EXHIBIT 10(i)
GERDAU STEEL INC.
as Obligor
and
GERDAU COURTICE STEEL INC.
GERDAU MRM STEEL INC.
GUSAP PARTNERS
as Borrowers
and
CHASE SECURITIES INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
THE TORONTO-DOMINION BANK
as Joint Arrangers and Joint Bookrunners
and
THE INSTITUTIONS NAMED HEREIN
as Lenders
and
THE TORONTO-DOMINION BANK
as Agent
================================================================================
AMENDED AND RESTATED LOAN AGREEMENT
INITIALLY DATED NOVEMBER 8, 1996
AS FURTHER AMENDED AND RESTATED BY AGREEMENT DATED
OCTOBER 22, 2002
================================================================================
FASKEN ▇▇▇▇▇▇▇▇▇ DUMOULIN LLP
TORONTO DOMINION BANK TOWER
▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
TABLE OF CONTENTS
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ARTICLE 1 INTERPRETATION......................................................................... 6
1.1 Definitions............................................................................ 6
1.2 Additional References.................................................................. 42
1.3 Gender and Number...................................................................... 44
1.4 Interest Act........................................................................... 44
1.5 Invalidity, etc........................................................................ 44
1.6 Headings, etc.......................................................................... 44
1.7 Governing Law.......................................................................... 45
1.8 Attornment............................................................................. 45
1.9 References............................................................................. 45
1.10 Currency............................................................................... 46
1.11 This Agreement to Govern............................................................... 46
1.12 Generally Accepted Accounting Principles............................................... 46
1.13 Computation of Time Periods............................................................ 46
1.14 Actions on days Other Than Banking Days................................................ 46
1.15 Verbal Instructions.................................................................... 47
ARTICLE 2 FACILITY............................................................................... 47
2.1 Establishment of Revolver Facility..................................................... 47
2.2 Availability and Revolving Nature of Revolver Facility................................. 48
2.3 Interest and Acceptance Fees on Advances under the Revolver Facility.................. 48
2.4 Repayment under Revolver Facility...................................................... 48
2.5 Mandatory Repayment.................................................................... 49
2.6 Annual Review.......................................................................... 49
2.7 Prepayment and Cancellation of Revolver Facility....................................... 50
2.8 Minimum Advance........................................................................ 50
2.9 Swing Line Advances.................................................................... 51
2.10 Advances............................................................................... 52
ARTICLE 3 FACILITY............................................................................... 52
3.1 Establishment of Term Facility......................................................... 52
3.2 Availability and Non-Revolving Nature of Term Facility................................. 53
3.3 Repayment of Term Facility............................................................. 53
3.4 Interest and Acceptance Fees on Advances under the Term Facility....................... 56
3.5 Prepayment of Term Facility............................................................ 56
3.6 Minimum Advance........................................................................ 56
3.7 Consolidation of Loans................................................................. 57
ARTICLE 4 FACILITIES............................................................................. 57
4.1 Existing Hedging Facility.............................................................. 57
ARTICLE 5 PAYMENT................................................................................ 58
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TABLE OF CONTENTS
(continued)
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5.1 Place of Payment....................................................................... 58
5.2 Application of Payments and Prepayments................................................ 58
5.3 Change in Circumstances................................................................ 58
5.4 Payments Generally..................................................................... 60
5.5 Repayment Notice....................................................................... 60
5.6 Netting of Payments.................................................................... 60
ARTICLE 6 CONDITIONS PRECEDENT TO ADVANCES....................................................... 60
6.1 Conditions Precedent to Advance........................................................ 60
6.2 Conditions Precedent to Effective Time................................................. 61
6.3 Effective Time......................................................................... 64
6.4 Effectiveness.......................................................................... 64
6.5 Provisions Taking Immediate Effect..................................................... 64
6.6 Rights Unaffected...................................................................... 65
6.7 Date of Agreement...................................................................... 65
ARTICLE 7 ADVANCES............................................................................... 65
7.1 Advance and Interest Payment Dates..................................................... 65
7.2 Payment of Interest.................................................................... 66
7.3 Conversions............................................................................ 66
7.4 Notice of Advances, Payments, Conversions and Rollovers................................ 66
7.5 Bankers' Acceptances................................................................... 67
7.6 Standby Credits........................................................................ 70
7.7 LIBOR Loans - Market Disruption........................................................ 74
7.8 Illegality............................................................................. 75
7.9 Facility Excesses by Reason of Foreign Currency Fluctuations........................... 75
7.10 Evidence of Indebtedness............................................................... 76
ARTICLE 8 FEES AND EXPENSES...................................................................... 76
8.1 Commitment Fee......................................................................... 76
8.2 Payment of Costs and Expenses.......................................................... 77
8.3 Indemnity.............................................................................. 77
8.4 Agency Fee............................................................................. 78
ARTICLE 9 SECURITY AND INSURANCE................................................................. 78
9.1 Security............................................................................... 78
9.2 Perfection............................................................................. 78
9.3 Security Effective Notwithstanding Date of Advance..................................... 78
9.4 No Merger.............................................................................. 78
9.5 Existing Security...................................................................... 78
9.6 Insurance.............................................................................. 79
9.7 Partial Discharges of Security......................................................... 80
9.8 Obligations Secured.................................................................... 80
9.9 Additional Obligations Secured......................................................... 80
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TABLE OF CONTENTS
(continued)
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9.10 Redemption of Security................................................................. 80
9.11 Repayment in Full...................................................................... 80
ARTICLE 10 REPRESENTATIONS AND WARRANTIES......................................................... 81
10.1 Representations and Warranties......................................................... 81
10.2 Survival of Representations and Warranties............................................. 89
10.3 Environmental Indemnity................................................................ 89
ARTICLE 11 COVENANTS.............................................................................. 89
11.1 Affirmative Covenants.................................................................. 89
11.2 Agent Entitled to Perform Covenants.................................................... 97
11.3 Negative Covenants..................................................................... 97
ARTICLE 12 EVENTS OF DEFAULT AND REMEDIES......................................................... 105
12.1 Events of Default...................................................................... 105
12.2 Remedies Upon Default.................................................................. 109
12.3 Payment of Bankers' Acceptances........................................................ 109
12.4 Lenders' Right of Advance.............................................................. 110
12.5 Distributions.......................................................................... 110
ARTICLE 13 THE AGENT AND ADMINISTRATION OF THE CREDIT FACILITIES.................................. 110
13.1 Appointment and Authorization.......................................................... 110
13.2 Declaration of Agency.................................................................. 110
13.3 Protection of Agent.................................................................... 111
13.4 Interest Holders....................................................................... 111
13.5 Consultation with Professionals........................................................ 111
13.6 Documents.............................................................................. 111
13.7 Agent and its Subsidiaries and Affiliates.............................................. 111
13.8 Responsibility of the Agent............................................................ 111
13.9 Action by the Agent.................................................................... 112
13.10 Notice of Events of Default............................................................ 113
13.11 Responsibility Disclaimed.............................................................. 113
13.12 Indemnification........................................................................ 114
13.13 Protection of Employees, Etc........................................................... 114
13.14 Credit Decision........................................................................ 114
13.15 Replacement Agent and Reference Lenders................................................ 114
13.16 Delegation............................................................................. 115
13.17 Required Lender Decisions.............................................................. 115
13.18 Waivers and Amendments................................................................. 116
13.19 Determination by Agent................................................................. 117
13.20 Interlender Procedure for Making Advances.............................................. 117
13.21 Remittance of Payments................................................................. 119
13.22 Redistribution of Payments............................................................. 119
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TABLE OF CONTENTS
(continued)
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13.23 Prompt Notice to Lenders............................................................... 120
13.24 Several Debts of the Lenders........................................................... 120
13.25 Enforcement of Security................................................................ 120
13.26 Swing Line Loans....................................................................... 121
ARTICLE 14 GENERAL................................................................................ 123
14.1 Reliance and Non-Merger................................................................ 123
14.2 Amendment and Waiver................................................................... 123
14.3 Set-Off or Compensation................................................................ 123
14.4 Notices................................................................................ 124
14.5 Binding Effect and Assignment.......................................................... 124
14.6 Confidentiality........................................................................ 126
14.7 Time................................................................................... 126
14.8 Further Assurances..................................................................... 126
14.9 Currency Conversion and Indemnity...................................................... 127
14.10 Taxes.................................................................................. 127
14.11 Joint Arrangers and Joint Bookrunners and Co-Syndication Agents........................ 129
14.12 Survival............................................................................... 129
14.13 Entire Agreement....................................................................... 129
14.14 Counterparts........................................................................... 130
SCHEDULE A LENDERS, LENDING OFFICES AND COMMITMENTS............................................... 139
SCHEDULE B DRAWDOWN NOTICE........................................................................ 142
SCHEDULE C FORM OF CONVERSION NOTICE.............................................................. 145
SCHEDULE D FORM OF ROLLOVER NOTICE................................................................ 149
SCHEDULE E - PART I SUBSIDIARIES BEFORE THE EFFECTIVE TIME........................................ 153
SCHEDULE E - PART II SUBSIDIARIES AFTER THE EFFECTIVE TIME........................................ 154
SCHEDULE F ADDRESSES FOR NOTICES.................................................................. 155
SCHEDULE G FORM OF BORROWING BASE REPORT.......................................................... 157
SCHEDULE H LOAN TRANSFER AGREEMENT................................................................ 159
SCHEDULE I BORROWER'S COMPLIANCE CERTIFICATE...................................................... 165
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TABLE OF CONTENTS
(continued)
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SCHEDULE J LEGAL DESCRIPTION...................................................................... 167
SCHEDULE K THE REAL PROPERTY...................................................................... 172
SCHEDULE L SECURITY SCHEDULE...................................................................... 181
SCHEDULE M FORM OF REPAYMENT/CANCELLATION NOTICE.................................................. 187
SCHEDULE N ENVIRONMENTAL DISCLOSURE SCHEDULE...................................................... 188
SCHEDULE O INTELLECTUAL PROPERTY RIGHTS........................................................... 189
SCHEDULE P CHIEF EXECUTIVE OFFICES................................................................ 190
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AGREEMENT initially dated as of November 8, 1996 as further
amended and restated by agreement dated October 22, 2002 is made
A M O N G :
GERDAU STEEL INC., a corporation incorporated pursuant to the laws of
Canada
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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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GUSAP PARTNERS, a partnership formed under the laws of the State of
Delaware
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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.;
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 TD and Courtice;
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▇. ▇▇▇▇▇▇▇▇, 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 at that time 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 at that time 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 "SECOND SYNDICATED AMENDED AND RESTATED LOAN
AGREEMENT").
J. Pursuant to the Second Syndicated Amended and Restated 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).
K. Pursuant to a loan transfer agreement dated September 27, 1999, the
Lenders party thereto as transferees became the only Lenders under the
Second Syndicated
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Amended and Restated Loan Agreement entitled to be paid the entirety
of the Advances (as defined in the Second Syndicated Amended and
Restated Loan Agreement) payable under the Second Syndicated Amended
and Restated Loan Agreement.
L. The Prior Borrowers requested those Lenders to reallocate the amounts
available under the then existing Revolver Facility and Term Facility
(each as defined in the Second Syndicated Amended and Restated 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 Second Syndicated Amended and Restated
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, at that time, 88% of all such issued and outstanding
common stock), which in turn owned 9,000,000 issued and outstanding
shares of common stock in AmeriSteel Corporation (representing, at
that time, approximately 84% 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
Second Syndicated Amended and Restated Loan Agreement to provide the
Credit Facilities outlined in more detail in the Amended and Restated
Loan Agreement dated as of September 27, 1999, as amended by agreement
dated as of November 4, 1999, (together, the "THIRD SYNDICATED AMENDED
AND RESTATED LOAN AGREEMENT").
▇. ▇▇▇▇▇▇ Steel, MRM and Courtice (the "PRE-1999 BORROWERS") requested
the Lenders to permit USP to become a party to the Third Syndicated
Amended and Restated Loan Agreement as a Borrower and assume the
obligations of MRM thereunder with respect to a U.S.$50,000,000
portion of the U.S.$91,743,119.26 Base Rate Loan then owing by MRM to
the Lenders.
O. USP requested the Lenders to permit each of MRM and Courtice to
transfer the shares in Gerdau USA owned by each of them (having an
aggregate value of U.S.$20,000,000) to USP. These shares were subject
to a share pledge made in favour of the Lenders and such transfer
could not be made without the consent of the Lenders.
