or other similar law it
receives a secured claim the security for which is a debt owed
by it to such Gerdau Canada Group Member, it shall apportion
the amount thereof proportionately between:
13.22.1.1. amounts comprised in the Loan Obligations owing
to such Lender, which amounts shall be applied
in accordance with this Agreement; and
13.22.1.2. amounts otherwise owed to it by such Gerdau
Canada Group Member;
provided that any cash collateral account funded by way of
advances from a Gerdau Canada Group Member as collateral for a
documentary or standby credit or letter of guarantee issued by
such Lender on behalf of such Gerdau Canada Group Member may
be applied by such Lender to such amounts owed by such Gerdau
Canada Group Member to such Lender in respect of any such
documentary or standby credit or letter of guarantee without
apportionment.
13.22.2. If a Lender shall, through the exercise of a right, or the
receipt of a secured claim described above or otherwise
receives payment of a portion of the Loan Obligations due to
it which is greater than the proportion received by any other
Lender in respect of the aggregate amount of the Loan
Obligations due to such other Lender (having regard to the
respective Rateable Shares of the Lenders), the Lender
receiving such proportionately greater payment shall purchase
a participation (which shall be done simultaneously with
receipt of such payment) in that portion of the Loan
Obligations due to the other Lender or Lenders (the
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"Selling Lender or Lenders") so that the respective receipts
shall be pro rata according to their Rateable Shares;
provided, however, that if all or part of such proportionately
greater payment received by such purchasing Lender shall be
recovered from the Gerdau Canada Group Member by the Selling
Lender or Lenders, such purchase shall be rescinded and the
purchase price paid for such participation shall be returned
by such Selling Lender or Lenders to the extent of such
recovery, but without interest. Such Lender shall exercise its
rights in respect of such secured claim in a manner consistent
with the rights of the Lenders entitled under this Section
13.22 to share in the benefits of any recovery on such secured
claims.
13.22.3. If any Lender does any act or thing permitted by Subsections
13.22.1 or 13.22.2, it shall promptly provide full particulars
thereof to the Agent and the Agent shall promptly provide
copies of such particulars to the other Lenders.
13.23. Prompt Notice to Lenders
The Agent agrees to provide to the Lenders copies of the
information, notices and reports received by it pursuant to Section 11.1.1.10
promptly upon receipt of same.
13.24. Several Debts of the Lenders
Each Lender's share in each Borrowing constitutes a several debt
owing by the Relevant Borrower to such Lender.
13.25. Enforcement of Security
Subject to the Security Coordination Agreement listed in Schedule L,
to the extent that the Agent receives or recovers monies pursuant to any right
of enforcement under the Security, such monies shall (without prejudice to the
rights of the Agent to credit any monies received by it to the Cash Collateral
Account), be applied as among the Syndicate:
13.25.1. first, in or towards payment of all of the Agent's losses and
expenses and disbursements;
13.25.2. secondly, in or towards payment of all amounts which are due
and payable at such time by each Borrower to the Lenders on
account of the Loan Obligations owing by such Borrower pro
rata to the respective aggregate amounts owing to the Lenders;
13.25.3. thirdly, if the Loan Obligations have been paid in full, in
payment to any Person to whom the Agent is obliged to pay in
priority to the Gerdau
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Canada Group Member otherwise entitled thereto, to the extent
it is so obliged; and
13.25.4. fourthly, thereafter, in payment of the Gerdau Canada Group
Member entitled thereto.
The fact that the Agent may make a payment pursuant to paragraph 13.25.3 or
13.25.4 above or may determine that the Loan Obligations have been paid in full,
will not thereafter prevent the Agent from applying any further monies, or any
credit balance on any account, in the order set out in this Section 13.25.
13.26. Swing Line Loans
13.26.1. Unless the Swing Line Lender and the Majority Lenders agree
otherwise, if an Event of Default occurs then the Swing Line
Lender will promptly request the Agent on behalf of each
Relevant Borrower (and for this purpose the Swing Line Lender
is irrevocably authorized by each Relevant Borrower to do so)
for an Advance by way of Prime Rate Loan or Base Rate Loan (as
applicable) from the Lenders pursuant to Section 2.4 to repay
to the Swing Line Lender the Swing Line Loans. The Lenders are
irrevocably directed by each Relevant Borrower to make any
Advance by way of Prime Rate Loan or Base Rate Loan (as
applicable) if so requested by the Swing Line Lender and pay
the proceeds thereof directly to the Swing Line Lender. At all
times thereafter the Swing Line Commitment shall be treated as
reduced to nil, the Swing Line Lender's Revolver Commitment
shall be increased by the amount of such reduction and the
Lenders shall make such adjusting payments amongst them in the
manner contemplated by Section 13.22.2 as may be required to
ensure their respective participations in outstanding Advances
under the Revolver Facility reflect their respective Rateable
Portions of the Revolver Facility. If any Standby Instrument
is thereafter drawn upon which results in a further Swing Line
Loan the Swing Line Lender will again promptly request the
Agent on behalf of the Relevant Borrower (and for this purpose
the Swing Line Lender is irrevocably authorized by the
Relevant Borrower to do so) for an Advance by way of Prime
Rate Loan or Base Rate Loan (as applicable) from the Lenders
pursuant to Section 2.4 to repay that Swing Line Loan and the
foregoing provisions of this Subsection 13.26.1 shall equally
apply to each such further Advance. Each Lender
unconditionally agrees to pay to the Agent for the account of
the Swing Line Lender such Lender's Rateable Portion of each
Advance requested by the Swing Line Lender on behalf of the
Relevant Borrower to repay Swing Line Loans made by such Swing
Line Lender.
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13.26.2. Except as provided in Subsection 13.26.4, the obligations of
each Lender under Subsection 13.26.1 are unconditional, shall
not be subject to any qualification or exception whatsoever
and shall be performed in accordance with the terms and
conditions of this Agreement under all circumstances
including:
13.26.2.1. any lack of validity or enforceability of the
Relevant Borrower's obligations under Section
2.6 or Article Six;
13.26.2.2. any of the matters referred to in Section 6.2 or
6.3;
13.26.2.3. the occurrence of any Default or Event of
Default or the exercise of any rights by the
Agent under Section 13.2; and
13.26.2.4. the absence of any demand for payment being
made, any proof of claim being filed, any
Security being enforced, any proceeding being
commenced or any judgment being obtained by the
Swing Line Lender or the Issuing Bank against
the Relevant Borrower.
13.26.3. If a Lender (a "Defaulting Lender") fails to make payment on
the due date therefor of any amount due from it for the
account of the Swing Line Lender pursuant to Subsection
13.26.1 (the balance thereof for the time being unpaid being
referred to in this Subsection 13.26.3 as an "overdue amount")
then until the Swing Line Lender has received payment of that
amount (plus interest as provided below) in full (and without
in any way limiting the rights of the Swing Line Lender in
respect of such failure):
13.26.3.1. the Swing Line Lender shall be entitled to
receive any payment which the Defaulting Lender
would otherwise have been entitled to receive in
respect of the Credit Facilities or otherwise in
respect of any Loan Document; and
13.26.3.2. the overdue amount shall bear interest payable
by the Defaulting Lender to the Swing Line
Lender at the rate payable by the Relevant
Borrower in respect of the Loan Obligations
which gave rise to such overdue amount.
13.26.4. If for any reason an Advance may not be made pursuant to
Subsection 13.26.1 to reimburse the Swing Line Lender as
contemplated thereby, then promptly upon receipt of
notification of such fact from the Agent, each Lender shall
deliver to the Agent for the account of such Swing Line Lender
in immediately available funds the purchase price for
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such Lender's participation interest in the relevant
unreimbursed Swing Line Advances. Each Lender shall, upon
demand by such Swing Line Lender made to the Agent, deliver to
the Agent for the account of such Swing Line Lender interest
on such Lender's Rateable Share from the date of payment by
such Swing Line Lender of such unreimbursed Swing Line
Advances until the date of delivery of such funds to such
Swing Line Lender by such Lender at a rate per annum equal to
the Federal Funds Rate (in the case reimbursement is to be
made in U.S. Dollars) or the one month CDOR BA Rate (in the
case the reimbursement is to be made in Canadian Dollars) for
such period. Such payment shall only, however, be made by the
Lenders in the event and to the extent such Swing Line Lender
has not been reimbursed in full by the Relevant Borrower for
interest on the amount of such unreimbursed Swing Line
Obligations.
13.26.5. The Swing Line Lender shall, forthwith upon its receipt of any
reimbursement (in whole or in part) by the Relevant Borrower
for any unreimbursed Swing Line Advances in relation to which
other Lenders have purchased a participation interest pursuant
to Subsection 13.26.4, or of any other amount from the
Relevant Borrower or any other Person in respect of such
payment (other than pursuant to Section 2.6 or 6.2), transfer
to such other Lender such other Lender's Rateable Share of
such reimbursement or other amount. In the event that any
receipt by the Issuing Bank of any reimbursement or other
amount is found to have been a transfer in fraud of creditors
or a preferential payment under any applicable insolvency
legislation or is otherwise required to be returned, such
Lender shall promptly return to such Swing Line Lender any
portion thereof previously transferred to it by such Swing
Line Lender, without interest to the extent that interest is
not payable by such Swing Line Lender in connection therewith.
ARTICLE 14.
GENERAL
14.1. Reliance and Non-Merger
All covenants, agreements, representations and warranties of each
party hereto (other than the Lenders) made herein or in any other Loan Document
or in any certificate or other document signed by any of its directors or
officers and delivered by or on behalf of it pursuant hereto or thereto are
material, shall be deemed to have been relied upon by the Syndicate
notwithstanding any investigation heretofore or hereafter made by the Syndicate
or the Lenders' Counsel or any employee, agent or other representative of any of
the Syndicate and shall survive
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the execution and delivery of this Agreement and the other Loan Documents until
the Borrowers shall have satisfied and performed all of the Loan Obligations.
14.2. Amendment and Waiver
No amendment of any provision of any Loan Document or consent to any
departure by any other party thereto from any provision thereof is effective
unless it is in writing and signed by the Required Lenders. No amendment of or
consent to any departure from any provision of any Loan Document to which any
party hereto (other than a Lender) is party shall require the agreement of any
other party hereto, except the Required Lenders, to be effective and binding on
all parties hereto. Such amendment or consent shall be effective only in the
specific instance and for the specific purpose for which it is given. No failure
or delay on the part of the Syndicate in exercising any right under any Loan
Document or under any other instrument delivered to any Lender pursuant thereto
and no indulgence or forbearance by any of the Syndicate in respect of the
strict application of the provisions thereof shall operate as a waiver unless
made in writing and signed by an officer of the Agent in accordance with Section
13.18. Any written waiver by the Syndicate shall not preclude the further
exercise by the Syndicate of any right hereunder or extend to or apply to any
subsequent default of the same or any other nature.
14.3. Set-Off or Compensation
In addition to and not in limitation of any rights now or hereafter
granted under Applicable Law, but subject to Section 13.22, if a Default or
Event of Default has occurred or is continuing, each Lender, may at any time and
from time to time without prior notice to any other party hereto or any other
Person, any such prior notice being expressly waived by each such party hereto,
combine, off-set, set-off or compensate and apply any and all deposits, general
or special, time or demand, provisional or final, matured or unmatured, in the
same or in different currencies, and any other indebtedness at any time owing by
the Lender, to or for the credit of or for the account of either Borrower,
against and on account of that Borrower's Loan Obligations notwithstanding that
any of them are contingent or unmatured and notwithstanding that any such
deposit or indebtedness may or may not be expressed in the same Currency.
14.4. Notices
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by prepaid first-class mail, by
telecopier or other means of electronic communication or by hand-delivery as
hereinafter provided. Any such notice, if mailed by prepaid first-class mail at
any time other than during or within three Banking Days prior to a general
discontinuance of postal service due to strike, lockout or otherwise, shall be
deemed to have been received on the fourth Banking Day after the post-marked
date thereof, or if
- 116 -
sent by telecopier or other means of electronic communication, shall be deemed
to have been received on the Banking Day following the sending, or if delivered
by hand shall be deemed to have been received at the time it is delivered to the
applicable address of the addressee either to the individual designated in
Schedule A or F, as applicable, or to a senior employee of the addressee at such
address (and, in the case of any Lender, at the same department within the
Lender) with responsibility for matters to which the information relates. Notice
of change of address shall also be governed by this Section 14.4. In the event
of a general discontinuance of postal service due to strike, lock-out or
otherwise, notices or other communications shall be delivered by hand or sent by
facsimile or other means of electronic communication and shall be deemed to have
been received in accordance with this Section 14.4. Notwithstanding the
foregoing, no notice or other communication to the Agent or (so long as they are
the same Person) the Agent shall be effective or be deemed to be received by the
Agent or (so long as they are the same Person) the Agent unless it is sent by
telecopier or delivered by hand. Notices and other communications shall be
addressed to the addresses of the relevant party hereto specified beside its
name on Schedule A or F, as applicable.
14.5. Binding Effect and Assignment
14.5.1. Benefit & Burden. The Loan Documents shall enure to the
benefit of and be binding on the parties hereto, their
respective successors and each assignee of some or all of the
rights or obligations of the parties under the Loan Documents
permitted by Subsection 14.5.4. Any reference in any such Loan
Document to any party shall (to the extent the context so
admits) be construed accordingly.
14.5.2. Borrower. No Borrower may assign all or any part of any of its
rights or obligations in respect of any Credit Facility or
under any Loan Document. Where the context so admits, each
reference in this Agreement to any Borrower shall be construed
so as to include the successors of such Borrower.