P. USP also requested the Lenders to permit MRM to assign the existing
U.S.$50,000,000 loan owing by Gerdau USA to MRM in consideration of
its assumption referred to in Recital N above. This loan was subject
to a security interest in favour of the Lenders and could not be
assigned to USP without the consent of the Lenders.
Q. The Lenders agreed to permit the transfer and assignment referred to
in Recitals O and P above, in exchange for which USP agreed to become
a Borrower under the
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Third Syndicated Amended and Restated Loan Agreement to the extent
referred to in Recital N above.
R. The amendments described in Recitals N to Q above were incorporated
into an amendment and restatement of the Third Syndicated Amended and
Restated Loan Agreement entered into among the Pre-1999 Borrowers and
USP (the "EXISTING BORROWERS"), the Lenders, the Agent and others
dated as of December 23, 1999 (the "FOURTH SYNDICATED AMENDED AND
RESTATED LOAN AGREEMENT").
S. The Existing Borrowers subsequently requested the Lenders to extend
the term of the Revolver Facility.
T. The Existing Borrowers also requested the Lenders to amend certain
definitions and covenants in the Fourth Syndicated Amended and
Restated Loan Agreement, to permit the repayment by the Pre-1999
Borrowers of certain advances that may be made to them from time to
time by ▇▇▇▇▇▇ ▇.▇. and its subsidiaries, and to make certain other
amendments to the Fourth Syndicated Amended and Restated Loan
Agreement.
U. The Existing Borrowers also requested the Lenders' consent to borrow
in a maximum amount equal to the principal amount of the Kyoei Steel
Balance of Sale Notes by means of one or more subordinated loans.
V. Accordingly the parties to the Fourth Syndicated Amended and Restated
Loan Agreement entered into an amendment and restatement of the Fourth
Syndicated Amended and Restated Loan Agreement among the Existing
Borrowers, the Lenders, the Agent and others dated as of April 20,
2001 (the "EXISTING LOAN AGREEMENT").
W. The Existing Borrowers have now requested the Lenders to consent to
the indirect transfer by Gerdau Steel to Co-Steel of all of the issued
Capital Stock in each of Courtice, MRM Holdings and Gerdau USA
(collectively, the "GERDAU CANADA SUBGROUP SHARES").
X. The indirect transfer of the Gerdau Canada Subgroup Shares by Gerdau
Steel to Co-Steel would take place in accordance with the general
terms outlined in the Information Circular and the following
transactions (the "CO-STEEL COMBINATION TRANSACTIONS") in the
following time sequence:
(i) Gerdau Steel incorporates a new Wholly-Owned Subsidiary (herein
referred to as the Gerdau Canada Subgroup Interim Holding
Company);
(ii) the Gerdau Canada Subgroup Interim Holding Company incorporates a
new Wholly-Owned Subsidiary (herein referred to as the Gerdau
Canada Subgroup Holding Company);
(iii) Gerdau Steel transfers the Gerdau Canada Subgroup Shares to the
Gerdau Canada Subgroup Interim Holding Company, subject to the
Security, for a
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consideration consisting entirely of shares in Gerdau Canada
Subgroup Interim Holding Company;
(iv) contemporaneously with the acquisition of the Gerdau Canada
Subgroup Shares the Gerdau Canada Subgroup Interim Holding
Company issues a guarantee of the Loan Obligations to the
Syndicate;
(v) immediately following the receipt of the transfer of the Gerdau
Canada Subgroup Shares from Gerdau Steel, the Gerdau Canada
Subgroup Interim Holding Company transfers the Gerdau Canada
Subgroup Shares to the Gerdau Canada Subgroup Holding Company,
subject to the Security, for a consideration consisting entirely
of shares in Gerdau Canada Subgroup Holding Company; and
(vi) the Gerdau Canada Subgroup Interim Holding Company transfers all
of the issued Capital Stock of the Gerdau Canada Subgroup Holding
Company (the "GERDAU CANADA SUBGROUP HOLDING COMPANY SHARES") to
Co-Steel, in exchange for such number of issued common shares in
Co-Steel as will entitle Gerdau Steel to vote not less than 64.8%
(assuming the AmeriSteel Merger Transactions take place) of the
voting rights attributable to all of the Voting Capital Stock of
Co-Steel on a fully diluted basis (the "EXCHANGED CO-STEEL
SHARES").
Y. Before the Co-Steel Combination Transactions could take place, Gerdau
Steel agreed with Co-Steel to eliminate or combine various
inter-corporate debts amongst MRM, USP, Gerdau Steel, Courtice, NSULC,
Gerdau USA, ▇▇▇▇▇, GTL Netherlands and GTL Spain with the result that
none of the Gerdau Canada Subgroup and their respective subsidiaries
have any inter-corporate debt owing to GTL Spain, GTL Netherlands or
Gerdau Steel, save for the remaining intercorporate debt contemplated
by the Debt Reorganization Transactions (as defined below). The
Security did not permit the Debt Reorganization Transactions and
accordingly the Existing Borrowers requested the Lenders to consent to
the transactions contemplated by the Debt Reorganization Transactions.
▇. ▇▇▇▇▇▇ Steel has also agreed with Co-Steel to cease to be a Borrower
under the Existing Credit Agreement and accordingly, Gerdau Steel has
requested the Lenders to amend the Existing Loan Agreement and delete
Gerdau Steel as a Borrower thereunder.
AA. Gerdau Steel has also agreed with Co-Steel to use commercially
reasonable efforts to cause Gerdau USA and its Subsidiaries to approve
a plan of merger with the effect that AmeriSteel will be the surviving
corporation, the Capital Stock of AmeriSteel, other than the Capital
Stock of AmeriSteel held by Gerdau USA, will be converted into
Co-Steel shares based on the exchange ratio set out in the Information
Circular and the Capital Stock of AmeriSteel owned by Gerdau USA will
remain as the only issued Capital Stock of the surviving corporation
(referred
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to herein as the AmeriSteel Merger Transactions). Following the
AmeriSteel Merger Transactions, Gerdau USA will own 100% of the
Capital Stock of AmeriSteel and Gerdau Steel will own approximately
64.8% of the common shares of Co-Steel on a fully diluted basis. The
Existing Borrowers have requested the Lenders to consent to the
transactions contemplated by the AmeriSteel Merger Transactions
because the Existing Loan Agreement does not permit such transactions.
BB. The Lenders have agreed to amend the Existing Loan Agreement to delete
Gerdau Steel as a Borrower thereunder and to consent to the
Reorganization Transactions on the conditions, amongst others, that
(i) the Co-Steel Combination Transactions take place on the Effective
Date in the order set forth in Recital X of this Agreement, (ii) the
Debt Reorganization Transactions takes place before the Effective Date
in a manner satisfactory to the Agent, (iii) the AmeriSteel Merger
Transactions take place before March 31, 2003 in a manner satisfactory
to the Agent and (iv) the Gerdau Canada Subgroup Interim Holding
Company amalgamates vertically with Gerdau Steel effective January 1,
2003.
Accordingly, subject to the terms and conditions set out below, the
parties have agreed to amend 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 Existing Loan Agreement with effect as of and
from the Effective Time 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;
"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;
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"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 and any Person that does not deal at arm's length with any
such Senior Officer or director;
"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 rateable 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 Existing 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;
"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;
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"AMENDING AGREEMENT NO. 4" means the agreement dated November 8, 1996
between MRM and TD amending the MRM Debenture;
"AMERISTEEL" means AmeriSteel Corporation, a corporation incorporated
pursuant to the laws of the State of Florida as at the date hereof,
and its successors, as the context requires;
"AMERISTEEL BRIGHT BAR" means AmeriSteel Bright Bar, Inc., a
corporation incorporated under the laws of the State of Ohio as at the
date hereof, and its successors, as the context requires;
"AMERISTEEL MERGER TRANSACTIONS" means the following transactions in
the following order:
(i) Gerdau USA will incorporate a new subsidiary under the laws
of the State of Florida wholly-owned by Gerdau USA which
will be nominally capitalized and have only nominal assets
("FLORIDACO");
(ii) Co-Steel will, immediately following the Co-Steel
Combination Transactions, file a registration statement
(the "REGISTRATION STATEMENT") with the United States
Securities and Exchange Commission containing a preliminary
version of the prospectus to be sent to minority
shareholders of AmeriSteel in connection with a plan of
merger which must be in form and substance not unacceptable
to the Agent acting reasonably (the "PLAN OF MERGER")
pursuant to which AmeriSteel and FloridaCo will merge;
(iii) once the Registration Statement is effective (approximately
one to three months after filing), Gerdau USA will adopt
the Plan of Merger and Gerdau USA and Co-Steel will give 35
days' notice of the Plan of Merger to shareholders of
AmeriSteel and FloridaCo;
(iv) FloridaCo and AmeriSteel will merge, with AmeriSteel
surviving (the "SURVIVING CORPORATION"), pursuant to which
(A) the Capital Stock of the FloridaCo will be cancelled
without payment or other consideration, (B) the Capital
Stock of AmeriSteel held by shareholders other than Gerdau
USA will be exchanged for common shares in the capital
stock of Co-Steel based on the exchange ratio set out in
the Plan of Merger (which shall not result in Gerdau Steel
owning less than 64.8% of the issued and outstanding common
shares in the capital stock of Co-Steel on a fully diluted
basis) and (C) the Capital Stock of AmeriSteel held by
Gerdau USA shall be deemed to be and constitute all of the
issued Capital Stock of the Surviving Corporation;
- 9 -
"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 6.2.3.12 or ▇▇.▇.▇.▇▇:
LIBOR LOAN,
PRIME RATE & BASE STANDBY CREDIT &
TOTAL DEBT/ RATE LOAN BANKERS' 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 the Effective Time shall be
deemed to be 2.44:1 and the Applicable Margin as from the
Effective Time shall be determined accordingly. Changes in the
Applicable Margin shall take effect as 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 ▇▇▇▇ of exchange or
depository ▇▇▇▇) in Canadian dollars (in such form as a Lender
may require) drawn by a
- 10 -
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 Courtice, MRM and USP;
"BORROWER'S COUNSEL" means (i) in the Province of Ontario, Torys,
(ii) in the State of New York, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (iii) in each
other relevant jurisdiction, such firm of solicitors of
recognized local standing as Gerdau Steel may select and (iv)
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;
- 11 -
"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, (iv) in relation to USP, the only business
carried on by it which is acting as a financial intermediary for
the Gerdau Canada Group, NSULC, ▇▇▇▇▇ and Gerdau USA, (v) in
relation to Gerdau Canada Subgroup Interim Holding Company, the
only business carried on by it which initially is the holding of
the Gerdau Canada Subgroup Shares and the Gerdau Canada Subgroup
Holding Company Shares and, following their disposition, the
holding of the Exchanged Co-Steel Shares, (vi) in relation to the
Gerdau Canada Subgroup Holding Company, the only business carried
on by it which is the holding of the Gerdau Canada Subgroup
Shares, (vii) in relation to the Intermediate Holding Company,
the only business that may be carried on by it which will be the
acquisition and holding of the issued Capital Stock of the Gerdau
Canada Subgroup Holding Company, and (viii) in relation to any
Subsidiary of Gerdau Steel (other than the Co-Steel Group) or any
of the Gerdau Canada Subgroup, the applicable businesses
identified in (i), (ii), (iii) or (v);
"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;
"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:
- 12 -
(b) for an amount or Advance which is denominated in Canadian
dollars, the Canadian dollar amount thereof; and
(c) 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" 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 of 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 rated A-1 or better
by S&P or P-1 or better by ▇▇▇▇▇'▇, (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
- 13 -
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 Fiscal Quarter or period of
successive Fiscal Quarters means the sum (without duplication) of
(i) total interest expense of Gerdau Steel determined on a
Combined Basis (including the total interest expense payable by
USP on its Loan Obligations) 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 Fiscal Quarter or period of consecutive
Fiscal Quarters;
"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 financial reporting service
or 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;
"COMBINED BASIS" when used in relation to any computation of
financial terms, tests or ratios relative to Gerdau Steel, means
such computation determined on a consolidated basis and assuming
that the Co-Steel Combination Transactions had not taken place
and the corporate structure depicted in Schedule E - Part I
remained true, accurate and complete in all material respects,
and ignoring the Investments of the Gerdau Canada Group in all
Non-Qualifying Subsidiaries and Non-Qualifying Investments, but
including USP solely with respect to its Loan Obligations;
"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;
- 14 -
"COMMITMENT LETTER" means the commitment letter dated September
21, 1999 between the Joint Arrangers and Joint Bookrunners, the
Agent, the Lenders and the Pre-1999 Borrowers pursuant to which
the Third Syndicated Amended and Restated Loan Agreement was
entered into;
"COMPLIANCE CERTIFICATE" in respect of any Fiscal Quarter or
period of successive Fiscal Quarters means a Certificate of
Gerdau Steel substantially in the form attached as Schedule I
setting out, among other things, a statement for such Fiscal
Quarter or period of successive Fiscal Quarters 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 Existing 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;
"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 an active business activity which
in the opinion of the Majority Lenders acting reasonably, is of
the same nature as a principal active business activity carried
on by any of the Gerdau Canada Group, excluding the animal hide
business of ▇▇▇▇▇▇, as of September 27, 1999 as part of their
respective Businesses. For certainty, acting as a holding company
is not a Core Related Business;
"CORPORATE BORROWERS" means Courtice and MRM;
- 15 -
"CO-STEEL" means Co-Steel Inc., a corporation incorporated
pursuant to the laws of the Province of Ontario as at the date
hereof, and any successor of it, as the context requires;
"CO-STEEL COMBINATION TRANSACTIONS" has the defined meaning
assigned to it in Recital X of this Agreement;
"CO-STEEL GROUP CREDIT AGREEMENTS" means (i) the Credit Agreement
dated as of April 30, 2002 between Co-Steel Inc. as Borrower, the
companies therein named as Guarantors, the Lenders therein named,
The Toronto-Dominion Bank as Administration Agent and The Bank of
Nova Scotia as Syndication Agent, (ii) the Second Amended and
Restated Credit Agreement dated as of April 30, 2002 between
Co-Steel Sayreville, Inc. as Borrower and PNC Bank, National
Association as Lender, (iii) the Second Amended and Restated
Credit Agreement dated as of April 30, 2002 between Co-Steel
Raritan, Inc. as Borrower and PNC Bank, National Association as
Lender, (iv) the Second Amended and Restated Note Agreement dated
as of April 30, 2002 between Co-Steel Inc. as Issuer and The
Prudential Insurance Company of America and U.S. Private
Placement Fund as Purchasers, (v) the Trust Indenture dated as of
April 23, 1997 between Co-Steel Inc. as Issuer and The R-M Trust
Company as Trustee, (vi) the Financing and Security Agreement
dated as of March 31, 1999 among Gallatin Steel Company as
Borrower, Bankamerica Business Credit, Inc. as Agent and
Bankamerica Business Credit, Inc. and others as Lenders and (vii)
the Intercreditor Agreement dated as of April 30, 2002 among
State Street Bank and Trust Company and Computershare Trust
Company of Canada as Security Agents, The Toronto-Dominion Bank
as Administration Agent under the TD Credit Agreement (as therein
defined), The Prudential Insurance Company of America and U.S.