14.5.3. Participation. Each Lender may grant a participation in the
whole or any part of its Revolver Commitment or Term
Commitment (including its share in any Advances made by it
hereunder) to any other Person (a "Participant") provided
that, in respect of such share of its Revolver Commitment or
Term Commitment and as amongst all parties to this Agreement,
such Lender shall remain entitled to all rights, and shall
remain responsible for the performance of all obligations, of
such Lender under this Agreement with respect to the share of
its Revolver Commitment or Term Commitment subject to such
participation.
14.5.4. Assignments. Each Lender (a "Transferring Lender") may assign
its Revolver Commitment or Term Commitment (including its
share in any
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Advances made hereunder), or any part thereof in a minimum
amount of Cdn.$10,000,000 to (i) any Person during the period
of primary syndication of the Credit Facilities, (ii) any
affiliate of the Transferring Lender, (iii) prior to the
occurrence of an Event of Default, to any Person not referred
to in clauses (i) and (ii), with the prior consent of the
Agent and the Borrowers, such consent not to be unreasonably
withheld or delayed or (iv) after the occurrence of an Event
of Default, to any other Person without the consent of any
other party hereto, other than the Agent whose consent shall
still be required and which will not be unreasonably withheld
or delayed. Any such transfer to any Person permitted pursuant
to the preceding sentence (a "Transferee") shall be made
pursuant to a loan transfer agreement (a "Loan Transfer
Agreement") substantially in the form of Schedule H (or in
such other form to similar effect as the Agent may approve).
Each Loan Transfer Agreement must be delivered to the Agent at
least five Banking Days before it takes effect accompanied, if
such assignment is not being made to an affiliate of an
existing Lender and is not being made during the period of
primary syndication of the Credit Facilities, by payment to
the Agent of a processing fee of Cdn.$3,500. Each party hereto
hereby agrees that any such Transferee under any such Loan
Transfer Agreement shall be entitled to rights identical to
the rights assigned to such Transferee as if such Transferee
were named in this Agreement as an original party in
substitution for the Transferring Lender in respect of such
Revolver Commitment and Term Commitment, or part thereof,
assigned, and such Transferring Lender shall be released from
all obligations in relation to its Revolver Commitment and
Term Commitment, or part thereof, so assigned.
14.5.5. Schedule A Revisions: The Agent shall from time to time revise
Schedule A to record the Lenders and their respective
Commitments and Lending Offices after giving effect to
assignments and changes in Lending Offices referred to above.
Any such revised Schedule A shall be prima facie evidence of
the identities, Commitments and Lending Offices of the
Lenders. The Agent shall provide a copy of any revised
Schedule A to the Borrowers or any Lender upon request.
14.6. Confidentiality
Each Lender shall, subject as hereinafter provided, keep
confidential from any third party (excluding directors, officers, employees,
agents, solicitors, accountants, consultants, financial advisors and all other
representatives of the Lender) any data or information received by it from a
Borrower pursuant to this Agreement which is confidential or which is designated
in writing as such by a Borrower except to the extent that such information was
not confidential when received by the Lender, except as required by law, rule,
regulation or official directive or as
- 118 -
may be necessary to protect the interests of any Lender under this Agreement.
Notwithstanding any other provision of this Section 14.6, any Lender may make
available any confidential data or information received by it pursuant to this
Agreement:
14.6.1. to any other Lender;
14.6.2. to any Person referred to in Section 14.5 to whom the Lender
is soliciting to purchase or has granted a participation or
assignment of the whole or any part of any of the Lender's
rights or obligations under this Agreement so long as that
Person agrees with the Lender to be bound by the same
conditions and obligations pertaining to confidentiality which
apply to the Lender under this Section 14.6;
14.6.3. to any Person referred to in Section 13.15 to whom the Agent,
Agent or the Issuing Bank is soliciting to be a successor
agent, security trustee or issuing bank under this Agreement;
or
14.6.4. as may be necessary in connection with the enforcement of this
Agreement or any other Loan Document.
14.7. Time
Time is of the essence of each of the Loan Documents.
14.8. Further Assurances
Whether before or after the happening of a Default or an Event of
Default, each Obligor party hereto shall at its own expense do, make, execute or
deliver all such further acts, documents and things in connection with the Loans
and the Loan Documents as the Agent may reasonably require from time to time for
the purpose of giving effect to the Loan Documents including for the purpose of
facilitating the enforcement of the Security, all immediately upon the request
of the Agent.
14.9. Currency Conversion and Indemnity
14.9.1. All payments made hereunder shall be made in the Currency in
respect of which the Loan Obligations requiring such payment
arose. If, in connection with any action or proceeding brought
in connection with this Agreement or any other of the Loan
Documents or any judgment or order obtained as a result
thereof, it becomes necessary to convert any amount due
hereunder in one Currency (the "first Currency") into another
Currency (the "second Currency"), then the
- 119 -
conversion shall be made at the Spot Rate on the first Banking
Day prior to the day on which payment is received.
14.9.2. If the conversion is not able to be made in the manner
contemplated by subsection 14.9.1 in the jurisdiction in which
the action or proceeding is brought, then the conversion shall
be made at the Spot Rate on the day on which the judgment is
given.
14.9.3. If the Spot Rate on the date of payment is different from the
Spot Rate on such first Banking Day or on the date of
judgment, as the case may be, the Borrower concerned shall pay
such additional amount (if any) in the second Currency as may
be necessary to ensure that the amount paid on such payment
date is the aggregate amount in the second Currency which,
when converted at the Spot Rate on the date of payment, is the
amount due in the first Currency, together with all costs,
charges and expenses of conversion. Any additional amount
owing by a Borrower to any Lender pursuant to the provisions
of this Section 14.9 shall be due as a separate debt and shall
give rise to a separate cause of action and shall not be
affected by or merged into any judgment obtained for any other
amounts due under or in respect of this Agreement or any other
of the Loan Documents.
14.10. Taxes
14.10.1. Each payment under each Loan Document shall be made without
any deduction or withholding for or on account of any Tax
unless such deduction or withholding is required by any
Applicable Law, as modified by the practice of any relevant
Governmental Body, then in effect. If the Relevant Borrower is
required to deduct or withhold Tax from any such payment to
any Lender (the "Affected Lender"), then the Relevant Borrower
will:
14.10.1.1. promptly notify the Agent of such requirement;
14.10.1.2. pay to the relevant Governmental Body the full
amount required to be deducted or withheld
(including the full amount required to be
deducted or withheld from any additional amount
paid by the Relevant Borrower to the Affected
Lender under this Subsection 14.10.1) promptly
upon the earlier of determining that such
deduction or withholding is required or
receiving notice that such amount has been
assessed against the Relevant Borrower;
14.10.1.3. promptly forward to the Agent an official
receipt (or a certified copy), or other
documentation reasonably acceptable to the
- 120 -
Agent, evidencing such payment to such
Governmental Body; and
14.10.1.4. pay to the Affected Lender, in addition to the
payment to which the Affected Lender is
otherwise entitled under such Loan Document such
additional amount as is necessary to ensure that
the net amount actually received by the Affected
Lender (free and clear of Tax, whether assessed
against the Relevant Borrower or the Affected
Lender) will equal the full amount the Affected
Lender would have received had no such deduction
or withholding been required.
14.10.2. If an Affected Lender is, in its sole opinion, entitled to
claim a refund or able to apply for or otherwise take
advantage of any tax credit, tax deduction or similar benefit
by reason of any withholding or deduction made by a Relevant
Borrower in respect of a payment made by it hereunder which
payment shall have been increased pursuant to Subsection
14.10.1, then such Affected Lender will use commercially
reasonable efforts (to the extent it has the administrative
controls in place to enable it to do so) to obtain such
refund, credit, deduction or benefit and upon receipt thereof
will pay to the Relevant Borrower such amount (if any) not
exceeding the increased amount paid by the Relevant Borrower
as equals the net after tax value to such Affected Lender of
such part of such refund, credit, deduction or benefit as it
considers is allocable to such withholding or deduction having
regard to all its dealings giving rise to similar credits,
deductions or benefits in relation to the same tax period and
to the cost of obtaining the same, provided that nothing
herein shall (i) interfere with the right of any Affected
Lender to arrange its tax affairs in whatever manner it deems
fit and in particular no Affected Lender shall be under any
obligation to claim relief from its corporate profits or
similar tax liability in respect to any such deduction or
withholding in priority to any other relief, claims, credits
or deductions available to it and (ii) no Affected Lender
shall be obligated to disclose to any Relevant Borrower any
information regarding its tax affairs or tax computations.
14.11. Joint Arrangers and Joint Bookrunners and Co-Syndication Agents
None of the Joint Arrangers and Joint Bookrunners, Co-Syndication
Agents or their respective directors, officers, employees, agents, solicitors,
accountants, consultants, financial advisors, other experts or other
representatives shall be under any obligation whatsoever:
- 121 -
14.11.1. to any Xxxxxx X.X. Group Member as a consequence of any
failure or delay in performance by, or any breach by, any
Lender of any of its obligations under any Loan Document;
14.11.2. to any Lender as a consequence of any failure or delay in
performance by, or any breach by, any Xxxxxx X.X. Group Member
of any of its obligations under any Loan Document; or
14.11.3. to any Lender for any statements, representations or
warranties in any Loan Document or any other agreement,
document or instrument contemplated by any Loan Document or
any other information provided pursuant to any Loan Document
or any other agreement, document or instrument contemplated by
any Loan Document or for validity, effectiveness,
enforceability or sufficiency of any Loan Document or any
other agreement, document or instrument contemplated thereby.
14.12. Entire Agreement
From and after the date the Implementation Notice is issued, the
Loan Documents will constitute the entire agreement between the parties hereto
pertaining to the subject matter contemplated therein and there will be no
warranties, representations or agreements between the parties in connection with
such subject matter except as specifically set forth or referred to in the Loan
Documents. Each Borrower agrees to pay and satisfy its indebtedness, obligations
and liabilities under the First Syndicated Amended and Restated Loan Agreement
outstanding immediately before the Effective Time in accordance with the
provisions of this Agreement, and that such indebtedness, obligations and
liabilities shall constitute Loan Obligations for the purposes of this
Agreement. Each Borrower hereby confirms its obligations under the Prior
Security and agrees that the Prior Security, subject to the terms of this
Agreement and the Confirmed Loan Documents, continues in full force and effect
in accordance with its terms. Each Obligor hereby confirms that, subject to the
provisions of this Agreement, the Security shall secure the obligations of the
Borrowers incurred hereunder or pursuant hereto.
- 122 -
14.13. 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.
IN WITNESS WHEREOF the parties have executed this Agreement as of
the date first written above.
GERDAU STEEL INC.
By:______________________________________
Name: Xxxx X. Xxxxx
Title: Vice President, Finance
GERDAU COURTICE STEEL INC.
By:______________________________________
Name: Xxxx X. Xxxxx
Title: Vice President, Finance
GERDAU MRM STEEL INC.
By:______________________________________
Name: Xxxx X. Xxxxx
Title: Vice President, Finance
- 123 -
The LENDERS:
THE TORONTO-DOMINION BANK
By:____________________________ Revolver Commitment: Cdn.$25,000,000
---------------
By:____________________________ Term Commitment: Cdn.$66,666,666.67
------------------
THE TORONTO-DOMINION BANK
P.O. Box 1
2nd Floor, 00 Xxxx Xxxxxx Xxxx xx Xxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Relationship Manager,
Corporate & Financial Institutions Group
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
CITIBANK CANADA
By:____________________________ Revolver Commitment: Cdn.$25,000,000
---------------
By:____________________________ Term Commitment: Cdn.$66,666,666.67
------------------
CITIBANK CANADA
000 Xxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
- 000 -
XXX XXXXX XXXXXXXXX XXXX XX XXXXXX
By:____________________________ Revolver Commitment: Cdn.$25,000,000
---------------
By:____________________________ Term Commitment: Cdn.$66,666,666.67
------------------
THE CHASE MANHATTAN BANK OF CANADA
1 First Canadian Place
000 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
THE AGENT: THE TORONTO-DOMINION BANK
By:______________________________________
Xxxxx Xxxxxxxx
Manager, Agency, Syndicated Loans
- 125 -
CONSENTING PARTY:
The undersigned consents and agrees to the amendment and restatement
of the Existing Loan Agreement set out above.
GERDAU MRM HOLDINGS INC.
By:______________________________________
Name: Xxxx X. Xxxxx
Title: Vice President, Finance
EXHIBIT D
SCHEDULE A
Lenders, Lending Offices and Commitments
Term Revolver
Lender Commitment Commitment Lending Office
The Toronto- Cdn.$66,666,666.67 Cdn.$25,000,000 TD Centre Branch, 2nd
Dominion Bank Floor
00 Xxxx Xxxxxx Xxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attn: Relationship
Manager,
Corporate &
Financial
Institutions Group
Tel: 000-0000
Fax: 000 0000
Citibank Cdn.$66,666,666.67 Cdn.$25,000,000 000 Xxxxx Xxxxxx Xxxx
Xxxxxx Suite 1900
Xxxxxxx, Xxxxxxx
X0X 0X0
Attn: Vice President
Tel: (000) 000-0000
Fax: (000) 000-0000
The Chase Cdn.$66,666,666.66 Cdn.$25,000,000 0 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxxx 000 Xxxx Xxxxxx Xxxx
Xxxx xx Xxxxxx Suite 6900
Toronto, Ontario
M5X 1A4
Attn: Vice President
Tel: (000) 000-0000
Fax: (000) 000-0000
EXHIBIT D
SCHEDULE B
Drawdown Notice
TO: The Toronto-Dominion Bank
Toronto Xxxxxxxx Xxxx Xxxxx, 0xx Xxxxx
00 Xxxx Xxxxxx Xxxx & Xxx Xxxxxx
P.O. Box 1, Toronto Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Manager, Agency, Syndicated Loans
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the
"Loan Agreement") dated as of November 8, 1996, as further amended and restated
on December 18, 1998 and on September 27, 1999, and as further amended,
supplemented, restated or novated from time to time, between Gerdau Steel Inc.,
Gerdau Courtice Steel Inc. and Gerdau MRM Steel Inc., as Borrowers, the
Institutions named therein as Lenders and The Toronto-Dominion Bank as Agent.
All terms used in this Drawdown Notice which are defined in the Loan Agreement
have the respective meanings attributed to them in the Loan Agreement.
Pursuant to Section o of the Loan Agreement, the undersigned hereby
requests an Advance as follows:
1 Type of Advance:
2 Amount of Advance:
3 Currency of Advance:
4 Drawdown Date:
5 [Interest Period/Maturity Date]:
6 Payment instructions (if any):
The undersigned acknowledges and agrees that prior to obtaining the
Advance requested by this Drawdown Notice, it shall satisfy and comply with all
of the conditions in Section 6.1 of the Loan Agreement.
DATED this ______ day of ____________________, _________.
____________________________________
By: ______________________________________
Title:
- ii -
By: ______________________________________
Title:
EXHIBIT D
SCHEDULE C
Form of Conversion Notice
TO: The Toronto-Dominion Bank
Toronto Xxxxxxxx Xxxx Xxxxx, 0xx Xxxxx
00 Xxxx Xxxxxx Xxxx & Xxx Xxxxxx
P.O. Box 1, Toronto Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Manager, Agency, Syndicated Loans
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the
"Loan Agreement") dated as of November 8, 1996, as further amended and restated
on December 18, 1998 and on September 27, 1999, and as further amended,
supplemented, restated or novated from time to time, between Gerdau Steel Inc.,
Gerdau Courtice Steel Inc. and Gerdau MRM Steel Inc., as Borrowers, the
Institutions named therein as Lenders and The Toronto-Dominion Bank as Agent.
All terms used in this Conversion Notice which are defined in the Loan Agreement
have the respective meanings attributed to them in the Loan Agreement.
Notice is hereby given in accordance with subsection o of the Loan
Agreement that the undersigned wishes to convert an Advance, and, in connection
therewith the undersigned hereby advises the Agent that the Advance made
[specify date of Advance] in the amount of [specify amount and Currency of
Advance] by way of [specify Type of Loan] and which has a Maturity Date of
[specify date] is hereby requested to be converted on such Maturity Date to a
[specify type of Advance] as follows:
(i) Amount of Advance:
(ii) Conversion Date:
(iii) [Interest Period/new Maturity Date]:
(iv) Payment instructions (if any):
The undersigned acknowledges and agrees that prior to obtaining the
Conversion requested by this Conversion Notice, it shall satisfy and comply with
all of the conditions in Section 6.1 of the Loan Agreement.
DATED this ______ day of ____________________, _________.
____________________________________
By: ______________________________________
Title:
- ii -
By: ______________________________________
Title:
EXHIBIT D
SCHEDULE D
Form of Rollover Notice
TO: The Toronto-Dominion Bank
Toronto Xxxxxxxx Xxxx Xxxxx, 0xx Xxxxx
00 Xxxx Xxxxxx Xxxx & Xxx Xxxxxx
P.O. Box 1, Toronto Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Manager, Agency, Syndicated Loans
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the
"Loan Agreement") dated as of November 8, 1996, as further amended and restated
on December 18, 1998 and on September 27, 1999, and as further amended,
supplemented, restated or novated from time to time, between Gerdau Steel Inc.,
Gerdau Courtice Steel Inc. and Gerdau MRM Steel Inc., as Borrowers, the
Institutions named therein as Lenders and The Toronto-Dominion Bank as Agent.
All terms used in this Rollover Notice which are defined in the Loan Agreement
have the respective meanings attributed to them in the Loan Agreement.
Notice is hereby given in accordance with subsection o of the Loan
Agreement that the undersigned wishes to Rollover an Advance, and, in connection
therewith the undersigned hereby advises the Agent that the Advance made
[specify date of Advance] in the amount of [specify amount and Currency of
Advance] by way of [specify type of Advance] and which has a Maturity Date of
[specify date] is hereby requested to be rolled-over on such Maturity Date as
follows:
(i) Amount of Advance:
(ii) Rollover Date:
(iii) [Interest Period/new Maturity Date]:
(iv) Payment instructions (if any):
The undersigned acknowledges and agrees that prior to obtaining the
Rollover requested by this Rollover Notice, it shall satisfy and comply with all
of the conditions in Section 6.1 of the Loan Agreement.
DATED this ______ day of ____________________, _________.
____________________________________
By: ______________________________________
Title:
- ii -
By: ______________________________________
Title:
EXHIBIT D
SCHEDULE E
Subsidiaries
XXXXXX X.X.
(Brazil)
100%
|
|
|
|
----------------------------------------------
| |
| |
Gerdau Industrial GTL Trade
International Ltda Corporation (BVI)
(Brazil)
| |
| |
| Gerdau Steel Inc |
----------------- (CBCA) ------------
100%
|
|
-------------------------------------------------------
| |
| |
Gerdau Courtice Steel Inc. Gerdau MRM Holdings Inc. [Gerdau USA Inc.]
Kyoei Steel, Ltd.
(Sask.) (CBCA) (Del.) (Japan)
100% 88% (176 shares)
12% (24 shares) | | |
| | |
| |----------------
| |
Gerdau MRM Steel Inc. FLS Holdings Inc.
Sumitomo Corporation
(Sask.) (Del.) (Japan)
100% (95%) (9MM shares)
5% (455,545 shares) |
| | |
| |----------------
| |
Xxxxxx Bros Corporation AmeriSteel Corporation
(N. Dakota) (Del.)
EXHIBIT D
SCHEDULE F
Addresses for Notices
1. if to Courtice:
Xxxxx Xxxxx
Xxx 0000
Xxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxx
Telecopier No.: (000) 000-0000
2. if to MRM:
Xxxxx Xxxxx
Xxx 0000
Xxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxx
Telecopier No.: (000) 000-0000
3. if to Gerdau Steel:
Xxxxx Xxxxx
Xxx 0000
Xxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx Xxxxx
Telecopier No.: (000) 000-0000
4. if to TD in its capacity as Swing Line Lender:
Toronto-Dominion Centre Branch
Commercial Banking
King Street West and Xxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: The Vice President & Manager
Telecopier No.: (000) 000-0000
- ii -
5. if to the Agent:
The Toronto-Dominion Bank
Toronto Xxxxxxxx Xxxx Xxxxx, 0xx Xxxxx
00 Xxxx Xxxxxx Xxxx & Xxx Xxxxxx
P.O. Box 1, Toronto Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Manager, Agency, Syndicated Loans
Telecopier No.: (000) 000-0000
EXHIBIT D
SCHEDULE G
Form of Borrowing Base Report
TO: The Toronto-Dominion Bank
Toronto Xxxxxxxx Xxxx Xxxxx, 0xx Xxxxx
00 Xxxx Xxxxxx Xxxx & Xxx Xxxxxx
P.O. Box 1, Toronto Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Manager, Agency, Syndicated Loans
Re: Gerdau Steel Inc.
Reference is made to an amended and restated loan agreement (the
"Loan Agreement") dated as of November 8, 1996, as further amended and restated
on December 18, 1998 and on September 27, 1999, and as further amended,
supplemented, restated or novated from time to time, between Gerdau Steel Inc.,
Gerdau Courtice Steel Inc. and Gerdau MRM Steel Inc., as Borrowers, the
Institutions named therein as Lenders and The Toronto-Dominion Bank as Agent.
All terms used in this Borrowing Base Report which are defined in the Loan
Agreement have the respective meanings attributed to them in the Loan Agreement.
This Certificate is given to the Agent pursuant to Section 11.1.1.10
of the Loan Agreement in respect of the Fiscal Quarter ending on ________,
______.
The undersigned hereby certifies to the Syndicate that the
attachment to this Certificate shows the calculation of the Borrowing Base as at
_________, ____ to be Cdn.$________ which does [not] exceed the Outstanding
Amount of all Advances under the Operating Facility at that time.
DATED this ______ day of ____________________, _________.*
GERDAU STEEL INC.
By:___________________________________
Title
* same date as the fiscal month end
- ii
GERDAU STEEL INC.
(Outstanding Amount of
Revolver Facility not to exceed sum of 80% Eligible
Receivables + lesser of
$40,000,000 or 50% Eligible
Inventory
AUGUST '99
--------------------------------------------------
COURTICE MRM CONSOLIDATED
Advances under Revolver:
Cdn.$ Concentration Acct
US$ Concentration Acct in
Cdn.$
Short Term BA (net)
Tranche B
__________________
Total
Accounts Receivable
Less: > 90 days
Less: intercompany
____________________________ __________________
% Allowed
____________________________ __________________
Add: 1/2 eligible inventory
Total Leverage
Total Margin Surplus
Attachments
A/R Reports
Payables Reports
Inventory Lists
- iii
EXHIBIT D
SCHEDULE H
Loan Transfer Agreement
THIS AGREEMENT is made the day of , .
B E T W E E N :
-----------------------------------------------------------------
(hereinafter called the "Transferor")
OF THE FIRST PART
- and -
-----------------------------------------------------------------
(hereinafter called the "Transferee")
OF THE SECOND PART
- and -
-----------------------------------------------------------------
for its own benefit and in its capacity as agent for the rateable
benefit of the Lenders under the Loan Agreement defined below
(hereinafter called the "Agent")
OF THE THIRD PART
BACKGROUND
Gerdau Steel Inc., Gerdau Courtice Steel Inc. and Gerdau MRM Steel
Inc. as Borrowers, the Institutions named therein as Lenders, and The
Toronto-Dominion Bank as Agent entered into a loan agreement (the "Loan
Agreement") dated as of November 8, 1996, as further amended and restated on
December 18, 1998 and on September 27, 1999, and as further amended,
supplemented, restated or novated from time to time. In addition, terms defined
in Sections 1.1 and 1.2 of the Loan Agreement (and not otherwise defined herein)
are used with the same respective defined meanings in this loan transfer
agreement.
The Transferor is a Lender under the Loan Agreement with a Revolver
Commitment of Cdn.$___________ and a Term Commitment of Cdn.$___________ , for a
Total Commitment of Cdn.$___________ . The Transferor has agreed to transfer to
the Transferee _______% (the "Revolver
- ii -
Transfer Percentage") of its Revolver Commitment and ______% (the "Term Transfer
Percentage") of its Term Commitment. The portion of the Transferor's Commitment
so transferred is hereinafter called the "Transferred Commitment".
WITNESSETH THAT in consideration of the mutual covenants herein
contained and other valuable consideration now paid by each party hereto, the
one to the other, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Transferred Commitment
The Transferor confirms to each of the Transferee and the other
parties to the Loan Agreement that the Transferred Commitment relates to the
Revolver Transfer Percentage of its Revolver Commitment and the Term Transfer
Percentage of its Term Commitment (including the corresponding percentage of
each outstanding Loan under each such portion of its Commitment) represented as
of the date hereof as set out in Appendix 1 to this loan transfer agreement.
2. Transfer
As of and from ____________, _______ (herein called the "Effective
Date") and subject to the terms and conditions herein contained:
(a) the Transferee assumes obligations identical to the obligations of
the Transferor under the Loan Agreement arising on or after the
Effective Date in relation to the Transferred Commitment (herein
called the "Transferred Obligations") and agrees to perform and be
responsible for such obligations as if the Transferee were named in
the Loan Agreement as an original party in substitution for the
Transferor or its predecessor in title, as applicable, in respect of
the Transferred Obligations;
(b) the Agent on behalf of each of the Lenders other than the Transferor
(herein called the "Other Lenders") hereby releases and forever
discharges the Transferor of and from any and all losses and
expenses and obligations arising on or after the Effective Date
under, by reason of, or in connection with the Transferred
Obligations;
(c) the Agent on behalf of each of the Other Lenders acknowledges and
agrees that, except as otherwise provided in section 3 of this loan
transfer agreement, the Transferee is entitled to rights identical
to the rights of the Transferor under the Loan Agreement existing on
or arising after the Effective Date in relation to the Transferred
Commitment (herein called the "Transferred Rights");
(d) the Transferor hereby releases and forever discharges each of the
Other Lenders of and from any and all losses and expenses and
obligations arising under, by reason of, or in connection with the
Transferred Rights or the Transferred Obligations.
3. Transitional Provisions
Subject to the terms and conditions contained herein:
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(a) any payments due and payable by the Borrowers on or before the
Effective Date in respect of the Transferred Commitment; and
(b) any payments due and payable by the Borrowers after the Effective
Date, but payable in respect of the Transferor's participation in
any LIBOR Loan or issue of Bankers' Acceptances outstanding on the
Effective Date,
shall, upon receipt by the Agent, be paid to the Transferor. For certainty, the
Transferee acknowledges that its participation in Loans outstanding under the
Credit Facilities as at the Effective Date is subject to the maturity of
existing contracts on their respective Maturity Dates (to the extent there are
Bankers' Acceptances and LIBOR Loans outstanding on the Effective Date), and
that the Transferor's participation in outstanding Loans will increase in
proportion to its Rateable Portion as such existing contracts mature.
4. Copy to the Borrower
Each of the Transferor and Transferee hereby authorizes the Agent to
provide a signed copy of this loan transfer agreement (without the attached
Appendices) to Courtice (to be received by Courtice for itself, MRM and the
Guarantors) in acceptance of the offer contained in the Loan Agreement of the
Borrowers and the Guarantors to the Transferee to become a party to the Loan
Agreement in respect of the Transferred Commitment. Upon receipt thereof by
Courtice, the provisions of Section 16.5.4 of the Loan Agreement in respect of
the Transferred Commitment shall become effective and be binding upon all
parties to the Loan Agreement.