Private Placement Fund and PNC Bank, National Association;
"CO-STEEL GROUP MEMBER" means any one of Co-Steel and its
consolidated Subsidiaries, excluding the Gerdau Canada Subgroup
Holding Company, the Intermediate Holding Company and the Gerdau
Canada Subgroup and their respective Subsidiaries; and "CO-STEEL
GROUP" means all of the Co-Steel Group Members;
"CO-STEEL LENDERS" has the defined meaning assigned to it in the
Status Quo Agreement;
"CO-SYNDICATION AGENTS" means ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇,
▇▇▇▇▇▇ Branch and Citibank Canada, and any of their respective
successors;
"COURTICE" means Gerdau Courtice Steel Inc., a corporation
continued pursuant to the laws of the Province of Saskatchewan as
at the date hereof, such corporation when it was a Canada
corporation, and any successor of it, as the context requires;
- 16 -
"COURTICE AMENDED AND RESTATED DEBENTURE DELIVERY AGREEMENT"
means the agreement dated as of November 8, 1996 made between
Courtice and the Agent 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 GUARANTEES" means the Courtice/Gerdau Steel Guarantee
and the Courtice/MRM Guarantee, and "COURTICE GUARANTEE" means
one of them;
"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 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
- 17 -
consolidated balance sheet of such Person (or, in the case of
Gerdau Steel, its balance sheet prepared on a Combined Basis)
prepared as at such time as indebtedness for borrowed money,
including bank indebtedness, long-term debt, capital lease
obligations and indebtedness to affiliates or other financial
indebtedness;
"DEBT REORGANIZATION TRANSACTIONS" means the transactions
described in the letter dated October 11, 2002 from Gerdau Steel
to the Agent requesting the consent of the Lenders to the
reorganization of certain intercorporate ▇▇▇▇▇▇ ▇.▇. Group Debt;
"DEBT SERVICE COST" for any Fiscal Quarter or period of
successive Fiscal Quarters means (i) the sum (without
duplication) of the amounts for such Fiscal Quarter or period of
successive Fiscal Quarters of (A) Cash Interest Expense, plus (B)
all scheduled repayments of USP's Loan Obligations in respect of
the Term Facility which USP is required to pay during such Fiscal
Quarter or period of successive Fiscal Quarters plus (C) all
scheduled repayments of other Indebtedness (except for repayments
of Indebtedness owing to a bank which is repayable on demand or
within one year from the date of borrowing, which for greater
certainty includes repayments in respect of the Revolver Facility
made during the relevant Fiscal Quarter or period of successive
Fiscal Quarters) which any Gerdau Canada Group Member is required
to make during such Fiscal Quarter or period of successive Fiscal
Quarters plus (D) repayments of ▇▇▇▇▇▇ ▇.▇. Advances made during
the relevant Fiscal Quarter or period of successive Fiscal
Quarters minus (ii) the sum of (A) the aggregate amount of any
sums actually received during such accounting period by any of
the Borrowers, whether directly or indirectly (but without double
counting), on account of a refund of or rebate in Taxes or any
other benefit relating to Taxes received by AmeriSteel or FLS, or
any of their respective Subsidiaries, and (B) the aggregate
outstanding principal amount of ▇▇▇▇▇▇ ▇.▇. Advances made during
or within 20 Banking Days after the end of the relevant Fiscal
Quarter or period of successive Fiscal Quarters;
"DEBT SERVICE COVERAGE RATIO" for any Fiscal Quarter or period of
successive Fiscal Quarters means the ratio for such Fiscal
Quarter or period of successive Fiscal Quarters of (i) the sum of
(A) EBITDA minus (B) the aggregate amount of all Capital
Expenditures incurred by Gerdau Steel minus (C) Income Taxes
incurred and actually paid by Gerdau Steel, in each case
determined on a Combined Basis, divided by (ii) Debt Service
Cost;
"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;
- 18 -
"DERIVATIVE EXPOSURE" for any Person at any time means the
amount, if any, which would be payable by such Person to its
counterparty (determined in accordance with customary market
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 as a result of that Person
being a Defaulting Party (as defined in said Section 14) 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;
"EBITDA" for any Fiscal Quarter or period of successive Fiscal
Quarters means the sum (without duplication) for such Fiscal
Quarter or period of successive Fiscal Quarters of (i) the net
income of Gerdau Steel for such Fiscal Quarter or period of
successive Fiscal Quarters before interest, income taxes,
depreciation, amortization, and any non-cash gains or losses in
the books of Gerdau Steel (or any other Gerdau Canada Group
Member where such gains or losses would form part of the net
income of Gerdau Steel determined on a Combined Basis) to the
extent that such gains or losses result only from exchange rate
fluctuations, excluding (for the avoidance of doubt) any gains or
losses resulting from actual sales or purchases of one currency
with another, whether upon a spot sale, a forward purchase or
sale, the completion of a forward sale transaction or otherwise,
and before extraordinary and unusual items, in each case,
determined on a Combined Basis;
"EFFECTIVE TIME" means the time the amendment and restatement of
the Existing Credit Agreement contemplated by this Agreement
becomes effective in accordance with Section 6.4 by delivery of
the Implementation Notice by the Agent to the Borrowers;
"ELIGIBLE HEDGING INSTRUMENT" has the defined meaning assigned to
it in Section 4.1.3;
- 19 -
"ELIGIBLE INVENTORY" of any Gerdau Canada Group Member means, at
any time, that portion of that Gerdau Canada Group Member's
inventories determined from the most recent balance sheet of
Gerdau Steel prepared on a Combined Basis 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 Gerdau Canada Group Member means,
at any time, the aggregate outstanding balances, net of allowance
for credit losses, of all receivables owned by that Gerdau Canada
Group Member representing unconditional obligations to pay,
arising from sales, leases or rentals by that Gerdau Canada Group
Member to any other Persons in the ordinary course of its
business, existing at that time, and as determined from the most
recent balance sheet of Gerdau Steel prepared on a Combined
Basis; 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 another ▇▇▇▇▇▇ ▇.▇. 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 amount 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 Handling and Transportation Act
(Canada), 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
- 20 -
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
▇▇▇▇▇▇ ▇.▇. Group are situated or any of the Business of the
▇▇▇▇▇▇ ▇.▇. 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;
"EXCHANGED CO-STEEL SHARES" has the defined meaning assigned to
it in Recital X of this Agreement, and (where the context so
admits) includes any Capital Stock in Co-Steel derived in the
future therefrom;
"EXISTING BORROWERS" has the defined meaning assigned to it in
Recital R of this Agreement;
"EXISTING LOAN AGREEMENT" has the defined meaning assigned to it
in Recital V of this Agreement;
"EXISTING 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 Confirmed Loan Documents;
"EVENT OF DEFAULT" has the defined meaning assigned to it 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 (i) January 15, 2004
provided that, if such date is not a Banking Day, the Final Term
Facility Due Date shall be the preceding Banking Day, or (ii)
such earlier date as the entire balance of the Advances under the
Term Facility may become due whether by acceleration or
otherwise, whichever is first to occur;
- 21 -
"▇▇▇▇▇" means PASUG LLC (formerly PASUG Inc.), a limited
liability company organized pursuant to the laws of the State of
Delaware as at the date hereof, and any successor of it, as the
context requires;
"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 (i) before the FLS/Gerdau USA Merger took effect, FLS
Holdings, Inc., a corporation incorporated pursuant to the laws
of the State of Delaware and (ii) upon and after the FLS/Gerdau
USA Merger took effect, Gerdau USA Inc., a corporation
incorporated pursuant to the laws of the State of Delaware, the
surviving corporation from the FLS/Gerdau USA Merger, and any
successor of it, as the context requires;
"FLS/GERDAU USA MERGER" means the merger of Gerdau USA Inc. with
FLS Holdings, Inc. with FLS Holdings, Inc. (renamed Gerdau USA
Inc.) as the surviving corporation which took place with effect
immediately before the date hereof;
"FOURTH SYNDICATED AMENDED AND RESTATED LOAN AGREEMENT" has the
defined meaning assigned to it in Recital R of this Agreement;
"FREE CASH FLOW" for any Fiscal Quarter or period of successive
Fiscal Quarters means the sum determined as (i) EBITDA less (ii)
Debt Service Cost less (iii) the Income Taxes incurred and
actually paid by Gerdau Steel, less (iv) Capital Expenditures
incurred, in each case, in respect of such Fiscal Quarter or
period of successive Fiscal Quarters and determined on a Combined
Basis;
"GAAP" means generally accepted accounting principles determined
in accordance with Section 1.11;
"GERDAU CANADA GROUP FACILITIES" means all plants, ▇▇▇▇▇ 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 Gerdau Steel and
its consolidated Subsidiaries, including any Gerdau Canada
Subgroup Member, but excluding each Co-Steel Group Member and
each Non-Qualifying Subsidiary; and "GERDAU CANADA GROUP" means
all Gerdau Canada Group Members;
- 22 -
"GERDAU CANADA SUBGROUP HOLDING COMPANY" means Gerdau Nova Scotia
Holding Company, an unlimited liability company formed pursuant
to the laws of the Province of Nova Scotia as at the date hereof,
and any successor of it, as the context requires;
"GERDAU CANADA SUBGROUP HOLDING COMPANY SHARES" has the defined
meaning assigned to it in Recital X of this Agreement, and (where
the context so admits) including any future Capital Stock in
Gerdau Canada Subgroup Holding Company;
"GERDAU CANADA SUBGROUP INTERIM HOLDING COMPANY" means 4104315
Canada Limited, a corporation incorporated pursuant to the laws
of Canada as at the date hereof, and any successor of it, as the
context requires;
"GERDAU CANADA SUBGROUP MEMBER" at any time means any one of
Courtice, MRM Holdings, MRM and Gerdau USA and their respective
consolidated Subsidiaries, but excluding each Non-Qualifying
Subsidiary; and "GERDAU CANADA SUBGROUP" means all of the Gerdau
Canada Subgroup Members;
"GERDAU CANADA SUBGROUP SHARES" has the defined meaning assigned
to it in Recital W of this Agreement, and (where the context so
admits) includes any future Capital Stock in any Gerdau Canada
Subgroup Member;
"▇▇▇▇▇▇ ▇.▇." means ▇▇▇▇▇▇ ▇.▇., a Brazilian corporation at the
date hereof, and any successor of it, as the context requires;
"▇▇▇▇▇▇ ▇.▇. ADVANCE" means the advances made by ▇▇▇▇▇▇ ▇.▇. to
Gerdau Steel on September 29, 2000, December 27, 2000 and March
30, 2001 in the principal amounts of Cdn.$5,400,000,
Cdn.$5,000,000 and Cdn.$7,500,000 respectively, and the principal
amount of any other advance made by ▇▇▇▇▇▇ ▇.▇. to a Pre-1999
Borrower pursuant to and in accordance with the terms of Section