5. Interpretation
This agreement shall be governed by the laws of the Province of
Ontario and the laws of Canada applicable therein and shall be construed as
supplemental to and form part of the Loan Agreement.
IN WITNESS WHEREOF the parties hereto have executed this agreement
as of the day and year first above written.
____________________________________
as Transferor
By:_________________________________
____________________________________
as Transferor
By:_________________________________
____________________________________
as Agent
By:_________________________________
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-v-
Appendix 1
TRANSFEROR'S COMMITMENT
As of [Insert Date]
Outstanding Outstanding
Amount of Outstanding Bankers' Participations in
Commitment Undrawn Loans Acceptances Standby Credits
------------- ------- ----- ----------- ---------------
REVOLVER FACILITY
Cdn.$________ [stipulate portion [stipulate types of [stipulate [stipulate
undrawn] Advances outstanding outstanding
outstanding, Acceptances, participations in
amount, interest amount and Standby Credits]
rate and maturity maturity]
of current Interest
Periods]
TERM FACILITY
Cdn.$________ [stipulate portion [stipulate types of [stipulate [stipulate
undrawn] Advances outstanding outstanding
outstanding, Acceptances, participations in
amount, interest amount and Standby Credits]
rate and maturity maturity]
of current Interest
Periods]
TRANSFERRED COMMITMENT
Amount of Outstanding Outstanding
Transferred Outstanding Bankers' Participations in
Commitment Undrawn Loans Acceptances Standby Credits
------------- ------- ----- ----------- ---------------
REVOLVER FACILITY
Cdn.$________ *[stipulate portion *[stipulate types of *[stipulate *[stipulate
undrawn] Advances outstanding outstanding
outstanding, Acceptances, participations in
amount, interest amount and Standby Credits]
rate and maturity maturity]
of current Interest
Periods]
TERM FACILITY
Cdn.$________ **[stipulate portion **[stipulate types of **[stipulate **[stipulate
undrawn] Advances outstanding outstanding
outstanding, Acceptances, participations in
amount, interest amount and Standby Credits]
rate and maturity maturity]
of current Interest
Periods]
-vi-
*Amount determined as the Revolver Transfer Percentage x corresponding amount
set out above with respect to the Transferor's Revolver Commitment.
**Amount determined as the Term Transfer Percentage x corresponding amount set
out above with respect to the Transferor's Term Commitment.
NOTE: Each portion of the Revolver Commitment and the Term Commitment
transferred must be in a minimum amount of Cdn.$5,000,000.
EXHIBIT D
SCHEDULE I
Borrower's Compliance Certificate
TO: The Toronto-Dominion Bank
Toronto Xxxxxxxx Xxxx Xxxxx, 0xx Xxxxx
00 Xxxx Xxxxxx Xxxx & Xxx Xxxxxx
P.O. Box 1, Toronto Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Manager, Agency, Syndicated Loans
Re: Gerdau Steel Inc.
Reference is made to an amended and restated loan agreement (the
"Loan Agreement") dated as of November 8, 1996, as further amended and restated
on December 18, 1998 and on September 27, 1999, and as further amended,
supplemented, restated or novated from time to time, between Gerdau Steel Inc.,
Gerdau Courtice Steel Inc. and Gerdau MRM Steel Inc., as Borrowers, the
Institutions Named Therein as Lenders and The Toronto-Dominion Bank as Agent.
All terms used in this Compliance Certificate which are defined in the Loan
Agreement have the respective meanings attributed to them in the Loan Agreement.
This certificate is given pursuant to Section 11.1.1.10 of the Loan
Agreement.
The Borrowers hereby certify as follows:
(a) Current Ratio. The attachment hereto shows the calculations of the
ratio referred to in Section 11.1.1.13.1 of the Loan Agreement.
(b) Debt Service Coverage Ratio. The attachment hereto shows the
calculation of the ratio referred to in Section 11.1.1.13.2 of the
Loan Agreement.
(c) Interest Average Ratio. The attachment hereto shows the calculation
of the ratio referred to in Section 11.1.1.13.3 of the Loan
Agreement.
(d) Total Debt/EBITDA Ratio. The attachment hereto shows the calculation
of the ratio referred to in Section 11.1.1.13.4 of the Loan
Agreement.
(e) Term Debt/Capitalization Ratio. The attachment hereto shows the
calculation of the ratio referred to in Section 11.1.1.13.5 of the
Loan Agreement.
(f) Tangible Net Worth. The attachment hereto shows the calculation of
the amount referred to in Section 11.1.1.13.6 of the Loan Agreement.
- ii -
Each of the calculations in the attachment hereto demonstrates
compliance with the relevant financial tests listed above as at, or for the
relevant period ending on ____________________,__________________.
In addition, the Borrowers confirm that the representations and
warranties contained in Article 10 of the Loan Agreement are true and correct as
if made on the date hereof.
DATED this _______ day of ______, ________.
Yours very truly,
GERDAU STEEL INC. GERDAU COURTICE STEEL INC.
By:_________________________ By:_______________________
[Title] [Title]
GERDAU MRM STEEL INC.
By:_______________________
[Title]
EXHIBIT D
SCHEDULE J
Legal Description
PIN No. 03826-0209(R)
Part Xxx 0, Xxxxxxxxxx 00 (Xxxxxx),
Xxxx xx Xxxxxxxxx (formerly, in the City of Galt), Regional Municipality of
Waterloo, designated as:
Firstly:
Part 5 on Reference Plan 67R-3397, save and except Part 1 on Reference Plan
58R-10199 and save and except Parts 2 and 7 on Reference Plan 67R-3585;
Subject to an easement in favour of the Corporation of the City of Cambridge
over Parts 1, 2 and 3 on Reference Plan 67R-1595 as in Instrument No. 562772;
Subject to an easement in favour of the Corporation of the City of Cambridge
over Part 1 on Reference Plan 67R-2662, as set out in Instrument Nos. 672505 and
719705;
Subject to an easement in favour of Ontario Hydro over Parts 10, 11 and 13 on
Reference Plan 67R-2555 as set out in Instrument No. 519440;
Subject to an easement in favour of Ontario Hydro over Part 3 on Reference Plan
67R-2744 as set out in Instrument No. 672553;
Subject to an easement in favour of Ontario Hydro over Part 1 on Reference Plan
67R-2721 as set out in Instrument No. 675358;
Subject to the restrictive covenants more particularly set out in Instrument
Nos. 664863, 666649 and 657448;
Secondly:
Parts 3, 4 and 6 on Reference Plan 67R-3397, save and except Parts 5 and 6 on
Reference Plan 67R-3585;
Subject to an easement over part of the lands being part of Part 10 on Reference
Plan 67R-2555 in favour of Ontario Hydro, as set out in Instrument No. 519440;
Subject to an easement over part of the lands being part of Part 1 on Reference
Plan 67R-1075 (now Parts 12, 13 and 14 on Reference Plan 67R-2555 and Part 2 on
Reference Plan 58R-8029) in favour of the City of Cambridge, as set out in
Instrument No. 562772;
Subject to the restrictive covenants as contained in Instrument No. 731985;
Thirdly:
Parts 1 and 2 on Reference Plan 58R-8029;
Subject to an easement in favour of the Corporation of the City of Cambridge
over Part 2 on Plan 58R-8029 as set out in Instrument No. 562772;
Fourthly:
Parts 1 and 2 on Reference Plan 67R-3567;
Subject to an easement over part of the lands being part of Part 5 on Reference
Plan 67R-1595, as set out in Instrument No. 519440;
-ii-
Subject to an easement over part of the lands being part of Part 1 on Reference
Plan 67R-1075 in favour of Ontario Hydro, as set out in Instrument No. 562772;
Subject to an easement over part of the lands being part of Part 1 on Reference
Plan 67R-2721 in favour of Ontario Hydro as set out in Instrument No. 675358;
Subject to the restrictive covenants as contained in Instrument No. 1272674;
Fifthly:
Parts 1 and 2 on Reference Plan 58R-10049;
Subject to an easement over Part 2 on Reference Plan 58R-10049, as set out in
Instrument No. 562772;
Sixthly:
Part of Orion Place (closed by By-law No. 160-96 registered as Instrument Xx.
0000000), Xxxx xx Xxxxxxxxx and designated as Part 1 on Reference Plan 58R-8704;
Seventhly:
Part of Orion Place being part of Lot 3, Concession 11 (closed by By-law No.
159-93 registered as Instrument Xx. 0000000), Xxxx xx Xxxxxxxxx, (formerly in
the City of Galt), Regional Municipality of Waterloo and designated as Part 2 on
Reference Plan 58R-8704;
Subject to an easement over that portion of the lands being composed of Part 1
on Reference Plan 58R-8785 in favour of Union Gas Limited, as set out in
Instrument No. 1181141; Subject to the restrictive covenants contained in
Instrument No. 1181143; and
Eighthly:
Part of Orion Place being part of Lot 3, Concession 11 (closed by By-law No.
160-96 registered as Instrument No. 1306011), designated as Parts 2 and 3 on
Reference Plan 58R-10199. Subject to an easement in favour of the Corporation of
the City of Cambridge over Part 1 on Plan 58R-10566 as set out in Instrument No.
1353996;
Subject to an easement in favour of Xxxx Canada over Part 3 on Plan 58R-10199 as
set out in Instrument No. 1314826.
Encumbrances Outstanding Against Courtice Steel Inc. Real Property
Affecting the lands Firstly described
(a) Subject to an easement in favour of the Corporation of the City of
Cambridge over Parts 1, 2 and 3 on Reference Plan 67R-1595 as in
Instrument No. 562772;
(b) Subject to an easement in favour of the Corporation of the City of
Cambridge over Part 1 on Reference Plan 67R-2662, as set out in
Instrument Nos. 672505 and 719705;
(c) Subject to an easement in favour of Ontario Hydro over Parts 10, 11
and 13 on Reference Plan 67R-2555 as set out in Instrument No.
519440;
(d) Subject to an easement in favour of Ontario Hydro over Part 3 on
Reference Plan 67R-2744 as set out in Instrument No. 672553;
(e) Subject to an easement in favour of Ontario Hydro over Part 1 on
Reference Plan
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67R-2721 as set out in Instrument No. 675358
Affecting the lands Secondly described
(f) Subject to an easement over part of the lands being part of Part 10
on Reference Plan 67R-2555 in favour of Ontario Hydro, as set out in
Instrument No. 519440;
(g) Subject to an easement over part of the lands being part of Part 1
on Reference Plan 67R-1075 (now Parts 12, 13 and 14 on Reference
Plan 67R-2555 and Part 2 on Reference Plan 58R-8029) in favour of
the City of Cambridge, as set out in Instrument No. 562772;
Affecting the lands Thirdly described
(h) Subject to an easement in favour of the Corporation of the City of
Cambridge over Part 2 on Plan 58R-8029 as set out in Instrument No.
562772;
Affecting the lands Fourthly described
(i) Subject to an easement over part of the lands being part of Part 5
on Reference Plan 67R-1595, as set out in Instrument No. 519440;
(j) Subject to an easement over part of the lands being part of Part 1
on Reference Plan 67R-1075 in favour of Ontario Hydro, as set out in
Instrument No. 562772;
(k) Subject to an easement over part of the lands being part of Part 1
on Reference Plan 67R-2721 in favour of Ontario Hydro as set out in
Instrument No. 675358;
Affecting the lands Fifthly described
(l) Subject to an easement over Part 2 on Reference Plan 58R-10049, as
set out in Instrument No. 562772;
Affecting the lands Seventhly described
(m) Subject to an easement over that portion of the lands being composed
of Part 1 on Reference Plan 58R-8785 in favour of Union Gas Limited,
as set out in Instrument No. 1181141;
Affecting the lands Eighthly described
(n) Subject to an easement in favour of the Corporation of the City of
Cambridge over Part 1 on Plan 58R-10566 as set out in Instrument No.
1353996;
(o) Subject to an easement in favour of Xxxx Canada over Part 3 on Plan
58R-10199 as set out in Instrument No. 1314826;
Affecting all lands
(p) a reservation of all mines and minerals to Her Majesty the Queen
registered as Instrument No. 16907;
(q) Instrument No. 1113692 is a site plan agreement registered April 9,
1992 made between the Corporation of the City of Cambridge and
Courtice Steel Inc. (affecting the lands Firstly and Secondly
described);
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(r) Instrument No. 1186874 registered September 28, 1993 being a site
plan control agreement made between the Corporation of the City of
Cambridge and Courtice Steel Inc. (affecting the lands Firstly and
Secondly described);
(s) Instrument No. 1193190 registered November 18, 1993 being a site
plan agreement made between the Corporation of the City of Cambridge
and Courtice Steel Inc. (affecting the lands Firstly and Secondly
described);
(t) restrictive covenants registered as Instrument Nos. 593522, 657448,
664863, 666649, 672553, 719704, 731985, 1181143 and 1272674;
(u) Instrument No. 718821 is a demand debenture registered October 31,
1989 made between Courtice Steel Inc. and The Toronto-Dominion Bank
securing an original principal sum of $50,000,000 as amended by a
supplemental debenture registered as Instrument No. 1258106 on June
28, 1995 and further amended by a debenture amending agreement
registered as Instrument No. 1314747 on November 12, 1996
(collectively, the "Courtice Original Debenture")
(v) Instrument No. 732365 is a demand debenture registered June 28, 1990
made between Courtice Steel Inc. and The Toronto-Dominion Bank as
amended by a supplemental debenture registered as Instrument No.