12.1.4 on not less than two Banking Days' prior notice by the
relevant Pre-1999 Borrower to the Agent, specifying the amount
and date of the advance;
"▇▇▇▇▇▇ ▇.▇. GROUP MEMBER" at any time means each Gerdau Canada
Group Member, the Gerdau Canada Subgroup Holding Company, the
Intermediate Holding Company, the Gerdau Canada Subgroup Interim
Holding Company, each Gerdau USA Group Member and their
respective Subsidiaries, but excluding each Co-Steel Group
Member;
"▇▇▇▇▇▇ ▇.▇. GUARANTEE" means the guarantee of ▇▇▇▇▇▇ ▇.▇. listed
in Schedule L;
"▇▇▇▇▇▇ ▇.▇. TRUST DEED" means the Indenture dated as of May 22,
1996 (as amended and supplemented) among Metalurgica ▇▇▇▇▇▇ ▇.▇.,
as issuer, ▇▇▇▇▇▇ ▇.▇., as the sole remaining guarantor, The
Chase Manhattan Bank, New York, as trustee, registrar transfer
agent, Chase Manhattan Bank Luxembourg S.A., as
- 23 -
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 as at the date hereof, and any successor of it, as the
context requires;
"GERDAU STEEL GUARANTEES" means the Gerdau Steel/Courtice
Guarantee and the Gerdau Steel/MRM Guarantee, and "GERDAU STEEL
GUARANTEE" means any one of them;
"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 (i) before the FLS/Gerdau USA Merger took
effect, Gerdau USA Inc., a corporation incorporated pursuant to
the laws of the State of Delaware and (ii) upon and after the
FLS/Gerdau USA Merger took effect, FLS;
"GERDAU USA GROUP" means USP, NSULC, ▇▇▇▇▇, Gerdau USA,
AmeriSteel and AmeriSteel Bright Bar and their respective
Subsidiaries;
"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;
"GTL NETHERLANDS" means GTL Financial Corp. B.V., a corporation
incorporated pursuant to the laws of the Netherlands as at the
date hereof, and any successor of it, as the context requires;
"GTL SPAIN" means Gerdau GTL Spain, S.L. (formerly GTL-Trade
Corp., a corporation incorporated pursuant to the laws of the
British Virgin Islands), a corporation continued under the laws
of Spain as at the date hereof, and any successor of it, as the
context requires;
- 24 -
"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;
"IMPLEMENTATION NOTICE" has the defined meaning assigned to it in
Section 6.2;
"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 (or in the case of Gerdau Steel, any
Gerdau Canada Group Member) to pay (in whole or in part) any of
the following amounts at such time:
(a) Debt;
(b) indebtedness, actual or contingent, arising under or in
respect of any note purchase, purchase of accounts,
factoring, securitization or discounting arrangement;
(c) the principal amount of, and premiums and capitalized
interest payable in respect of, indebtedness for the
deferred purchase price of property or services;
(d) 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);
(e) Derivative Exposure;
(f) the redemption or retraction price of any Preferred Shares;
(g) the capital portion of any other transaction that is not
Debt having the commercial effect of borrowing; or
- 25 -
(h) any amount payable under any direct or indirect guarantee of
any amount of the nature described in any of clauses (a) to
(g) 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;
"INFORMATION CIRCULAR" means the management information circular
of Co-Steel dated August 26, 2002;
"INITIAL TARGET SHARES" means the 88% of the 9,000,000 issued and
outstanding shares in the capital stock of AmeriSteel owned by
FLS as at September 27, 1999;
"INTELLECTUAL PROPERTY RIGHTS" means any rights under any
contract or Applicable Law, including the Patent Act (Canada),
Copyright Act (Canada) and Trade-▇▇▇▇ 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 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
- 26 -
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;
"INTERMEDIATE HOLDING COMPANY" has the defined meaning assigned
to it in the Status Quo Agreement;
"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 the Swing Line Lender
appointed pursuant to the provisions of Section 13.15.3;
"JOINT ARRANGERS AND JOINT BOOKRUNNERS" means Chase Securities
Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and The Toronto-Dominion Bank,
and any of their respective successors;
"KYOEI STEEL BALANCE OF SALE NOTES" means (i) the promissory note
dated December 23, 1999 in the principal amount of
U.S.$3,484,536.85 maturing March 19, 2001, issued by USP to Kyoei
Steel, Ltd., (ii) the three promissory notes dated December 23,
1999 each in the principal amount of U.S.$43,786,666.66 and
maturing March 17, 2000, September 18, 2000 and March 19, 2001,
respectively, issued by USP to Kyoei Steel, Ltd., (iii) the
promissory note dated December 23, 1999 in the principal amount
of U.S.$523,397 maturing March 17, 2000 issued by USP to Kyoei
Steel, Ltd. and (iv) the promissory note dated December 23, 1999
in the principal amount of U.S.$2,171,088.89 maturing September
18, 2000 issued by USP to Kyoei Steel, Ltd.;
"KYOEI STEEL BALANCE OF SALE NOTES REFINANCING LOAN" means the
principal amount of any loan made after the date hereof to a
Pre-1999 Borrower on not less than ten Banking Days' notice to
the Agent, provided that (i) no such loan shall be made prior to
the repayment and discharge in full of the Kyoei Steel Balance of
Sale Notes or at a time when a Default or Event of Default has
occurred that is continuing, (ii) every such loan is fully
postponed and subordinated to the Loan Obligations on terms
satisfactory to the Agent (acting reasonably), except that
interest on and fees and charges in respect of any such loan may
be paid with the
- 27 -
prior written consent of the Agent (acting on the instructions of
the Majority Lenders), and (iii) the aggregate principal amount
of such loans (not including any capitalized interest, fees and
charges) does not exceed the aggregate principal amount of the
Kyoei Steel Balance of Sale Notes as of the date of their issue;
"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;
"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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or
such other counsel as the Agent may designate;
"LENDERS' ONTARIO COUNSEL" means Fasken ▇▇▇▇▇▇▇▇▇ DuMoulin LLP of
Toronto, Ontario or such other counsel as the Agent may
designate;
"LENDERS' QUEBEC COUNSEL" means Fasken ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP of
Montreal, Quebec or such other counsel as the Agent may
designate;
"LENDERS' SASKATCHEWAN COUNSEL" means ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ or such other counsel as the Agent may designate;
"LENDERS' U.S. COUNSEL" means Winston & ▇▇▇▇▇▇ 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.
- 28 -
Dollars in a representative amount which appears on the Page 3750
of the Dow ▇▇▇▇▇ 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;
"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 Existing 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
Section 14.5.4;
"LONG TERM DEBT" means all Indebtedness of Gerdau Steel
determined on a Combined 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;
- 29 -
"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;
"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 ▇▇▇▇▇▇ ▇.▇. 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 ▇▇▇▇▇▇ ▇.▇. 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 ▇▇▇▇▇▇ ▇.▇. 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;
"MFT" means MFT Acquisition, Corp., a corporation incorporated
under the laws of the State of Delaware as at the date hereof,
and any successor of it, as the context requires;
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.;
- 30 -
"MORTGAGED PROPERTY" means all of the property, assets and
undertaking of each ▇▇▇▇▇▇ ▇.▇. 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 the
date hereof, such corporation when it was a Canada corporation,
and any successor of it, as the context requires;
"MRM AMERICA" means Gerdau MRM America Holding Corp., a
corporation incorporated under the laws of the State of Delaware
as at the date hereof, and any successor of it, as the context
requires;
"MRM DEBENTURE" means the Cdn.$80,000,000 secured demand
debenture dated June 27, 1995 granted by MRM to TD;
"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 as at the date
hereof, and any successor of it, as the context requires;
"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
- 31 -
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;
"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, ▇▇▇▇▇▇ ▇.▇. 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 Capital Stock 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
- 32 -
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 any of (i) any Subsidiary of
any of Gerdau Steel, MRM Holdings, Courtice or Gerdau USA that is
a Non-Qualifying Investment, (ii) any of the Gerdau USA Group and
(iii) Gerdau Canada Subgroup Interim Holding Company, the
Intermediate Holding Company and Gerdau Canada Subgroup Holding
Company;
"NSULC" means 3038482 Nova Scotia Company, a Nova Scotia
unlimited liability company as at the date hereof, or any
successor of it, as the context requires;
"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 Gerdau Steel, the Borrowers, MRM Holdings,
NSULC, ▇▇▇▇▇, ▇▇▇▇▇▇ ▇.▇., Gerdau USA, ▇▇▇▇▇▇, the Gerdau Canada
Subgroup Interim Holding Company, the Intermediate Holding
Company, the Gerdau Canada Subgroup Holding Company 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;
"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 ▇▇▇▇▇▇ ▇.▇. Group
Member, the following:
- 33 -
(a) 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;
(b) 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;
(c) 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;
(d) 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 ▇▇▇▇▇▇ ▇.▇. Group Member has not received written
notice of a lien;
(e) liens arising from court or arbitral proceedings, provided
that the claims secured thereby are being contested in good
faith by such ▇▇▇▇▇▇ ▇.▇. 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 ▇▇▇▇▇▇ ▇.▇. Group Member's property in the aggregate or
materially impair the use thereof in its Business;
(f) 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;
(g) deposits to secure public or statutory obligations or in
connection with any matter giving rise to a lien described
in (d) above;
(h) 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 (c)
or (e) above;
- 34 -
(i) 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 ▇▇▇▇▇▇ ▇.▇. Group Member in the
operation of its Business;
(j) 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;
(k) security given by such ▇▇▇▇▇▇ ▇.▇. 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 ▇▇▇▇▇▇ ▇.▇. Group Member in the ordinary
course of its Business;
(l) the reservation in any original grants from the Crown or
other Governmental Body of any land or interest therein and
statutory exceptions to title;
(m) 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
▇▇▇▇▇▇ ▇.▇. Group Member or interfere in any material
respect with the use of such real property for the purposes
for which it is held;
(n) the reversionary interests of landlords under leases of real
property that are not capital leases with a ▇▇▇▇▇▇ ▇.▇.