1258107 registered June 28, 1995 (collectively the "Courtice
Supplemental Debenture");
(w) Instrument No. 1342135 registered June 23, 1997 is an encroachment
agreement made between the Corporation of the City of Cambridge and
Gerdau Courtice Steel Inc. with respect to a right to allow Gerdau
Courtice Steel's storm sewer pipe to encroach on the southerly limit
of the public road allowance;
(x) Any reservations, limitations, provisos and conditions expressed in
the original grant from the Crown, as the same may be varied by
statute;
(y) Any right of expropriation, access or user or any similar rights
conferred or reserved by or in any Statutes of Canada or the
Province of Ontario;
(z) Any unregistered easements, rights of access or rights-of-way, not
disclosed by the registered title;
(aa) Any governing municipal by-laws other than those disclosed in this
opinion;
(bb) The rights of persons having unperfected liens under the
Construction Lien Act to the extent of any deficiency in holdbacks
required to be retained by the owner of the Property under that Act;
(cc) Any unregistered statutory charge arising under the Bankruptcy and
Insolvency Act (Canada) in respect of amounts expended by any
governmental authority to remediate any environmental condition;
(dd) Liens for taxes not due or payable.
(ee) Liens for public utility accounts not due or payable.
(ff) Any errors, omissions, encroachments or discrepancies which may be
revealed by an up-to-date survey of the Property.
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EXHIBIT E
FLS HOLDINGS, INC.
STOCK PLEDGE AGREEMENT
(Shares of AmeriSteel Corporation)
This Stock Pledge Agreement, dated as of September 27, 1999, is by and
between FLS HOLDINGS, INC., a corporation incorporated under the laws of
Delaware, and THE TORONTO-DOMINION BANK, for its own benefit and in its capacity
as Agent (as hereinafter defined) for the ratable benefit of the Lenders (as
hereinafter defined).
R E C I T A L S:
A. Pursuant to the Loan Agreement (as hereinafter defined) the Lenders
have agreed to make certain loans and other financial accommodations to the
Borrowers;
B. As a condition to the availability and further extension of credit
under the Loan Agreement, the Agent and the Lenders have requested that the
Pledgor grant to the Agent, on behalf of the Agent and the Lenders, a security
interest in the Collateral (as hereinafter defined); and
C. The Pledgor is a wholly-owned indirect Subsidiary of one of the
Borrowers, and the availability and further extension of credit under the Loan
Agreement inures to the substantial direct and indirect benefit of the Pledgor.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Pledge Agreement:
"Agent" means The Toronto-Dominion Bank, as administration agent for
ratable benefit of the Lenders and not in its individual capacity as a Lender,
and any replacement or successor Agent appointed pursuant to the Loan Agreement.
"Collateral" means the Pledged Stock, the Stock Rights and all proceeds of
the foregoing.
"Default" means an event described in Section 6.1.
"Guaranty" means that certain guarantee dated as of the date hereof by the
Pledgor in favor of the Agent, for its own benefit and for the benefit of the
Lenders, with respect to, inter alia, the "Loan Obligations" (as defined in the
Loan Agreement).
"Issuer" means AmeriSteel Corporation, a corporation incorporated under
the laws of Delaware, and its successors (including any successor by merger,
amalgamation or continuation under the laws of another jurisdiction).
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, lien, claim, charge, encumbrance, title retention agreement, or
lessor's interest, in, of or on the Collateral or any portion thereof.
"Loan Agreement" means the loan agreement dated as of November 8, 1996, as
further amended and restated as of December 18, 1998 and September 27, 1999,
among Gerdau Steel Inc., Gerdau Courtice Steel Inc. and Gerdau MRM Steel Inc.,
as Borrowers, the Agent, and the institutions named therein as Lenders, as it
may be amended, supplemented, restated, novated or otherwise modified from time
to time.
"Obligations" means all "Guarantor's Obligations" as defined in the
Guaranty.
"Pledge Agreement" means this Stock Pledge Agreement, as it may be
amended, supplemented, restated or otherwise modified from time to time.
"Pledged Stock" means all of the outstanding shares of capital stock of
the Issuer.
"Pledgor" means FLS Holdings, Inc., a corporation incorporated under the
laws of Delaware, and its successors and assigns.
"Section" means a numbered section of this Pledge Agreement, unless
another document is specifically referenced.
"Shareholders' Agreement" means the agreement dated as of September 27,
1999 among Gerdau USA Inc., Kyoei Steel Ltd. and FLS Holdings, Inc. with respect
to, among other things, the shares of the Issuer.
"Stock Rights" means any stock, any dividend or other distribution and any
other right or property which the Pledgor shall receive or shall become entitled
to receive for any reason whatsoever with respect to, in substitution for or in
exchange for any shares of Pledged Stock and any stock, any right to receive
stock and any right to receive earnings, in which the Pledgor now has or
hereafter acquires any right, issued by an issuer of the Pledged Stock.
"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to such terms in the
Loan Agreement.
2. PLEDGE AND SECURITY INTEREST. In order to secure the full and complete
payment and performance by the Pledgor of the Obligations when due, the Pledgor
hereby pledges and grants to the Agent for the benefit of the Agent and the
ratable benefit of the Lenders
-2-
a first priority lien on, and security interest in, all of the Pledgor's right,
title and interest in and to the Collateral.
-3-
3. DEPOSIT OF CERTIFICATES FOR PLEDGED STOCK. The certificates
representing the Pledged Stock listed on Schedule A attached hereto shall be
delivered to the Agent contemporaneously herewith together with appropriate
undated stock powers duly executed in blank. Neither the Agent nor the Lenders
shall be obligated to preserve or protect any rights with respect to the Pledged
Stock or to receive or give any notice with respect thereto whether or not the
Agent or any Lender are deemed to have knowledge of such matters.
4. REPRESENTATIONS AND WARRANTIES.
The Pledgor represents and warrants to the Agent and the Lenders that:
4.1. Existence and Standing. The Pledgor is duly organized and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and the Pledgor has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted.
4.2. Authorization, Validity and Enforceability. The execution, delivery
and performance by the Pledgor of this Pledge Agreement has been duly authorized
by proper corporate proceedings, and this Pledge Agreement constitutes a legal,
valid and binding obligation of the Pledgor, enforceable against the Pledgor in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and subject also to the availability of equitable remedies if
equitable remedies are sought, and creates a security interest which is
enforceable against the Pledgor in all now owned and hereafter acquired
Collateral. No consent or approval of any Governmental Body which has not been
obtained is required in connection with the execution, delivery and performance
by the Pledgor of this Pledge Agreement.
4.3. Conflicting Laws and Contracts. Neither the execution and delivery by
the Pledgor of this Pledge Agreement, nor the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance by the
Pledgor with the terms and provisions hereof will violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on the
Pledgor or the Pledgor's articles of incorporation or by-laws, the provisions of
any indenture, instrument or agreement to which the Pledgor is a party or is
subject, or by which it, or its property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
Lien pursuant to the terms of any such indenture, instrument or agreement.
4.4. No Default. No Default or Unmatured Default exists.
4.5. Pledged Stock. The Pledgor is the direct and beneficial owner of each
share of the Pledged Stock and the Pledged Stock represents the percentage (on a
fully diluted basis) of the issued and outstanding capital stock of its issuer
as set forth on Schedule A hereto. All of the shares of the Pledged Stock are
duly authorized, validly issued, fully paid and non-assessable. Subject to the
restrictions contained in the Shareholders' Agreement (a true copy of which has
been provided by the Pledgor to the Agent prior to the execution hereof), the
Pledgor has good and marketable title to the Pledged Stock and has all requisite
rights, power, and authority to execute, deliver and comply with the terms of
this Pledge Agreement and to pledge and deliver
-4-
the Collateral to the Agent pursuant hereto. The Pledged Stock is free and clear
of all Liens, options, warrants, puts, calls, or other rights of third persons,
and restrictions, other than (i) those liens arising under this Pledge
Agreement, (ii) restrictions on transferability imposed by applicable state and
Federal securities laws, rules and regulations and (iii) the restrictions
contained in the Shareholders' Agreement. Assuming the Agent has possession of
the Pledged Stock, the pledge, assignment and delivery of the Pledged Stock
pursuant to this Pledge Agreement creates a valid, continuing, first perfected
Lien on the Pledged Stock in favor of the Agent, for the benefit of the Agent
and the Lenders, subject to no prior Lien of any other Person, other than
Permitted Liens referred to in clauses (i), (ii), (xviii) and (xix) of the
definition of "Permitted Liens" in the Loan Agreement.
5. COVENANTS.
From the date hereof and continuing thereafter until this Pledge Agreement
is terminated pursuant to Section 9.10, the Pledgor covenants and agrees with
the Agent and the Lenders as follows:
5.1. Pledge of Additional Stock. If the Pledgor shall at any time acquire
any additional shares of the capital stock of any class of the Issuer, whether
such acquisition shall be by purchase, exchange, reclassification, dividend, or
otherwise, the Pledgor shall forthwith (and without the necessity for any
request or demand by the Agent or any Lender) deliver the certificates
representing such shares to the Agent, in the same manner as described in
Section 3. The Pledgor will hold in trust for the Agent and the Lenders upon
receipt and immediately thereafter deliver to the Agent any other instrument
evidencing or constituting Collateral (except, prior to the occurrence of an
Unmatured Default or a Default, ordinary cash dividends, if any, paid with
respect to the Pledged Stock and the Stock Rights and permitted by the Loan
Agreement).
5.2. Applications, Approvals and Consents. The Pledgor will, at its
expense, promptly execute and deliver, or cause the execution and delivery by
the issuer of the Pledged Stock of, all applications, certificates, instruments,
registration statements, and all other documents and papers the Agent on behalf
of the Lenders may reasonably request in connection with the obtaining of any
consent, approval, registration, qualification, or authorization of any
Governmental Body necessary or appropriate for the effective exercise of any
rights under this Pledge Agreement. Upon the Pledgor's request therefor, the
Agent shall acknowledge in writing receipt of all such certificates, instruments
and other documents. Without limiting the generality of the foregoing, the
Pledgor agrees that in the event the Agent on behalf of the Lenders shall
exercise its right to sell, transfer, or otherwise dispose of or take any other
action in connection with any of the Collateral pursuant to this Pledge
Agreement, the Pledgor shall execute and deliver all applications, certificates,
and other documents the Agent may reasonably request and shall otherwise
promptly, fully and diligently cooperate with the Agent and any other necessary
Persons, in making any application for the prior consent or approval of any
relevant Governmental Body to the exercise by the Agent or the Lenders of any of
such rights relating to all or any part of the Collateral. Furthermore, because
the Pledgor agrees that the Lenders' remedy at law for failure of the Pledgor to
comply with the provisions of this Section 5.2 would
-5-
be inadequate and that such failure would not be adequately compensable in
damages, the Pledgor agrees that the covenants of this Section 5.2 may be
specifically enforced.
5.3. Title; Security Interest and Lien. The Pledgor (a) will preserve,
warrant, and defend title to and ownership of the Pledged Stock and the Lien in
the Collateral created hereby against the claims of all Persons whomsoever; (b)
will not at any time assign, transfer, or otherwise dispose of its right, title
and interest in and to any of the Collateral; (c) will not do or suffer any
matter or thing whereby the Lien created by this Pledge Agreement in and to the
Collateral might or could be impaired; and (d) will not at any time, directly or
indirectly, create, assume, or suffer to exist any Lien, warrant, put, option,
or other rights of third Persons and restrictions in and to the Collateral or
any part thereof other than (i) those Liens arising under this Pledge Agreement,
(ii) restrictions on transferability imposed by applicable state and Federal
securities laws, rules and regulations, (iii) Permitted Liens referred to in
clauses (i), (ii), (xviii) and (xix) of the definition of that term in the Loan
Agreement, and (iv) the restrictions contained in the Shareholders' Agreement.
5.4. Further Assurances. The Pledgor, at its expense, shall from time to
time execute and deliver to the Agent all such other assignments, certificates,
supplemental documents and financing statements, and do all other acts or things
as the Agent may reasonably request in order to more fully create, evidence,
perfect, continue and preserve the priority of the Lien created hereby. If so
requested by the Agent, the Pledgor shall cause the Pledged Stock to be
registered and recorded in the books, records and registers of the Issuer in the
name of the Agent or its nominee.
5.5. Pledged Stock.
5.5.1. Changes in Capital Structure of Issuers. The Pledgor will not
(i) permit or suffer the Issuer to dissolve, liquidate, retire any of its
capital stock, reduce its capital or merge or consolidate with any other
entity, except for a merger permitted by Section 11.3 of the Loan
Agreement, or (ii) vote any of the Pledged Stock in favor of any of the
foregoing.
5.5.2. Issuance of Additional Stock. The Pledgor will not permit or
suffer the Issuer to issue any stock, any right to receive stock or any
right to receive earnings, except to the Pledgor.
5.5.3. Disposition of Collateral. The Pledgor will not sell or
otherwise dispose of all or any part of the Collateral.
5.5.4. Registration of Pledged Stock. After the occurrence of a
Default, the Pledgor will, to the extent permitted by applicable law and
to the extent not previously registered in the name of the Agent or its
nominee under Section 5.4 above, permit any registerable Collateral to be
registered in the name of the Agent or its nominee at any time at the
option of the Required Lenders.
-6-
5.5.5. Exercise of Rights in Pledged Stock. The Pledgor will permit
the Agent or its nominee at any time after the occurrence of a Default,
without notice, to exercise all voting and corporate rights relating to
the Collateral, including, without limitation, exchange, subscription or
any other rights, privileges, or options pertaining to any shares of the
Pledged Stock and the Stock Rights as if it were the absolute owner
thereof.
5.6. Notice of Default. The Pledgor will give prompt notice in writing to
the Agent and the Lenders of the occurrence of any Default or Unmatured Default
and of any other development, financial or otherwise, which might materially
adversely affect the Collateral.