Group Member as tenant;
(o) the tenancy rights of tenants under leases of real property
with a ▇▇▇▇▇▇ ▇.▇. Group Member as landlord;
(p) the interests (including security interests in the personal
property leased, any proceeds thereof and any insurance
proceeds in respect thereof) of lessors under operating
leases of personal property which do not constitute
Indebtedness of a ▇▇▇▇▇▇ ▇.▇. Group Member;
(q) 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;
(r) any Lien granted to TD or the Agent in connection with the
Security;
(s) any other lien which the Agent approves in writing as a
Permitted Lien; and
(t) any Lien granted by a ▇▇▇▇▇▇ ▇.▇. Group Member to an Obligor
in respect of Indebtedness owing by such ▇▇▇▇▇▇ ▇.▇. Group
Member to
- 35 -
such Obligor provided that such Indebtedness and Lien is
subject to a first ranking perfected Lien in favour of the
Lenders pursuant to such documentation as the Agent may
require;
"PERSON" means any individual, partnership, limited partnership,
joint venture, syndicate, sole proprietorship, limited or
unlimited liability company, corporation or other body corporate
with or without share capital, unincorporated association, trust,
estate, trustee, executor, administrator or other legal personal
representative or Governmental Body;
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Bros. Corporation, a corporation
incorporated pursuant to the laws of North Dakota as at the date
hereof, and any successor of it, as the context requires;
"▇▇▇▇▇▇ GUARANTEE" means the guarantee of MRM's Loan Obligations
to each Lender initially given by ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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;
"PRE-1999 BORROWERS" has the defined meaning assigned in Recital
N of this Agreement;
"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;
"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;
- 36 -
"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 amount secured has not increased
and the Lien continues to be limited to such property);
"RATEABLE SHARE" of any Lender means:
(a) in relation to any outstanding Advance, the proportion borne
by such Lender's share of the Advance to the full amount of
such Advance;
(b) in relation to the Revolver Facility, the proportion of such
Lender's Revolver Commitment to the Total Revolver
Commitment;
(c) in relation to the Term Facility, the proportion of such
Lender's Term Commitment to the Total Term Commitment; and
(d) 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 divided by (B) the sum of (1)
the Total Term Commitment plus (2) the Total Revolver
Commitment;
"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 and appurtenances comprising or used in
connection therewith, and any item or part thereof. For greater
certainty, Real Estate does not include any Real Estate of any
Co-Steel Group Member;
"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;
"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;
"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;
- 37 -
"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" (i) in relation to any Borrowing, other than
the portion of the Borrowing referred to in (ii) below, means 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 and (ii) and in relation to the U.S.$50,000,000 portion
of the U.S.$91,743,119.26 Base Rate Loan owing by MRM which was
assumed by USP, means each of USP and MRM;
"REORGANIZATION TRANSACTIONS" means the Co-Steel Combination
Transactions, the Debt Reorganization Transactions and the
AmeriSteel Merger Transactions;
"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);
"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 14.5.5) 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 Corporate Borrowers pursuant to Article 2;
- 38 -
"REVOLVER FACILITY DUE DATE" in respect of any Lender means
September 22, 2003 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;
"SECOND SYNDICATED AMENDED AND RESTATED LOAN AGREEMENT" has the
defined meaning assigned to it in Recital I of this Agreement;
"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 Existing Security;
"SECURITY CO-ORDINATION AGREEMENT" means the amended and restated
security co-ordination agreement initially made as of December
23, 1999 among Gerdau Steel, Courtice, MRM and USP as borrowers
and Gerdau Steel, Courtice, MRM, USP, MRM Holdings, ▇▇▇▇▇▇,
Gerdau USA, ▇▇▇▇▇▇ ▇.▇., FLS, NSULC and ▇▇▇▇▇ as guarantors and
The Toronto-Dominion Bank as administration agent;
"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, a Vice
President, the Secretary or the Controller of such Person, or any
other Person who performs the function normally expected of an
individual holding any of the aforesaid offices;
- 39 -
"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; and "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;
"STATUS QUO AGREEMENT" means the status quo agreement of even
date herewith among, inter alia, Gerdau Steel, Courtice, MRM
Holdings, Gerdau USA, Gerdau Canada Subgroup Holding Company,
Co-Steel, the Co-Steel Security Agents, the Agent and the
Intermediate Holding Company;
"SUBORDINATED DEBT" means Debt of any ▇▇▇▇▇▇ ▇.▇. Group Member
(including the Kyoei Steel Balance of Sale Notes, any Kyoei Steel
Balance of Sale Notes Refinancing Loans, any ▇▇▇▇▇▇ ▇.▇. Advances
and any loans made pursuant to Section 11.3.1.5.6), 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), save only as expressly
otherwise provided in this Agreement;
"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
▇▇▇▇▇▇ ▇.▇. Group Member, assets which (i) represents more than
10% of the consolidated
- 40 -
assets of the ▇▇▇▇▇▇ ▇.▇. Group Member as would be shown in the
consolidated financial statements of the ▇▇▇▇▇▇ ▇.▇. Group Member
(or, in the case of Gerdau Steel, the financial statements of
Gerdau Steel prepared on a Combined Basis) 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 10%
of the consolidated net sales or of the consolidated net income
of the ▇▇▇▇▇▇ ▇.▇. Group Member (or, in the case of Gerdau Steel,
the financial statements of Gerdau Steel prepared on a Combined
Basis) 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 Corporate 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 Corporate 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 of
Gerdau Steel plus (4) the principal amount of all Subordinated
Debt of Gerdau Steel minus (5) any retained earnings deficit of
Gerdau Steel minus (6) the amount of any deferred translation
loss of Gerdau Steel minus (7) the amount of all intangibles of
Gerdau Steel minus (8) the amount of all deferred charges
(including deferred income taxes) of Gerdau Steel minus (9) the
amount of all Indebtedness owing to any Gerdau Canada Group
- 41 -
Member by an Affiliate minus (10) all Non-Qualifying Investments;
as each such amount (to the extent applicable) would be expressed
on a balance sheet of Gerdau Steel prepared on a Combined Basis;
"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 September 27, 1999 or at any time thereafter, 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, or any successor of it, as
the context requires;
"TELLIB" means Tellib Trade Corp. Ltd., a company incorporated
under the laws of the British Virgin Islands as at the date
hereof, and any successor of it, as the context requires;
"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;
"TERM FACILITY" means the term credit facility made available to
the Borrowers pursuant to Article 3;
"THIRD PARTY FACILITIES" means all plants, ▇▇▇▇▇ 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;
"THIRD SYNDICATED AMENDED AND RESTATED LOAN AGREEMENT" has the
defined meaning assigned to it in Recital M of this Agreement;
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"TOTAL COMMITMENT" means the sum of the Total Term Commitment and
the Total Revolver Commitment;
"TOTAL DEBT/EBITDA RATIO" for any Fiscal Quarter or period of
successive Fiscal Quarters ending after September 27, 1999 means
the ratio of (i) the sum of (A) the total amount of all Debt of
Gerdau Steel as at the end of such Fiscal Quarter or period of
successive Fiscal Quarters less (B) all Subordinated Debt of
Gerdau Steel as at the end of such Fiscal Quarter or period of
successive Fiscal Quarters divided by (ii) EBITDA for such Fiscal
Quarter or period of successive Fiscal Quarters determined on a
Combined Basis;
"TRANSFEREE" has the defined meaning assigned in Section 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. 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;
"U.S. DOLLARS" or "U.S. $" means lawful money of the United
States of America;
"USP" means GUSAP Partners, a Delaware general partnership as at
the date hereof, or any successor of it, as the context requires;
"VOTING CAPITAL STOCK" means Capital Stock of a Person which
carries voting rights or the right to Control such Person under
any circumstances, provided that Capital Stock which carries the
right to vote or Control conditionally upon the happening of an
event shall not be considered Voting Capital Stock until the
occurrence of such event and then only during the continuance of
such event;
"WASTE" means ashes, garbage and refuse and includes domestic
waste, industrial waste, municipal refuse or such other wastes as
are designated as such under any Environmental Law;
"WHOLLY-OWNED SUBSIDIARY" of a Person means any Subsidiary, all
of the outstanding Capital Stock of which, shall at the time be
owned or Controlled, directly or indirectly, by such Person or
one or more Wholly-Owned Subsidiaries of such Person, or by such
Person and one or more Wholly-Owned Subsidiaries of such Person;
and
"$" means Cdn.$ or U.S.$, as the context requires.
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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);
"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, license or
otherwise dispose of any property, or the commercial benefits of
use or ownership of (including the right to profit or gain from)
any property, whether in a single transaction or in a series of
related transactions (other than the payment of money), and
"DISPOSED", "DISPOSITION" and "DISPOSAL" shall be construed in
like manner;
"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 substantial indemnity scale, and "LOSS AND
EXPENSE" shall be construed in like manner;
"OBLIGATIONS" shall be construed as indebtedness, obligations,
responsibilities, duties and liabilities (actual or contingent,
direct or indirect, matured or not, now existing or arising
hereafter), whether arising by contract or statute, at law, in
equity or otherwise, and "obliged", "OBLIGATION" and "OBLIGATED"
shall be construed in like manner; and
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"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, title, benefits,
interests, powers, authorities, discretions, privileges,
immunities and remedies (actual or contingent, direct or
indirect, matured or not, now existing or arising hereafter),
whether arising by contract or statute, at law, in equity or
otherwise, and "RIGHT" shall be construed in like manner;
"SUCCESSOR" of any Person (the "RELEVANT PARTY") shall be
construed so as to include (i) any amalgamated or other
corporation of which the relevant party or any of its successors
is one of the amalgamating or merging corporations, (ii) any
Person to whom all or substantially all of the Business Assets of
the relevant party are transferred, (iii) any corporation
resulting from any court approved arrangement of which the
relevant party or any of its successors is party, (iv) any
corporation resulting from the continuance of the relevant party
or any successor of it under the laws of another jurisdiction of
incorporation and (v) any successor (determined as aforesaid or
in any similar or comparable procedure under the laws of any
other jurisdiction) of any Person referred to in clause (i),
(ii), (iii) or (iv).
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 Gerdau Steel and the Borrowers 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
Gerdau Steel and the Borrowers 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 Gerdau Steel and the Borrowers
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 Gerdau Steel and the
Borrowers 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 it. Each of Gerdau Steel and the
Borrowers 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 it at the address, or by sending a telecopy
thereof to it at the telecopier number, for the time being prescribed by Section
14.4. Each of Gerdau Steel and the Borrowers confirms to the Syndicate that it
has accepted its appointment to act as process agent on behalf of each other
▇▇▇▇▇▇ ▇.▇. Group Member contained in any Loan Document to which each such other
▇▇▇▇▇▇ ▇.▇. 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 may be or become
entitled to any Drawdown, each of Gerdau Steel and the Borrowers covenants and
agrees to maintain each such appointment as such process agent.
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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 Required Lenders party thereto have given their 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 1.11 shall not apply to limit, restrict, prejudice or otherwise affect
or impair in any way the rights of any of the Syndicate 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 terms, tests or ratios relative to Gerdau Steel, including those
contained in Section 11.1.1.13 including each defined term and component item
taken into account in determining such financial terms, tests or ratios, shall
be computed on a Combined Basis.
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".
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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 1.14, 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.
ARTICLE 2
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 Corporate Borrowers in the
amount equal to the lesser of (a) the Borrowing Base or (b) the
Revolver Amount, to be used by each Corporate Borrower to finance
in part the indirect acquisition of the Initial 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 Corporate
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.
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Dollars; and (v) subject to the provisions of Section 7.5.10,
Standby Credits in Canadian dollars or U.S. Dollars.
2.1.3 At the Effective Time, (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 each
such expression is referred to and defined in the Existing 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. Gerdau Steel shall repay in full to the Lenders all
"Advances" outstanding to it under the "Revolver Facility" (as
each such expression is referred to and defined in the Existing
Loan Agreement) before the Effective Time and shall ensure that
it has no such "Advances" outstanding at the Effective Time.
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 Corporate 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 order stipulated in Section 2.5.2.
2.2 AVAILABILITY AND REVOLVING NATURE OF REVOLVER FACILITY
During the Availability Period, a Corporate 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
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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 Corporate 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.
2.5.2 On the date of each reduction of each Lender's Revolver
Commitment pursuant to Section 2.8, each Corporate Borrower shall
repay to such Lender such amount on account of such Lender's
Rateable Share of Advances made to such Corporate 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 Relevant 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"),
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request an extension of the Current Maturity Date by a period of up to 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 Gerdau Steel, 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 Gerdau Steel, the Revolver
Facility Due Date for that Lender shall automatically and without any further
action by any Person be extended as of and from the Current Maturity Date by the
period of extension so requested by Gerdau Steel, 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 Corporate 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
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.
2.7 PREPAYMENT AND CANCELLATION OF REVOLVER FACILITY
2.7.1 Prepayment. Subject to the terms and conditions of this
Agreement, each Corporate 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 that Corporate
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.
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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 Corporate Borrower complying with the provisions of Section 7.4.
2.9 SWING LINE ADVANCES
2.9.1 Commitment. The Swing Line Lender establishes a committed
revolving operating credit facility in favour of the Corporate
Borrowers to finance the day-to-day working capital requirements
for the Corporate 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 Corporate 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 Corporate Borrowers
shall ensure that the aggregate Outstanding Amount of all
outstanding Advances made by the Swing Line Lender under this
Section 2.9.2 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 7.6.6.