6. RIGHTS OF PLEDGOR, AGENT AND THE LENDERS.
6.1. Default; Exercise of Stockholder Rights.
(a) Unless and until an Unmatured Default or a Default shall occur
and be continuing, the Pledgor shall be entitled to receive all cash
dividends or other distributions on the Pledged Stock except (i)
distributions made in capital stock on the Pledged Stock resulting from
stock dividends or on subdivision, combination, or reclassification of the
outstanding capital stock of any corporation or as a result of any merger,
consolidation, acquisition or other exchange of assets of any corporation;
and (ii) all sums paid on any Pledged Stock upon liquidation or
dissolution or reduction of capital, repurchase, retirement or redemption.
All such sums, dividends, distributions, proceeds or property described in
the immediately preceding clauses (i) and (ii) shall, if received by any
Person other than the Agent, be held in trust for the benefit of the Agent
and the Lenders and shall forthwith be delivered to the Agent for the
benefit of the Agent and the Lenders (accompanied by proper instruments of
assignment and/or stock powers executed by the Pledgor in accordance with
the Agent's instructions) to be held subject to the terms of this Pledge
Agreement. Upon the occurrence of a Default, the Agent, for the benefit of
the Agent and the Lenders, shall be entitled to receive all payments of
whatever kind made upon or with respect to any Collateral and to hold such
payments as Collateral or apply such payments pursuant to the terms of
this Agreement and the Guaranty. As used herein, the term "Default" shall
mean the occurrence of any one or more of the following events:
(A) Any representation or warranty made by or on behalf of the
Pledgor to the Agent or the Lenders under or in connection with this
Pledge Agreement or the Guaranty shall be materially false on the
date as of which made.
(B) The breach by the Pledgor (other than a breach which
constitutes a Default under Section 6.1(a)(A)) of any of the terms
or provisions of this Pledge Agreement which is not remedied within
15 Business Days after the Pledgor knows or should have known of
such failure.
(C) The occurrence of any "Event of Default" under, and as
defined in, the Loan Agreement.
-7-
(b) Prior to the occurrence of a Default, the Pledgor shall have the
sole and exclusive right to vote and give consents with respect to all of
the Collateral and to consent to, ratify, or waive notice of any and all
meetings. Upon the occurrence of a Default, the Agent, on behalf of the
Lenders, shall have the right, but shall not be obligated, (A) to vote and
give consents with respect to any Pledged Stock and, in connection
therewith, to join in and become a party to any plan of recapitalization,
reorganization, or readjustment (whether voluntary or involuntary) as
shall seem desirable to the Agent, on behalf of the Lenders, to protect or
further their interests in respect of the Collateral, (B) to deposit the
Collateral under any such plan, and (C) to make any exchange,
substitution, cancellation, or surrender of the Collateral required by any
such plan and to take such action with respect to the Collateral as may be
required by any such plan or for the accomplishment thereof, and no such
disposition, exchange, substitution, cancellation, or surrender shall be
deemed to constitute a release of the Collateral from the Lien of this
Pledge Agreement.
6.2. Right of Sale after Default. Upon the occurrence and during the
continuance of a Default, the Agent on behalf of the Lenders may exercise any or
all of the rights and remedies provided (i) in this Pledge Agreement, (ii) to a
secured party when a debtor is in default under a security agreement by the New
York Uniform Commercial Code and (iii) by any other applicable law including,
without limitation, any law governing the exercise of a bank's right of setoff
or bankers' lien. Without limiting the generality of the foregoing, upon the
occurrence and continuance of a Default, the Agent may sell, without recourse to
judicial proceedings, with the right to bid for and buy, free from any right of
redemption, the Collateral or any part thereof, upon ten days' notice (which
notice is agreed to be reasonable notice for the purposes hereof) to the Pledgor
of the time and place of sale, for cash, upon credit or for future delivery, at
the Lenders' option and in the Lenders' complete discretion:
(a) At public sale, including a sale at any broker's board or
exchange;
(b) At private sale in any commercially reasonable manner which will
not require the Collateral, or any part thereof, to be registered in
accordance with the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder, or any other law or regulation. The
Agent and the Lenders are also hereby authorized, but not obligated, to
take such actions, give such notices, obtain such consents, and do such
other things as they may deem required or appropriate in the event of sale
or disposition of any of the Collateral. The Pledgor understands that the
Agent, on behalf of the Lenders, may in its discretion approach a
restricted number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Collateral, or any portion
thereof, than would otherwise be obtainable if the same were registered
and sold in the open market. The Pledgor agrees that (i) in the event the
Agent shall so sell the Collateral, or any portion thereof, at such
private sale or sales, the Agent and the Lenders shall have the right to
rely upon the advice and opinion of any Person with whom the Lenders deal
at arm's length who regularly deals in or evaluates stock of the type
constituting the Collateral as to the price obtainable in a commercially
reasonable manner
-8-
upon such a private sale thereof, and (ii) such reliance shall be
conclusive evidence that the Agent and the Lenders handled such matter in
a commercially reasonable manner.
In the case of any sale by the Agent on behalf of the Lenders of the
Collateral on credit or for future delivery, the Collateral sold may be retained
by the Agent until the selling price is paid by the purchaser, but neither the
Agent nor any Lender shall incur liability in case of failure of the purchaser
to take up and pay for the Collateral so sold.
In the event that the Agent and the Lenders reasonably determine that a
private sale is not economically practical, and if in the opinion of the Agent
and the Lenders it is necessary or advisable to have such securities registered
under the provisions of such Act, or any similar law relating to the
registration of securities, the Pledgor agrees, at its own expense, to (i)
execute and deliver all such instruments and documents, and do or cause to be
done such other acts and things, as may be necessary or, in the opinion of the
Agent, advisable to register such securities under the provisions of such Act or
any applicable similar law relating to the registration of securities, and the
Pledgor will use its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for such period as the Agent
shall request, and to make all amendments thereto and/or to the related
prospectus which, in the opinion of the Agent, are necessary or desirable, all
in conformity with the requirements of such Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto; (ii) use its best
efforts to qualify such securities under state "blue sky" or securities laws,
all as reasonably requested by the Agent; and (iii) at the request of the Agent,
indemnify and hold harmless the Lenders, the Agent, any underwriters (and any
Person controlling any of the foregoing), and their respective employees,
officers, agents, attorneys, and accountants (collectively, the "Indemnified
Parties") from and against any loss, liability, claim, damage, and expense
(including, without limitation, fees of counsel incurred in connection
therewith) under such Act or otherwise, insofar as such loss, liability, claim,
damage, or expense arises out of or is based upon any untrue statement or
alleged untrue statement of any material fact furnished by the Pledgor contained
in any registration statement under which such securities were registered under
such Act or other securities laws, any preliminary prospectus or final
prospectus contained therein, or arise out of or are based upon any omission or
alleged omission by the Pledgor to state therein a material fact required to be
stated or necessary to make the statements therein not misleading, such
indemnification to remain operative regardless of any investigation made by or
on behalf of any Indemnified Party; provided, however, that the Pledgor shall
not be liable in any case to the extent that any such loss, liability, claim,
damage, or expense arises out of or is based upon an untrue statement or alleged
untrue statement or an omission or an alleged omission made in reliance upon and
in conformity with written information furnished to the Pledgor by an
Indemnified Party specifically for use in such registration statement or
preliminary or final prospectus.
6.3. Application of Proceeds. The Agent shall apply the proceeds of the
Collateral, including the proceeds of any sales or other disposition of the
Collateral, or any part thereof, under Section 6, to payment of such part of the
Obligations and in such order as the Agent determines in its sole discretion,
unless a court of competent jurisdiction shall otherwise direct.
-9-
6.4. Governance. All rights and remedies available to the Agent or the
Lenders with respect to the grant, foreclosure and enforcement of the security
interest and lien granted hereby and with respect to any action permitted
hereunder may be exercised solely by the Agent acting, where so required by the
Loan Agreement, with the concurrence of the Required Lenders.
7. WAIVERS, AMENDMENTS AND REMEDIES.
No delay or omission of the Agent to exercise any right or remedy granted
under this Pledge Agreement shall impair such right or remedy or be construed to
be a waiver of any Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or provisions of this
Pledge Agreement whatsoever shall be valid unless in writing signed by the Agent
with the concurrence, where so required by the Loan Agreement, of the Required
Lenders, and then only to the extent in such writing specifically set forth. All
rights and remedies contained in this Pledge Agreement or by law afforded shall
be cumulative and all shall be available to the Agent and the Lenders until the
Obligations have been paid in full.
8. GENERAL PROVISIONS.
8.1. Indemnity. The Pledgor hereby agrees to assume liability for, and
does hereby agree to indemnify and keep harmless the Agent and the Lenders, and
their respective successors, assigns, agents, employees, directors, officers,
attorneys, accountants and other representatives (each an "Indemnitee"), from
and against any and all liabilities, damages, penalties, suits, costs and
expenses of any kind and nature, imposed on, incurred by or asserted against any
of the Indemnitees, in any way relating to or arising out of any action taken or
failure to act by the Pledgor under or in respect of this Pledge Agreement,
provided that no such Person shall be entitled to indemnification for
liabilities, damages, penalties, suits, costs and expenses caused by its or
their own gross negligence or willful misconduct.
8.2. Secured Party Performance of Pledgor Obligations. Without having any
obligation to do so, if a Default has occurred and is continuing the Agent may
perform or pay any obligation which the Pledgor has agreed to perform or pay in
this Pledge Agreement and the Pledgor shall reimburse the Agent for any amounts
paid by the Agent pursuant to this Section 8.2. The Pledgor's obligation to
reimburse the Agent pursuant to the preceding sentence shall constitute an
Obligation payable on demand.
8.3. Authorization for Secured Party to Take Certain Action. The Pledgor
irrevocably authorizes the Agent at any time and from time to time in the sole
discretion of the Agent and appoints the Agent as its attorney in fact to act on
behalf of the Pledgor (i) to execute on behalf of the Pledgor as debtor and to
file financing statements necessary or desirable in the Agent's sole discretion
to perfect and to maintain the perfection and priority of the Agent's security
interest in the Collateral, (ii) to indorse and collect any cash proceeds of the
Collateral, (iii) to file a carbon, photographic or other reproduction of this
Pledge Agreement or any financing statement with respect to the Collateral as a
financing statement in such offices as the Agent in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and
-10-
priority of the Agent's and the Lenders' security interest in the Collateral,
and (iv) to apply the proceeds of any Collateral received by the Agent to the
Obligations as provided in Section 6.3 if a Default has occurred and is
continuing.
8.4. Specific Performance of Certain Covenants. The Pledgor acknowledges
and agrees that a breach of any of the covenants contained in Sections 5.1 and
5.3 will cause irreparable injury to the Agent and the Lenders, that the Agent
and Lenders have no adequate remedy at law in respect of such breaches and
therefore agrees, without limiting the right of the Agent or the Lenders to seek
and obtain specific performance of other obligations of the Pledgor contained in
this Pledge Agreement, that the covenants of the Pledgor contained in the
Sections referred to in this Section 9.4 shall be specifically enforceable
against the Pledgor.
8.5. Definition of Certain Terms. Terms defined in the New York Uniform
Commercial Code which are not otherwise defined in this Pledge Agreement are
used in this Pledge Agreement as defined in the New York Uniform Commercial Code
as in effect on the date hereof.
8.6. Benefit of Agreement. The terms and provisions of this Pledge
Agreement shall be binding upon and inure to the benefit of the Pledgor, the
Agent and the Lenders and their respective successors and assigns, except that
the Pledgor shall not have the right to assign its rights under this Pledge
Agreement or any interest herein, without the prior written consent of the
Agent.
8.7. Survival of Representations. All representations and warranties of
the Pledgor contained in this Pledge Agreement shall survive the execution and
delivery of this Pledge Agreement.
8.8. Taxes and Expenses. Any taxes (including income taxes other than
taxes on the overall net income of the Lenders) payable or ruled payable by
Federal, Provincial or State authority or other Governmental Body in respect of
this Pledge Agreement shall be paid by the Pledgor, together with interest and
penalties, if any. The Pledgor shall reimburse the Agent for any and all
out-of-pocket expenses and internal charges (including reasonable attorneys'
fees and reasonable time charges of attorneys and paralegals who may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Pledge Agreement or in the collection, preservation or sale of the
Collateral.
8.9. Headings. The title of and section headings in this Pledge Agreement
are for convenience of reference only, and shall not govern the interpretation
of any of the terms and provisions of this Pledge Agreement.
8.10. Termination. This Pledge Agreement and the Lien arising hereunder
shall (i) become effective as of the date hereof upon the execution hereof and
(ii) continue in effect (notwithstanding the fact that from time to time there
may be no Obligations outstanding) until no Obligations or commitments of the
Pledgor or any of the Borrowers to the Agent or the Lenders which could give
rise to any Obligations shall be outstanding. Upon the termination of
-11-
this Pledge Agreement, the Agent will promptly deliver to the Pledgor (or to
such other Person as the Pledgor or a court of competent jurisdiction shall
direct), any Pledged Stock then still held by the Agent and not theretofore
disposed of in foreclosure or otherwise. Such delivery shall be without warranty
of, or recourse to, the Agent.
8.11. Releases; Partial Releases. Any cash dividends received by the
Pledgor in accordance with the terms of Section 6.1(a) shall be deemed released
from the Lien of this Pledge Agreement and shall be held by the Pledgor (or any
transferee of Pledgor) free and clear of the Lien created by this Pledge
Agreement. Upon termination of this Pledge Agreement in accordance with the
provisions of Section 8.10, the Agent shall, at the Pledgor's request and
expense, execute such release as the Pledgor may reasonably request, in form and
upon terms acceptable to the Agent in all respects, and shall deliver all
certificates representing the Pledged Stock and other property held in respect
thereof hereunder which is in the Agent's possession, together with all stock
powers or other instruments of transfer reasonably required to effect delivery
to the Pledgor.