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 Section 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: At the Effective Time, (i) the Swing Line
will be treated as having been drawn by the Relevant Borrower by
each outstanding Swing Line Loan and Standby Credit (each as
referred to and defined in the Existing Loan
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Agreement), (ii) each such 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 and
(iii) each such Standby Credit shall be treated as a Standby
Credit issued by the Issuing Bank under this Agreement.
2.10 ADVANCES
Any Advance from the Lenders requested by a Corporate 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
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 which shall be used by each
Corporate Borrower to finance, directly or indirectly, in part
the acquisition of the Initial 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 At the Effective Time, (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 each such
expression is referred to and defined in the Existing Loan
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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 Term Facility.
3.1.4 With effect as of and from December 23, 1999, USP assumes, and
shall be deemed to be the Relevant Borrower of, a U.S.$50,000,000
portion of the U.S.$91,743,119.26 Base Rate Loan owing by MRM to
the Lenders on that date (such portion being designated by the
Agent and referred to as the "Assumed Base Rate Loan") and USP
agrees to pay such Assumed Base Rate Loan, and all related Loan
Obligations, (collectively, the "Assumed Loan Obligations") to
the Lenders as if USP were named in the Existing Loan Agreement
as an original party in substitution for MRM in respect of such
Assumed Loan Obligations in accordance with the provisions of
this Agreement. Notwithstanding such assumption, MRM shall remain
obliged as guarantor under the MRM Guarantees in respect of such
Assumed Loan Obligations.
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 Relevant
Borrowers with Advances under the Term Facility shall repay all
Advances outstanding under the Term Facility in consecutive
semi-annual instalments on each day falling 12, 18, 24, 30 and 36
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
The Relevant Borrowers with Advances under the Term Facility
shall repay the balance of all Advances outstanding under the
Term Facility on the Final Term Facility Due Date (and the Total
Term Commitment shall permanently reduce to nil on the Final Term
Facility Due Date).
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 the 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 Disposal 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 (i) Indebtedness
referred to in clause (x) of the definition of "Permitted Liens",
(ii) Indebtedness to any Person that is either ▇▇▇▇▇▇ ▇.▇. or
another Gerdau Canada Group Member, (iii) Indebtedness in respect
of Kyoei Steel Balance of Sale Notes Refinancing Loans, and (iv)
Indebtedness in respect
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of loans made under Section 11.3.1.5.6) by an amount equal to the
sum of 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
▇▇▇▇▇▇ ▇.▇. 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, ▇▇▇▇▇▇ ▇.▇.
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. The Corporate Borrowers 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 the
Corporate Borrowers 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, such Affected Lender's Commitment
shall be reduced to nil on such effective date 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 Relevant 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
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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 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;
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
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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 co-operate 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
FACILITIES
4.1 EXISTING HEDGING FACILITY
4.1.1 TD has established a discretionary hedging facility in favour of
the Borrowers to be used by each of the Borrowers 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 was the only Hedging
Lender as at September 27, 1999.
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".
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 Each Hedging Lender and Eligible Hedging Instrument under the
Existing Loan Agreement shall be considered as a Hedging Lender
and Eligible Hedging Instrument under this Agreement.
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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
Corporate 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.
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;
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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;
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.
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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.
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, unless the Agent notifies the
Relevant Borrower stating that netting is not 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 PRECEDENT TO ADVANCES
6.1 CONDITIONS PRECEDENT TO ADVANCE
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 this
Agreement and shall 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;
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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
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 TO EFFECTIVE TIME
The amendments to and restatement of the Existing 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 Q relative to the Co-Steel Group Credit
Agreements;
6.2.2 the Agent shall have received a duly executed copy of each of the
Status Quo Agreement, an amended and restated security
co-ordination agreement and 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, to the extent not previously received by the
Agent, including share certificates representing all of the
issued Capital Stock in the Gerdau Canada Subgroup Interim
Holding Company and the Gerdau Canada Subgroup Shares and
arrangements satisfactory to the Agent shall have been made to
ensure that the Agent receives the share certificate representing
the Exchanged Co-Steel Shares, together with transfer forms duly
executed in blank with signatures guaranteed by a Canadian
chartered bank;
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 (or equivalent or
analogous formation and internal management
documentation) of
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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 performance of the New Loan
Documents to which it is a party;
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 ▇▇▇▇▇▇ ▇.▇. Group Member
that is currently providing, or intended pursuant hereto
to provide, Security to the Syndicate substantially
equivalent or analogous to the certificates of each
Gerdau Canada Group Member (including attachments)
referred to in Sections 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 ▇▇▇▇▇▇ ▇.▇. Group Member
currently providing, or intended pursuant hereto to
provide, 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 validity, effect and priority have been
effected;
6.2.3.7 deposit of the share certificates representing all the
issued Capital Stock of ▇▇▇▇▇▇ Bros., MRM America and
MFT, acknowledgements that such Capital Stock is pledged
to the Agent pursuant to the Security, and such other
documents and opinions relating thereto as the Agent may
require;
6.2.3.8 deposit of the share certificates representing all the
new issued Capital Stock of the ▇▇▇▇▇▇ ▇.▇. Group
Members as may arise from the Debt Restructuring
Transactions, acknowledgements that such Capital Stock
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is pledged to the Agent pursuant to the Security, and
such other documents and opinions relating thereto as
the Agent may require;
6.2.3.9 deposit of the share certificates representing the
Capital Stock of Courtice, MRM Holdings and Gerdau USA
transferred pursuant to the Co-Steel Combination
Transactions and deposit of the share certificate
representing all the Capital Stock of the Gerdau Canada
Sub-Group Interim Holding Company, acknowledgements that
all such Capital Stock is pledged to the Agent pursuant
to the Security, a guarantee of the Loan Obligations
executed in favour of the Agent by the Gerdau Canada
Sub-Group Interim Holding Company, and such other
documents and opinions relating thereto as the Agent may
require;
6.2.3.10 in respect of the FLS/Gerdau USA Merger, the deposit of
the share certificates representing all the Capital
Stock of AmeriSteel owned by Gerdau USA, an
acknowledgement that such Capital Stock continues to be
pledged to the Agent pursuant to the stock pledge
executed in favour of the Agent by FLS and pursuant to
the stock pledge executed in favour of the Agent by
Gerdau USA, and such other documents and opinions
relating thereto as the Agent may require;
6.2.3.11 opinions from:
6.2.3.11.1 the Borrower's Counsel in respect of the
▇▇▇▇▇▇ ▇.▇. Trust Deed in respect of the
Reorganization Transactions and the entry
into effect of the amendments to the
Existing Loan Agreement contemplated
hereby;
6.2.3.11.2 Co-Steel's Counsel in respect of the Co-
Steel Group Credit Agreements and the
amendments contemplated by the agreements,
documents and instruments listed in
Schedule Q;
6.2.3.11.3 the Borrower's Counsel in respect of the
Exchanged Co-Steel Shares; and
6.2.3.11.4 the Borrower's Counsel in respect of each
▇▇▇▇▇▇ ▇.▇. Group Member currently
providing, or intended pursuant hereto to
provide, Security to the Syndicate,
addressed to the Syndicate and the Lenders'
Counsel, in respect of the laws of such
jurisdictions, the Loan Documents, the
▇▇▇▇▇▇ ▇.▇. Trust Deed and as to such
matters and in such form as the Lenders may
require;
6.2.3.12 a Compliance Certificate for the period of four
consecutive Fiscal Quarters ending June 30, 2002;
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6.2.3.13 a Borrowing Base Report prepared as at June 30,
2002;
6.2.3.14 satisfactory evidence that the New Loan Documents
shall, if necessary or desirable, have been filed,
registered and recorded where appropriate;
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 this
Agreement 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 Sections 6.1.1, 6.1.2 and
6.1.3 inclusive have been satisfied; and
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 delivered pursuant to
Section 6.2.3.11.
6.2.4 The Agent shall have received from Gerdau Steel all outstanding
fees agreed to be paid on or prior to the date of this Agreement
by Gerdau Steel to the Agent and the Lenders (or any of them)
pursuant to the fee letter dated September 5, 2002 from Gerdau
Steel to the Agent.
6.3 EFFECTIVE TIME
The Credit Facilities set out in this Agreement shall only become
available to the Borrowers pursuant to this Agreement if the Agent issues the
Implementation Notice.
6.4 EFFECTIVENESS
Upon the Agent delivering the Implementation Notice to the
Borrowers, the Lenders will be deemed to have consented to the Reorganization
Transactions subject to and upon the terms and conditions stated herein and this
Agreement shall amend and restate the Existing Loan Agreement in its entirety.
The Existing Loan Agreement as amended and restated by this Agreement shall
constitute one agreement, and the Existing 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.
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6.6 RIGHTS UNAFFECTED
This Agreement shall not waive, prejudice, delay or impair any
rights of the Syndicate, Gerdau Steel or the Borrowers arising under the
Existing Loan Agreement, the Security or otherwise, at law or in equity, which
have accrued to the Syndicate, Gerdau Steel or the Borrowers, as the case may
be, before the Effective Time. All interest, fees and other amounts (other than
principal) due or becoming due or owing as at the Effective Time shall be paid
after such time to the Syndicate 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 amended and restated loan agreement is executed and delivered by the
parties hereto.
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 by the Relevant Borrower,
the Agent (to the extent it has received funds from the Lenders) on behalf of
the Lenders will, subject to Section 5.6, 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.
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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.
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 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 $25,000,000 (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);
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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
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 Section
7.5.2 by a Borrowing Notice;
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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 behalf in handwriting 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,
subject to Section 13.20.7, 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 5.6, 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
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
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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 crediting
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.
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 Corporate 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;
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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, a
Corporate Borrower may not 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, and reimburse
the Issuing Bank for, 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
substantial indemnity 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 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
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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
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.
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7.6.5.2 Notwithstanding the provisions of this Section 7.6.5, a
Corporate Borrower shall not 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 Canadian Dollars equal to the equivalent of such
other Currency payment determined at the spot rate of exchange
quoted by the Swing Line Lender at the time such payment is made.
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 times (ii) the
Applicable Margin and times (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.
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.
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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 cancelling 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 are withdrawals to pay the Issuing Bank
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 pertaining to such Standby Credit.
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:
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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 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
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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 entire excess over the Revolver Commitment or Total Term
Commitment, as applicable. 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.
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 Section 7.10.1.
ARTICLE 8
FEES AND EXPENSES
8.1 COMMITMENT FEE
8.1.1 The Corporate Borrowers and 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 The Corporate Borrowers and 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.
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8.1.3 Each commitment fee payable pursuant to this Section 8.1 shall be
calculated for each calendar quarter from and after September 27,
1999 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 January 6, 2000 and the final payment of
such fee shall be due and payable on the Revolver Facility Due
Date.
8.2 PAYMENT OF COSTS AND EXPENSES
Whether or not any Borrower obtains any Advances hereunder,
Gerdau Steel and the Borrowers shall pay to the Syndicate on demand all
reasonable out-of-pocket costs and expenses of the 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,
effect, perfection, 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 substantial indemnity 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
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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.
8.4 AGENCY FEE
The Borrowers and Gerdau Steel 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 Existing Security, and as security for the due
and punctual payment and performance of all Loan Obligations of each Borrower,
Gerdau Steel and the Borrowers shall deliver or cause to be delivered to and for
the benefit of the Syndicate, the New Loan Documents before the Effective Time.
9.2 PERFECTION
Each of Gerdau Steel and the Borrowers shall ensure that all the
Security referred to in Section 9.1 is executed and delivered and that the Liens
created thereby and by all other Security 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 Gerdau
Steel or any Borrower to pay interest and fees at the rates, times and in the
manner provided in this Agreement.
9.5 EXISTING SECURITY
9.5.1 Each of Gerdau Steel and the Borrowers confirms that the Existing
Security shall remain in full force and effect notwithstanding
amendments to the Existing Loan
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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 Effective Time no
amount has 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, (ii) MRM agrees with
and confirms to the Lenders that as at the Effective Time no
amount has 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 and (iii) each of Gerdau Steel and the
Borrowers agrees with and confirms to the Lenders that as at the
Effective Time no amount has been paid by it in reduction of the
amounts secured under the Cdn.$350,000,000 debenture dated as of
September 27, 1999 or December 23, 1999, as applicable, issued by
it to the Agent and that such debentures collectively shall
secure Loan Obligations of each of Gerdau Steel and the Borrowers
in an aggregate principal amount of up to U.S.$100,000,000.00 (or
the Canadian Dollar equivalent) 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 Section 3.01(a)(i) to (iv) of the MRM Debenture has
been released.