8.12. Entire Agreement. This Pledge Agreement together with the Loan
Agreement and the other Loan Documents embodies the entire agreement and
understanding among the Pledgor, the Lenders and the Agent relating to the
Collateral and supersedes all prior agreements and understandings among the
Pledgor, the Lenders and the Agent relating to the Collateral.
8.13. CHOICE OF LAW. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
NEW YORK BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
8.14. Waivers. Except to the extent expressly otherwise provided herein or
in any Loan Document, the Pledgor waives, to the extent permitted by applicable
law, (i) any right to require the Agent or any Lender to proceed against any
other Person, to exhaust their rights in any other collateral, or to pursue any
other right which the Agent or any Lender may have, (ii) with respect to the
Obligations, presentment and demand for payment, protest, notice of protest and
non-payment, and notice of the intention to accelerate, and (iii) all rights of
marshalling in respect of any and all of the Collateral.
8.15. Agent Appointed Attorney-In-Fact. The Pledgor hereby irrevocably
appoints the Agent as Pledgor's attorney-in-fact, with full authority in the
place and stead of the Pledgor and in the name of the Pledgor or otherwise, from
time to time in the Agent's discretion reasonably exercised, to take any action
and to execute any instrument that the Agent deems reasonably necessary or
advisable to accomplish the purposes of this Pledge Agreement, including,
without limitation, to receive, endorse and collect all instruments made payable
to the Pledgor representing any dividend, interest payment or other distribution
in respect of the Collateral or any part thereof and to give full discharge for
the same, when and to the extent permitted by this Pledge Agreement.
8.16. Severability. The provisions of this Pledge Agreement are severable
and if any clause or provision hereof shall be held invalid or unenforceable in
whole or in part, then such
-12-
invalidity or unenforceability shall attach only to such clause or provision, or
part thereof, and shall not in any manner affect such clause or provision in any
other jurisdiction or any other clause or provision in this Pledge Agreement or
any jurisdiction.
9. NOTICES.
9.1. Sending Notices. Any notice required or permitted to be given under
this Agreement may be, and shall be deemed, given and sent in accordance with
the provisions of the Guaranty.
9.2. Change in Address for Notices. Each of the Pledgor and the Agent may
change the address for service of notice upon it by a notice in writing to the
other party.
-13-
10. THE AGENT.
The Toronto-Dominion Bank has been appointed Agent hereunder pursuant to
Article 13 of the Loan Agreement, and the Agent has agreed to act (and any
successor or replacement Agent shall act) as such only upon the express
conditions contained in such Article. Any successor or replacement Agent
appointed pursuant to Article 13 of the Loan Agreement shall be entitled to all
the rights, interests and benefits of the Agent hereunder.
IN WITNESS WHEREOF, the undersigned have executed this Stock Pledge
Agreement as of the date first above written.
FLS HOLDINGS, INC.
By: __________________________________
Name: __________________________________
Title: _________________________________
THE TORONTO-DOMINION BANK,
as Agent
By: __________________________________
Name: __________________________________
Title: _________________________________
-14-
Schedule A to
Stock Pledge Agreement
Pledged Stock
-------------------------------------------------------------------------------
No. of
Pledged Stock Corporation Jurisdiction Stock No. of Par Value
Name of Domicile Certificates Shares Per Share
---- ----------- ------------ ------ ---------
-------------------------------------------------------------------------------
AmeriSteel Corporation Delaware
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SCHEDULE K
The Real Property
The Manitoba Real Property
Legal Descriptions and Registered Encumbrances
(all information is based upon Certified Titles dated December 15,
1998, and all C/T's listed below evidence registered ownership in "Gerdau
MRM Steel Inc.")
C/T No. 1398757
ALL THOSE PORTIONS OF RL 21, 22 AND 24, PARISH OF ST XXXXXXXX WHICH LIE TO
THE WEST OF A LINE DRAWN WEST OF, PARALLEL WITH AND PERPENDICULARLY
DISTANT 1610 FEET FROM THE WESTERN LIMIT OF RIGHT OF WAY OF RLY PLAN 380
WLTO
Registered Encumbrances
Mortgage No. 0000000 in favour of The Toronto-Dominion Bank (the "TD
Mortgage")
Mortgage No. 0000000 in favour of The Canam Manac Group Inc. (the "Canam
Mortgage")
C/T No. 1398762
ALL THAT PORTION OF RL 23, PARISH OF ST XXXXXXXX WHICH LIES TO THE WEST OF
A LINE DRAWN WEST OF, PARALLEL WITH AND PERPENDICULARLY DISTANT 1610 FEET
PERP FROM THE WESTERN LIMIT OF RIGHT OF WAY OF RLY PLAN 380 WLTO
Registered Encumbrances
The TD Mortgage and the Canam Mortgage (hereinafter together referred to
as the "Permitted Mortgages")
C/T No. 1398763
FIRSTLY: ALL THAT PORTION OF RL 20, PARISH OF ST XXXXXXXX LYING TO THE
EAST OF THE EASTERN LIMIT OF RLY PLAN 380 WLTO, WHICH LIES TO THE WEST OF
THE STRAIGHT PRODUCTION SLY OF THE EASTERN LIMIT OF XXX 0 XXXX 0000 XXXX
XXX, XXXXXX "A" PLAN 10373 WLTO
SECONDLY: XXX 0 XXXX 00000 WLTO IN RL 00 XXXXXX XX XX XXXXXXXX
-ii-
Registered Encumbrances
Easement No. J23544
Caveat No. 217089
The Permitted Mortgages
C/T No. 1416136
FIRSTLY: XXXX 0, 0 XXX 0 XXXX 0000 XXXX IN RL 21 AND 22 PARISH OF ST
XXXXXXXX
SECONDLY: PARCELS 1 TO 5 PLAN 6736 WLTO EXC OUT OF SAID PARCELS 4 AND 5:
PLAN 32978 WLTO IN RL 21 TO 00 XXXXXX XX XX XXXXXXXX
Registered Encumbrances
Caveat Xx. 000000
Xxxxxx Xx. 000000
The Permitted Mortgages
Caveat No. 2217728
Caveat No. 2264931
Builders Lien Nos. 2296942, 2311566 and 2312510
C/T No. 1398765
PARCEL 1: ALL THAT PORTION OF RL 24, PARISH OF ST XXXXXXXX LYING TO THE
WEST OF THE WESTERN LIMIT OF LORD SELKIRK HIGHWAY PLAN 3405 WLTO WHICH
LIES TO THE EAST OF A LINE DRAWN SLY AT RIGHT ANGLES TO THE NORTHERN LIMIT
OF SAID LOT, FROM A POINT IN THE SAME DISTANT WLY THEREON 660 FEET FROM
SAID WESTERN LIMIT, EXC, FIRSTLY: PARCEL 3 PLAN 6736 WLTO AND SECONDLY:
ROAD PLAN 10247 WLTO
PARCEL 2: ALL THAT PORTION OF THE SLY 66 FEET PERP OF RL 25 OF SAID PARISH
LYING TO THE WEST OF THE WESTERN LIMIT OF SAID HIGHWAY PLAN 3405 WLTO
WHICH LIES TO THE EAST OF A LINE DRAWN NLY AT RIGHT ANGLES TO THE SOUTHERN
LIMIT OF SAID LOT 25 FROM A POINT IN THE SAME DISTANT WLY THEREON 660 FEET
FROM SAID WESTERN LIMIT.
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398786
LOT 9 PLAN 3527 WLTO IN RL 21 AND 22 PARISH OF ST XXXXXXXX
Registered Encumbrances
-iii-
The Permitted Mortgages
C/T No. 1398787
XXXX 0, 0 XXX 0 XXXX 0000 XXXX IN RL 21 AND 22 PARISH OF ST XXXXXXXX
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398788
E 1/2 OF LOT 7 PLAN 3527 WLTO IN RL 21 AND 22 PARISH OF ST XXXXXXXX
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398804
W 1/2 OF LOT 7 PLAN 3527 WLTO IN RL 21 AND 22 PARISH OF ST XXXXXXXX
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398805
ALL THAT PORTION OF RL 23, PARISH OF ST XXXXXXXX, BOUNDED AS FOLLOWS: ON
THE NORTH BY A LINE DRAWN SOUTH OF, PARALLEL WITH AND PERPENDICULARLY
DISTANT 99 FEET FROM THE NORTHERN LIMIT OF SAID LOT ON THE EAST BY THE
WESTERN LIMIT OF PARCEL 3 PLAN 6736 WLTO ON THE SOUTH BY A LINE DRAWN
NORTH OF, PARALLEL WITH AND PERPENDICULARLY DISTANT 66 FEET FROM THE
SOUTHERN LIMIT OF SAID LOT AND ON THE WEST BY THE EASTERN LIMIT OF PARCEL
4 PLAN 6736 WLTO
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398806
ALL THAT PORTION OF THE SLY 66 FEET PERP OF RL 23 PARISH OF ST XXXXXXXX,
LYING TO THE WEST OF THE WESTERN LIMIT OF THE LORD SELKIRK HIGHWAY PLAN
3405 WLTO WHICH LIES TO THE EAST OF A STRAIGHT LINE DRAWN SLY AT RIGHT
ANGLES TO THE NORTHERN LIMIT OF RL 24 OF SAID PARISH, FROM A POINT THEREIN
DISTANT WLY THEREON 660 FEET FROM THE WESTERN LIMIT OF SAID HIGHWAY EXC,
PARCEL 3 PLAN 6736 WLTO
-iv-
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398808
LOT 8 PLAN 3527 WLTO IN RL 21 AND 22 PARISH OF ST XXXXXXXX
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398809
ALL THAT PORTION OF THE SLY 66 FEET PERP OF RL 25 PARISH OF ST XXXXXXXX
WHICH LIES BETWEEN 2 LINES DRAWN AT RIGHT ANGLES TO THE SOUTHERN LIMIT OF
SAID LOT FROM POINTS IN THE SAME DISTANT WLY THEREON 660 FEET AND 666 FEET
FROM THE WESTERN LIMIT OF THE LORD SELKIRK HIGHWAY PLAN 3405 WLTO
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398811
ALL THAT PORTION OF RL 21, PARISH OF ST XXXXXXXX, TAKEN FOR SUNNYSIDE ROAD
PLAN 3527 (NOW CLOSED) WHICH LIES TO THE WEST OF THE STRAIGHT PRODUCTION
SLY OF THE WESTERN LIMIT OF LOT 8 PLAN 3527 WLTO EXC, ALL MINES AND
MINERALS
Registered Encumbrances
Caveat No. 217089
The Permitted Mortgages
C/T No. 1398813
PARCEL 1: ALL THAT PORTION OF RL 23, PARISH OF ST XXXXXXXX BOUNDED AS
FOLLOWS: ON THE NORTH AND SOUTH BY 0 XXXXX XXXXX XXXXX XX, XXXXXXXX WITH
AND PERPENDICULARLY DISTANT 99 FEET AND 149 FEET FROM THE NORTHERN LIMIT
OF SAID RL, ON THE EAST BY THE WESTERN LIMIT OF THE LORD SELKIRK HIGHWAY
PLAN 3405 WLTO AND ON THE WEST BY A LINE DRAWN SLY AT RIGHT ANGLES TO THE
NORTHERN LIMIT OF THE HEREIN DESCRIBED PARCEL OF LAND FROM A POINT IN THE
SAME DISTANT WLY THEREON 80 FEET FROM WESTERN LIMIT OF SAID HIGHWAY EXC,
ROAD PLAN 10247 WLTO.
PARCEL 2: ALL THAT PORTION OF THE NLY 99 FEET PERP OF SAID RL 23 LYING TO
THE WEST OF THE WESTERN LIMIT OF THE LORD SELKIRK HIGHWAY PLAN
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3405 WLTO WHICH LIES TO THE EAST OF A LINE DRAWN AT RIGHT ANGLES TO THE
NORTHERN LIMIT OF RL 24 OF SAID PARISH FROM A POINT THEREIN DISTANT WLY
THEREON 660 FROM THE FEET SAID WESTERN LIMIT EXC OUT OF PARCEL 2, FIRSTLY:
PARCEL 3 PLAN 6736 WLTO AND SECONDLY: ROAD PLAN 10247 WLTO.