9.6 INSURANCE
Each Corporate 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 Corporate
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 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.
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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 11.3.1.1.
9.8 OBLIGATIONS SECURED
The parties acknowledge that certain of the Existing 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 Existing Security or
other Loan Documents, such Existing 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 of Gerdau Steel and the Borrowers 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 and, in
the case of an assignment, without recourse of any kind.
9.11 REPAYMENT IN FULL
Each reference in this Agreement to payment or repayment of Loan
Obligations in full, and words to like effect, means payment or repayment of
such Loan Obligations in cash in full in accordance with the express provisions
of this Agreement, without regard to any compromise, reduction or disallowance
of all or any item or part thereof by virtue of the application of any
bankruptcy, insolvency or other similar such laws or general principles of
equity.
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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 of Gerdau Steel and the Borrowers represents and warrants,
with respect to itself and (to the extent the context so admits) each other
▇▇▇▇▇▇ ▇.▇. Group Member, to and in favour of the Syndicate as follows:
10.1.1 Incorporation and Status. It is duly incorporated or formed and
validly existing under the laws of its jurisdiction of
incorporation or formation and up-to-date in the filing of all
corporate or partnership and similar returns under the laws of
its jurisdiction of incorporation or formation; it has the
corporate or partnership 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 or partnership 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 or
partnership 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 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.
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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.
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
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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;
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;
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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;
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.
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10.1.16 All Material Information Supplied. No information furnished by it
to the Syndicate in connection with any of the Loan Documents
(including the Information Circular) 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, 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,
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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 ▇▇▇▇ 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.
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;
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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
or give rise to enforcement rights under 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;
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 ▇▇▇▇▇▇ ▇.▇. Group Member is Solvent.
10.1.24 Ownership of Subsidiaries. Attached as Schedule E - Part I is a chart,
as at the date of this Agreement, identifying all of the direct and
indirect Subsidiaries of ▇▇▇▇▇▇ ▇.▇. which hold, directly or
indirectly, through Subsidiaries, Capital Stock in any ▇▇▇▇▇▇ ▇.▇.
Group Member, as well as the percentage of all issued Capital Stock
held by ▇▇▇▇▇▇ ▇.▇., directly or indirectly. Attached as Schedule E -
Part II is a chart, pro forma as at the Effective Time and assuming
the AmeriSteel Merger Transactions have taken place, identifying all
of the direct and indirect Subsidiaries of ▇▇▇▇▇▇ ▇.▇. which hold,
directly or indirectly through Subsidiaries, Capital Stock in any
▇▇▇▇▇▇ ▇.▇. Group Member, as well as the percentage of all issued
Capital Stock held by ▇▇▇▇▇▇ ▇.▇., 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,
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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.
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 Borrower or
▇▇▇▇▇▇ ▇.▇. Group Member is, and after giving effect to any Advance no
Borrower or ▇▇▇▇▇▇ ▇.▇. 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 Borrower or ▇▇▇▇▇▇ ▇.▇. 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 Borrower or ▇▇▇▇▇▇ ▇.▇. 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 Borrower and ▇▇▇▇▇▇ ▇.▇. Group Member is listed
in Schedule P.
10.1.30 ▇▇▇▇▇▇ ▇.▇. Trust Deed: 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
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(including the creation of the Security contemplated thereby) and by
the Reorganization Transactions 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 ▇▇▇▇▇▇ ▇.▇. Trust Deed) or similar such event
(howsoever described) under the ▇▇▇▇▇▇ ▇.▇. Trust Deed.
10.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Each of Gerdau Steel and 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 of Gerdau Steel and the Borrowers 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 ▇▇▇▇▇▇ ▇.▇.
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 ▇▇▇▇▇▇ ▇.▇. 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 each
Syndicate member shall be constituted as the trustee of each of its own
directors, officers, employees, agents, solicitors, accountants, financial
advisors and other representatives 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 Gerdau Steel and Borrowers' Covenants. So long as any Loan Obligations
remain payable or any Borrower may be or become entitled to any
Drawdown,
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unless the Majority Lenders otherwise consent in writing, each of
Gerdau Steel and the Borrowers covenants and agrees with the Syndicate
that it will, and (where the context so admits) it will ensure that
each ▇▇▇▇▇▇ ▇.▇. 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 or
partnership existence, in its present jurisdiction of
incorporation or formation, and to maintain its corporate or
partnership 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, or give rise to
enforcement rights under, 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;
11.1.1.9.3 any development which has had or could have a
Material Adverse Effect; and
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11.1.1.9.4 any Default or Event of Default, or the
occurrence or non-occurrence 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
financial statements of Gerdau
Steel prepared on a Combined Basis
audited by its Auditors, the annual
consolidated financial statements
of Co-Steel audited by its auditors
and unaudited consolidating
financial statements of each of
Co-Steel, the Gerdau Canada Group,
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 financial
statements of Gerdau Steel prepared
on a Combined Basis, the unaudited
quarterly financial statements of
Co-Steel, and consolidating
financial statements of each of
Co-Steel, the Gerdau Canada Group,
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 and a commentary
prepared by the Vice President,
Finance of Gerdau Steel summarizing
the salient points of the
performance of each relevant
corporation, as shown in the
quarterly financial statements;
11.1.1.10.3 within 90 days after the
commencement of each Fiscal Year,
the budget and business plan of
Gerdau Steel prepared on a Combined
Basis for such Fiscal Year and
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the following four Fiscal Years,
including (A) forecasts of
projected disposals (including
timing and amount thereof) of
Gerdau Steel prepared on a Combined
Basis 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 (broken out on a quarterly
basis) for Gerdau Steel prepared on
a Combined Basis and on a
consolidated basis for each other
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 Section
11.1.1.10.6; 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.
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 Borrower or Gerdau Canada
Group Member and to discuss any of the Business
Affairs of any Borrower or Gerdau Canada Group
Member with any of its
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directors, Senior Officers and with any of its Auditors or
other consultants.
11.1.1.12 Arm's Length Arrangements. Except for transactions with
Affiliates expressly permitted herein, only enter into an
agreement, transaction or other arrangement with or for the
benefit of an Affiliate if such agreement, transaction or
arrangement is made on commercially reasonable terms, with
no deferred payment terms, at fair market value and
consistent with commercial relations between Persons that
deal at arm's length. Notwithstanding the foregoing or any
other provision of this Agreement, no ▇▇▇▇▇▇ ▇.▇. Group
Member shall enter into any agreement, transaction or other
arrangement with or for the benefit of, or assume any
obligations of, any Co-Steel Group Member, or dispose of any
of its Business Assets or transfer or pay any amount to or
for the benefit of any Co-Steel Group Member, except for (i)
the Reorganization Transactions and (ii) transactions
carried out between one ▇▇▇▇▇▇ ▇.▇. Group Member and a
Co-Steel Group Member in the ordinary course of trading at
fair market value and consistent with commercial relations
between Persons that deal at arm's length (including payment
terms taking into account the creditworthiness of the
purchasing party) provided that the aggregate outstanding
amount of all amounts owing by the entire Co-Steel Group to
the entire ▇▇▇▇▇▇ ▇.▇. Group pursuant to such transactions
shall not exceed U.S.$10,000,000 (or the foreign currency
equivalent) at any time.
11.1.1.13 Gerdau Canada Group 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
current assets of Gerdau Steel prepared on a
Combined Basis divided by (B) the sum of (1)
the current liabilities of Gerdau Steel
prepared on a Combined Basis 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 1.0:1.0 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 by Gerdau Steel
determined on a Combined Basis in respect of
such period to (B) Cash Interest Expense to be
less than 2.00:1 at any time.
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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:
FISCAL QUARTER 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 2.75:1
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 divided by (B) the
sum of (1) Tangible Net Worth plus (2) Long-
Term Debt 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
net income of Gerdau Steel determined on a
Combined Basis 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 to the Agent
pursuant to this Section 11.1.1 in sufficient numbers to
allow the Agent to distribute one copy to each Lender.
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11.1.1.19 Derivatives. Ensure 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.
11.1.1.20 Vertical Amalgamation. The Gerdau Canada Subgroup Interim
Holding Company will vertically amalgamate with Gerdau Steel
on January 1, 2003.
11.1.1.21 AmeriSteel Merger Transactions. It will cause the AmeriSteel
Merger Transactions to take place strictly in accordance
with the description thereof contained herein and in the
Information Circular with the result that AmeriSteel becomes
a Wholly-Owned Subsidiary of Gerdau USA and all of the
issued Capital Stock of AmeriSteel is subject to the first
priority Liens in favour of the Syndicate created pursuant
to the Security Documents. It will cause the Borrower's
Counsel to deliver to the Agent, promptly following the
AmeriSteel Merger Transactions taking place, such legal
opinions regarding the AmeriSteel Merger Transactions and
the Security in the Capital Stock of AmeriSteel consequent
upon such AmeriSteel Merger Transactions as the Agent shall
reasonably require.
11.2 AGENT ENTITLED TO PERFORM COVENANTS
If a Default or an Event of Default has occurred and is continuing and
if any ▇▇▇▇▇▇ ▇.▇. 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 ▇▇▇▇▇▇ ▇.▇. 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 the Corporate Borrowers and shall
be repaid accordingly.
11.3 NEGATIVE COVENANTS
11.3.1 Gerdau Steel and 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 of Gerdau Steel and the Borrowers covenants and
agrees with the Syndicate that it will, and (where the context so
admits) it will ensure that each Borrower and Gerdau Canada Group
Member will, duly perform and comply with each of the following
negative covenants:
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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 Section 11.1.1.12 or (C) to any other
Gerdau Canada Group Member in accordance with Section 11.3.1.12, (ii)
disposals of assets for fair market value to any other Person, other
than an Affiliate (including, for certainty, any Co-Steel Group
Member), in any period of four consecutive Fiscal Quarters having an
aggregate book value of up to Cdn.$10,000,000 and (iii) the
Reorganization Transactions.
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 (i) the Merger
Transactions, (ii) 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, and (iii) the vertical amalgamation referred to in Section
11.1.1.20.
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 after
November 8, 1996, other than:
11.3.1.5.1 Cash Equivalent Investments;
11.3.1.5.2 Investments in Gerdau Canada Group Members in existence at
the date hereof, or in any Wholly-Owned Subsidiaries of any
such existing Gerdau Canada Group Members that are also
Gerdau Canada Group Members, so long as:
(A) such Wholly-Owned Subsidiaries are engaged in a Core
Business in Canada or the continental United States of
America; and
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(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 the
aggregate in ▇▇▇▇▇▇▇ Steel Processors Inc. made
after November 8, 1996;
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 U.S.$15,500,000;
11.3.1.5.5 Investments in each of Gerdau USA, USP, NSULC and
▇▇▇▇▇ to the extent and in the manner
contemplated by the Loan Documents entered into
on or about December 23, 1999 and the Mortgaged
Property subject thereto, as amended or replaced
by the documentation delivered to the Agent
pursuant to Section 6.2.3.8.