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398815
XXX 00 XXXX 0000 XXXX XXX, THE WLY 134 FEET OF THE SLY 150 FEET IN RL 21
AND 22 PARISH OF ST XXXXXXXX
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398818
ALL THAT PORTION OF RL 23, PARISH OF ST XXXXXXXX, BOUNDED AS FOLLOWS: ON
THE EAST BY THE WESTERN LIMIT OF THE LORD SELKIRK HIGHWAY PLAN 3405 WLTO
ON THE WEST BY THE EASTERN LIMIT OF PARCEL 3 PLAN 6736 WLTO ON THE SOUTH
BY A LINE DRAWN NORTH OF, PARALLEL WITH AND PERPENDICULARLY DISTANT 66
FEET FROM THE SOUTHERN LIMIT OF SAID RL AND ON THE NORTH BY A LINE DRAWN
SOUTH OF, PARALLEL WITH AND PERPENDICULARLY DISTANT 99 FEET FROM THE
NORTHERN LIMIT OF SAID RL EXC, FIRSTLY: ALL THAT PORTION OF THE NLY 50
FEET PERP WHICH LIES TO THE EAST OF A LINE DRAWN AT RIGHT ANGLES TO THE
NORTHERN LIMIT OF THE LAND ABOVE DESCRIBED FROM A POINT IN THE SAME
DISTANT WLY THEREON 80 FEET FROM SAID WESTERN LIMIT AND SECONDLY: PUBLIC
ROAD PLAN 10247 WLTO
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398819
ALL THAT PORTION OF RL 21, PARISH OF ST XXXXXXXX TAKEN FOR SUNNYSIDE ROAD
(NOW CLOSED) CONTAINED WITHIN THE LIMITS SHOWN PINK ON PLAN 3527 WLTO,
LYING TO THE EAST OF THE STRAIGHT PRODUCTION SLY OF THE WESTERN LIMIT OF
LOT 8 PLAN 3527 WLTO, WHICH LIES TO THE WEST OF THE STRAIGHT PRODUCTION
SLY OF THE WESTERN LIMIT OF XXX 55 FEET OF SAID LOT 8 EXC, ALL MINES AND
MINERALS
Registered Encumbrances
The Permitted Mortgages
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C/T No. 1398820
XXX 0 XXXX 00000 WLTO IN RL 28 AND 29 PARISH OF ST XXXXXXXX
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398821
ALL THOSE PORTIONS OF RL 26 AND 27, PARISH OF ST XXXXXXXX LYING TO THE
WEST OF PARCEL 5 PLAN 6736 WLTO WHICH LIE TO THE EAST OF THE EASTERN LIMIT
OF THE RIGHT OF WAY OF RLY PLAN 380 WLTO
Registered Encumbrances
Caveat No. 198384
The Permitted Mortgages
Builders Lien Nos. 2296942, 2311566 and 2312510
C/T No. 1398824
ALL THOSE PORTIONS OF RL 19 AND 20, PARISH OF ST XXXXXXXX WHICH LIE TO THE
WEST OF THE WESTERN LIMIT OF THE RIGHT OF WAY OF RLY PLAN 380 WLTO
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398826
ALL THAT PORTION OF RL 25, PARISH OF ST XXXXXXXX LYING TO THE WEST OF THE
WESTERN LIMIT OF THE RIGHT OF WAY OF RLY PLAN 380 WLTO WHICH LIES TO THE
EAST OF A LINE DRAWN WEST OF, PARALLEL WITH AND PERPENDICULARLY DISTANT
1082 FEET FROM SAID WESTERN LIMIT
Permitted Liens
The Permitted Mortgages
C/T No. 1398827
XXX 0 XXXX 00000 WLTO IN RL 21 TO 25 PARISH OF ST XXXXXXXX
Registered Encumbrances
The Permitted Mortgages
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C/T No. 1398830
XXX 0 XXXX 00000 WLTO IN RL 27 AND 28 PARISH OF ST XXXXXXXX
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398831
XXX 0 XXXX 00000 WLTO IN RL 27 TO 30 PARISH OF ST XXXXXXXX
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398833
ALL THOSE PORTIONS OF RL 26, 27 AND 28, PARISH OF ST XXXXXXXX LYING TO THE
WEST OF A LINE DRAWN PARALLEL WITH THE WESTERN LIMIT OF THE RIGHT OF WAY
OF RLY PLAN 380 WLTO AND ITS STRAIGHT PRODUCTIONS AND PERPENDICULARLY
DISTANT WLY THEREFROM 99 FEET EXC OUT OF RL 27 AND 28, PLANS 16426 AND
26644 WLTO
Registered Encumbrances
The Permitted Mortgages
C/T No. 1398835
XXX 0 XXXX 00000 WLTO IN RL 00 XXXXXX XX XX XXXXXXXX
Registered Encumbrances
Easement No. J23544
The Permitted Mortgages
C/T No. 1507428
XXX 0 XXXX 00000 WLTO IN RL 28 TO 31 PARIS OF ST XXXXXXXX
-viii-
Registered Encumbrances
The Permitted Mortgages
Caveat No. 2059433
Caveat No. 2059434
Caveat No. 2087192
Caveat No. 2162371
C/T No. 1507432
XXX 0 XXXX 00000 WLTO IN RL 28 TO 31 PARISH OF ST XXXXXXXX
Registered Encumbrances
The Permitted Mortgages
Caveat No. 2059433
Caveat No. 2059434
Caveat No. 2087192
Encumbrances Outstanding Against Gerdau MRM Steel Inc. Real Property
1. Secured Party: Greater Winnipeg Gas Company
Date Registered: May 7, 1969
Registration Number: J23544
Consideration: 0
Comments: Easement
2. Secured Party: Manitoba Hydro Electric Board
Date Registered: 217089
Registration Number: September 23, 1970
Consideration: 0
Comments: Caveat
3. Secured Party: Manitoba Power Commission
Date Registered: October 26, 1942
Registration Number: 144534
Consideration: 0
Comments: Caveat
4. Secured Party: Manitoba Hydro Electric Board
Date Registered: July 14, 1965
Registration Number: 198384
Consideration: 0
Comments: Caveat
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5. Secured Party: The Canam Manac Group Inc.
Date Registered: June 29, 1995
Registration Number: 1922867
Consideration: $30,000,000
Comments: Mortgage
6. Secured Party: Royal Bank of Canada
Date Registered: September 10, 1996
Registration Number: 2059433
Consideration: 0
Comments: Caveat as to equitable mortgage
and charge of the interest of
658817 Alberta Ltd., as lessee
7. Secured Party: Royal Bank of Canada
Date Registered: September 10, 1996
Registration Number: 2059434
Consideration: 0
Comments: Caveat as to equitable mortgage
and charge by virtue of
Mortgage of Lease by way of
Sub-lease, executed by 658817
Alberta Ltd.
8. Secured Party: Manitoba Development Corporation
Date Registered: November 29, 1996
Registration Number: 2087192
Consideration: 0
Comments: Charge granted by 658817
Alberta Ltd. to Manitoba
Development Corporation over
its interest in an Option
Agreement to acquire title to
lands described in C/T1507428
9. Secured Party: 658817 Alberta Ltd. and Black
Cat Blades Ltd.
Date Registered: July 15, 1997
Registration Number: 2162371
Consideration: 0
Comments: Option to purchase lands
described in C/T150728 in
favour of 658817 Alberta Ltd.
and Black Cat Blades Ltd.
SCHEDULE L
Security Schedule
PRIOR SECURITY
1. Given by Courtice
(a) Guarantee of MRM's obligations dated as of December 18, 1998
(b) Guarantee of Gerdau Steel's obligations dated as of December 18,
1998
(c) Cdn.$50,000,000 Debenture dated October 31, 1989
(d) Debenture Pledge Agreement dated October 31, 1989
(e) Cdn.$50,000,000 Supplemental Debenture dated June 27, 1990
(f) Debenture Pledge Agreement dated June 27, 1990
(g) Debenture Amending Agreement dated November 8, 1996
(h) Debenture Delivery Agreement dated November 8, 1996
2. Given by MRM
(a) Guarantee of Courtice's obligations dated as of December 18, 1998
(b) Guarantee of Gerdau Steel's obligations dated as of December 18,
1998
(c) Cdn.$80,000,000 Fixed and Floating Charge Debenture dated June 27,
1995
(d) Hypothecation and Pledge of Debenture dated June 27, 1995
(e) US$20,000,000 Working Capital General Security Agreement (Inventory
and Receivables) dated as of November 8, 1996
(f) Guarantee of Xxxxxx Bros.' obligations dated as of December 18, 1998
3. Given by Gerdau Steel
(a) Guarantee of Courtice's obligations dated as of December 18, 1998
(b) Guarantee of MRM's obligations dated as of December 18, 1998
-ii-
4. Given by Metalurgica Xxxxxx X.X.
(a) Cdn.$50,000,000 Guarantee of Courtice's obligations dated as of
December 18, 1998
(b) Cdn.$50,000,000 Guarantee of MRM's obligations dated as of December
18, 1998
5. Given by Xxxxxx Bros.
(a) Guarantee of MRM's obligations dated as of December 18, 1998
6. Given by GTL Trade Corporation
(a) Subordination by GTL Trade Corporation in respect of Gerdau Steel
and Courtice promissory notes
7. Given by Oruscom S.A.
(a) Subordination by Oruscom S.A. in respect of Gerdau Steel promissory
note
NEW SECURITY
8. To be given by Courtice
(a) Guarantee of obligations of MRM and Gerdau Steel
(b) Guarantee of MRM Holdings' obligations
(c) Cdn.$350,000,000 Fixed and Floating Demand Debenture
(d) Debenture Delivery Agreement
(e) Security under Section 427 of the Bank Act (Canada) in favour of
Citibank Canada
(f) Security under Section 427 of the Bank Act (Canada) in favour of The
Chase Manhattan Bank of Canada
(g) Security under Section 427 of the Bank Act (Canada) in favour of The
Toronto-Dominion Bank
(h) Working Capital Security Agreement (Inventory and Receivables)
9. To be given by MRM
(a) Guarantee of obligations of Courtice and Gerdau Steel
(b) Guarantee of MRM Holdings' obligations
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(c) Cdn.$350,000,000 Fixed and Floating Demand Debenture
(d) Debenture Delivery Agreement
(e) Security under Section 427 of the Bank Act (Canada) in favour of
Citibank Canada
(f) Security under Section 427 of the Bank Act (Canada) in favour of The
Chase Manhattan Bank of Canada
(g) Security under Section 427 of the Bank Act (Canada) in favour of The
Toronto-Dominion Bank
(h) Working Capital Security Agreement (Inventory and Receivables)
(i) Stock Pledge of all issued Xxxxxx Bros. shares, with deposit of
stock certificates
10. To be given by Steel
(a) Guarantee of obligations of Courtice and MRM
(b) Guarantee of MRM Holdings' obligations
(c) Cdn.$350,000,000 Fixed and Floating Demand Debenture
(d) Debenture Delivery Agreement
(e) Security under Section 427 of the Bank Act (Canada) in favour of
Citibank Canada
(f) Security under Section 427 of the Bank Act (Canada) in favour of The
Chase Manhattan Bank of Canada
(g) Security under Section 427 of the Bank Act (Canada) in favour of The
Toronto-Dominion Bank
(h) Working Capital Security Agreement (Inventory and Receivables)
(i) Share Pledge of all issued Courtice and MRM Holdings shares, with
deposit of share certificates
(j) Stock Pledge of all issued Gerdau USA shares, with deposit of stock
certificates
11. To be given by MRM Holdings
(a) Guarantee of obligations of Gerdau Steel and MRM
(b) Cdn.$350,000,000 Fixed and Floating Charge Debenture
-iv-
(c) Debenture Delivery Agreement
(d) Share Pledge of all issued MRM shares, with deposit of share
certificates
12. To be given by Xxxxxx Bros.
(a) Cdn.$350,000,000 Guarantee of obligations of Courtice, MRM and
Gerdau Steel
(b) Security Agreement
(c) Working Capital Security Agreement (Inventory and Receivables)
13. To be given by Gerdau USA
(a) Cdn.$350,000,000 Guarantee of Gerdau Steel's obligations
(b) Stock Pledge of all issued FLS shares held by Gerdau USA, with
deposit of stock certificates
14. To be given by FLS
(a) Limited Recourse Guarantee of Gerdau Steel's obligations
(b) Stock Pledge of the Target Shares held by FLS, with deposit of stock
certificate
15. To be given by Xxxxxx X.X.
(a) Cdn.$350,000,000 Guarantee of obligations of Courtice, MRM and
Gerdau Steel
(b) Subordination Agreements
16. To be given by GTL Trade Corporation
(a) Subordination by GTL Trade Corporation in respect of Gerdau Steel
and Courtice promissory notes
17. To be given by Oruscom S.A.
(a) Subordination by Oruscom S.A. in respect of Gerdau Steel promissory
note
18. To be given by all Xxxxxx X.X. Group Members and the Agent
(a) Security Coordination Agreement among all the Xxxxxx X.X. Group
Members and the Agent
19. To be given by the Gerdau Canada Group and Xxxxxx X.X.
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(a) Confirmation of Security Agreement, among the Gerdau Canada Group
and Xxxxxx X.X. in favour of the Agent
SCHEDULE M
Form of Repayment/Cancellation Notice
TO: The Toronto-Dominion Bank, as Agent
Corporate Investment Banking Group
0xx Xxxxx , Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx Dominion Centre
00 Xxxx Xxxxxx Xxxx, X.X. Xxx 0
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Manager
Agency, Syndicated Loans
Re: Gerdau Steel Inc.
Reference is made to an amended and restated loan agreement (the
"Loan Agreement") dated as of November 8, 1996, as further amended and restated
on December 18, 1998 and on September 27, 1999, and as further amended,
supplemented, restated or novated from time to time, between Gerdau Steel Inc.,
Gerdau Courtice Steel Inc. and Gerdau MRM Steel Inc., as Borrowers, the
Institutions named therein as Lenders and The Toronto-Dominion Bank as Agent.
All terms used in this Repayment Notice which are defined in the Loan Agreement
have the respective meanings attributed to them in the Loan Agreement.
[Notice is hereby given in accordance with Section o of the Loan
Agreement that the undersigned wishes to cancel the [Revolver/Term] Facility by
the amount of Cdn.$o.]*
Notice is hereby given in accordance with Section o of the Loan
Agreement that the undersigned wishes to repay a Borrowing, and in connection
therewith, the undersigned advises the Agent that the [specify type of
Borrowing] in the amount of [specify amount and currency] will be repaid on
[specify date].
DATED as of the _____ day of ____________, _______.*
__________________________________
By:_____________________________________
Title:
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By:_____________________________________
Title:
* as applicable
SCHEDULE N
Environmental Disclosure Schedule
None
SCHEDULE O
Intellectual Property Rights
None
SCHEDULE P
Chief Executive Offices
1. Courtice - Ontario
2. MRM - Manitoba
3. Gerdau Steel - Ontario