11.3.1.5.6 a cash Investment in a ▇▇▇▇▇▇ ▇.▇. Group Member,
other than the Gerdau Canada Subgroup Interim
Holding Company and the Gerdau Canada Subgroup
Holding Company, (an "EXISTING ▇▇▇▇▇▇ ▇.▇. GROUP
MEMBER") in the same amount as, and out of the
proceeds of, an Investment made in that Existing
▇▇▇▇▇▇ ▇.▇. Group Member by another Existing
▇▇▇▇▇▇ ▇.▇. Group Member or by ▇▇▇▇▇▇ ▇.▇.,
provided that:
(i) at least five (5) Banking Days' prior
written notice of each such Investment is
given by Gerdau Steel to the Agent,
specifying the date and amount of the
Investment;
(ii) there may be one Investment, or two or more
successive Investments in a series, as long
as in any case the first of such Investments
is made by ▇▇▇▇▇▇ ▇.▇., the last is made to
AmeriSteel and both or all the Investments
are made during the same Fiscal Quarter; and
(iii) repayment of such cash Investments is made
at a time when no Default or Event of
Default has occurred that is continuing and
on not less than five (5) Banking Days
prior written notice to the Agent
specifying the date and method of
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repayment, being either by payment directly
from AmeriSteel to ▇▇▇▇▇▇ ▇.▇. or by
repayment of all the Investments in a
series during the same Fiscal Quarter in
the reverse order to the order in which
they were made;
11.3.1.5.7 the Investment in the Gerdau Canada Subgroup
Interim Holding Company, the Gerdau Canada
Subgroup Holding Company and the Exchanged
Co-Steel Shares contemplated by the Co-Steel
Combination Transactions and the Investment in
the Intermediate Holding Company contemplated by
the Status Quo Agreement;
11.3.1.5.8 the Investment by MRM in 100% of the issued and
outstanding shares of MRM America in the
aggregate amount of Cdn.$3,307,376 as at the
date hereof;
11.3.1.5.9 the Investment by MRM America in 100% of the
issued and outstanding shares of MFT in the
aggregate amount of Cdn.$1,194,600 as at the
date hereof;
11.3.1.5.10 the Investment by MRM in 100% of the issued and
outstanding shares of Mandak Car Crusher Inc. a
corporation incorporated under the laws of
Manitoba as at the date hereof, in the aggregate
amount of Cdn.$nil as at the date hereof; and
11.3.1.5.11 the Investment by MRM in 50% of the issued and
outstanding common shares of SSS/MRM Guide Rail
Inc., a corporation incorporated pursuant to the
laws of Manitoba at the date hereof, in the
aggregate amount of Cdn.$4,796,229 as at the
date hereof;
11.3.1.6 Redemptions and Distributions; Dividends. Except for
repayments made in accordance with Section 11.3.1.5.6(iii),
not declare, set apart for payment or distribution or pay
any dividends or make any other distributions (including in
specie distributions and Capital Stock dividends) 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.
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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, or permit any Subsidiary of it to
dispose, of any Capital Stock in any Subsidiary,
or any rights to acquire Capital Stock in any
Subsidiary, or issue, 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 (A) by any Gerdau
Canada Group Member to another Gerdau Canada
Group Member so long as such Capital Stock will,
upon acquisition by such Gerdau Canada Group
Member, be subject to the Security free and
clear of any other Liens, (B) in the case of any
Subsidiary that is a limited partnership, of
non-Voting Capital Stock in such Subsidiary to
any other Person that is not an Affiliate on
commercially reasonable terms for fair market
value for consideration consisting solely of
cash or Cash Equivalent Investments payable on
disposal or issuance consistent with commercial
relations with Persons that deal at arm's length
or (C) by any Co-Steel Group Member, save that
Co-Steel shall not be permitted to dispose of
any Capital Stock or rights to acquire any
Capital Stock in Gerdau Canada Subgroup Holding
Company, and Gerdau Canada Subgroup Holding
Company shall not be permitted to issue any
Capital Stock or rights to acquire Capital
Stock, except to the extent contemplated by the
Co-Steel Combination Transactions.
11.3.1.12.2 Subject to Section 11.1.1.12, not acquire any
new Subsidiary (a) that is a body corporate
unless such new Subsidiary becomes a Wholly-
Owned Subsidiary on
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acquisition and at no time before acquisition
was it a Co-Steel Group Member or a Gerdau USA
Group Member or (b) that is a limited or general
partnership, unless all of the Voting Capital
Stock in such Subsidiary will be owned by
another Gerdau Canada Group Member on
acquisition and at no time before acquisition
was it a Co-Steel Group Member or a Gerdau USA
Group Member; provided that the foregoing shall
not restrict (i) any of the Co-Steel Group from
acquiring any new Subsidiary, other than a
Subsidiary that owns Capital Stock in the
Intermediate Holding Company or (except for the
Intermediate Holding Company) in the Gerdau
Canada Subgroup Holding Company, (ii) any of
AmeriSteel and its Subsidiaries from acquiring
any Subsidiary or (iii) prohibit the
Reorganization Transactions.
11.3.1.12.3 Subject to Section 11.1.1.12, not dispose of any
of its Business Assets to any Subsidiary of it,
or to 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 so long as such Business Assets will,
upon acquisition by such Subsidiary be subject
to the Security free and clear of any other
Liens.
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, 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, directly or indirectly, and Controlled by
any Person other than ▇▇▇▇▇▇ ▇.▇. Not permit any Capital
Stock in any ▇▇▇▇▇▇ ▇.▇. Group Member to be issued or
disposed of if the percentage ownership of Capital Stock of
any ▇▇▇▇▇▇ ▇.▇. Group Member directly owned by any other
▇▇▇▇▇▇ ▇.▇. Group Member or (in the case of each of the
Intermediate Holding Company and the Gerdau Canada Subgroup
Holding Company) Co-Steel on a fully diluted basis (and
after giving effect to minority interests) would be diluted
below the percentage ownership depicted in Schedule E - Part
II.
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11.3.1.16 Financial Assistance. Except as contemplated by Section
11.3.1.5.6, not provide financial assistance, by means of
Investments, guarantees, provision of security or otherwise,
to any Person other than (a) to another Gerdau Canada Group
Member, and (b) to Gerdau USA, NSULC and ▇▇▇▇▇ to the extent
and in the manner contemplated by the Loan Documents entered
into on or about December 23, 1999 and the Mortgaged
Property subject thereto, as amended or replaced by the
documentation delivered to the Agent pursuant to Section
6.2.3.8.
11.3.1.17 Management Contracts. Not pay any amount to any Affiliate
(including, for certainty, any of the Co-Steel Group, Gerdau
Canada Subgroup Interim Holding Company and Gerdau Canada
Subgroup Holding Company) under any management agreement or
service contract or for any other reason whatsoever.
11.3.1.18 Repayment of ▇▇▇▇▇▇ ▇.▇. Advances. Not repay the principal
amount of any ▇▇▇▇▇▇ ▇.▇. Advance or any part thereof or pay
any interest, fees or any other sum on or in respect of a
▇▇▇▇▇▇ ▇.▇. Advance, except that a ▇▇▇▇▇▇ ▇.▇. Advance (or
part thereof and/or any accrued but unpaid interest, fees
and charges in respect thereof) may be repaid at any time or
times during the Fiscal Quarter next following a Fiscal
Quarter in respect of which a Compliance Certificate has
been delivered to the Agent that discloses no existing
Default or Event of Default that is continuing, provided
that:
11.3.1.18.1 there would be no Default or Event of Default if
(i) the relevant repayment of the ▇▇▇▇▇▇ ▇.▇.
Advance was included in the Debt Service Cost in
respect of the period covered by the relevant
Compliance Certificate, (ii) the required Total
Debt/EBITDA Ratio in respect of the said period
would be complied with if it took account of any
Debt or increased Debt of Gerdau Steel that
would result if the proposed repayment was made,
or (iii) the principal amount to be repaid was
excluded from any Indebtedness in which it had
been included for purposes of compliance with
any other financial tests specified in Section
11.1.1.13,
11.3.1.18.2 not less than five (5) Banking Days notice in
writing of the proposed repayment is given to
the Agent, and such notice annexes a copy of the
Compliance Certificate referred to above, and
11.3.1.18.3 no Default or Event of Default has occurred that
is continuing at the time of the repayment.
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11.3.1.19 Repayment of Kyoei Steel Balance of Sale Notes Refinancing
Loans. Not make any payment in respect of a Kyoei Steel
Balance of Sale Notes Refinancing Loan without the prior
written consent of the Agent (acting on the instructions of
the Majority Lenders).
11.3.1.20 Gerdau Canada Subgroup Holding Company. Not permit the
Gerdau Canada Subgroup Holding Company to (i) conduct any
business, except for the acquisition and holding of the
Gerdau Canada Subgroup Shares, (ii) incur any contractual
obligations, except those under the Loan Documents
(including the Status Quo Agreement) and the agreements
required to be entered into by it to complete the Co-Steel
Combination Transactions (which must be in form and
substance satisfactory to the Agent), (iii) receive any
money or other property, except for the existing Gerdau
Canada Subgroup Shares in the manner contemplated by the
Co-Steel Combination Transactions, (iv) make any
distributions on any of its Capital Stock or redeem or
purchase any of its Capital Stock, (v) issue any of its
Capital Stock, except to Gerdau Canada Subgroup Interim
Holding Company pursuant to the Co-Steel Combination
Transactions, or (vi) dissolve, be liquidated or wind up.
11.3.1.21 Intermediate Holding Company. Not permit the Intermediate
Holding Company to (i) conduct any business, except for the
acquisition and holding of all the issued Capital Stock in
the Gerdau Canada Subgroup Holding Company, (ii) incur any
contractual obligations except those under the Loan
Documents (including the Status Quo Agreement) and the
Intermediate Holding Company Transfer Agreement (as defined
in the Status Quo Agreement), (iii) receive any money or
other property, except for the issued Capital Stock in the
Gerdau Canada Subgroup Holding Company, (iv) make any
distributions on any of its Capital Stock or redeem or
purchase any of its Capital Stock, (v) issue any Capital
Stock, except to Co-Steel in exchange for the entire issued
Capital Stock in the Gerdau Canada Subgroup Holding Company
pursuant to the Intermediate Holding Company Transfer (as
defined in the Status Quo Agreement) or (vi) dissolve, be
liquidated or wind up.
11.3.1.22 Gerdau Canada Subgroup Interim Holding Company. Not permit
Gerdau Canada Subgroup Interim Holding Company, before its
vertical amalgamation with Gerdau Steel, to (i) conduct any
business, except for the holding of the Gerdau Canada
Subgroup Holding Company Shares and the Exchanged Co-Steel
Shares, (ii) incur any contractual obligations, except those
under the Loan Documents and the agreements required to be
entered into by it to complete the Co-Steel Combination
Transactions (which must be in form and substance
satisfactory to the Agent), or (iii) receive any money or
other property, except for the existing Gerdau Canada
Subgroup Shares and the
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Exchanged Co-Steel Shares in the manner contemplated by the
Co-Steel Combination Transactions.
11.3.1.23 Repayment of GTL Netherlands Debt. Not make any payment
(including by way of set-off, combination of accounts or
conversion to equity) in respect of the Indebtedness of any
▇▇▇▇▇▇ ▇.▇. Group Member owing to GTL Netherlands, except
(i) with the prior written consent of the Agent acting on
the instructions of the Majority Lenders and (ii) the Debt
Restructuring Transactions in accordance with the
agreements, documents and instruments delivered to the Agent
pursuant to Section 6.2.3.8.
11.3.1.24 Consolidated Tax Filing. Not participate in or make any
consolidated or combined Tax filing with any Co-Steel Group
Member.
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 by each Borrower under this Agreement:
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 ▇▇▇▇▇▇ ▇.▇. Group Member 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 ▇▇▇▇▇▇ ▇.▇. Guarantee is not complied with, provided that
non-compliance with Section 11.1.1.13.2 as of the end of any Fiscal
Quarter shall not be deemed to be an Event of Default if a ▇▇▇▇▇▇ ▇.▇.
Advance is made within 20 Banking Days of the end of that Fiscal
Quarter which, if the ▇▇▇▇▇▇ ▇.▇. Advance had been made prior to the
end of that Fiscal Quarter, would have resulted in compliance with
Section 11.1.1.13.2, and provided that the prior notice to the Agent
in respect of such ▇▇▇▇▇▇ ▇.▇. Advance includes details of the
non-compliance to be cured by it. Notwithstanding anything in this
Section 12.1.4, (i) the aggregate principal amount of ▇▇▇▇▇▇ ▇.▇.
Advances made during the period from April 1, to December 31, 2001
shall not at any time exceed US $15,000,000, and (ii) the aggregate
principal amount of ▇▇▇▇▇▇ ▇.▇. Advances made during any calendar year
after December 31, 2001 shall not exceed US $15,000,000, without in
either
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case the prior written consent of the Agent (acting on the
instructions of the Majority Lenders).
12.1.5 Breach by Gerdau Canada Subgroup Holding Company, Gerdau Canada
Subgroup Interim Holding Company, USP, Gerdau USA, NSULC or ▇▇▇▇▇. Any
of Gerdau Canada Subgroup Holding Company, Gerdau Canada Subgroup
Interim Holding Company, Gerdau USA, NSULC or ▇▇▇▇▇ fails to perform
or comply with any provision or obligation contained in any Loan
Document (including the Status Quo Agreement) to which it is party.
12.1.6 Breach of Other Covenants. Any ▇▇▇▇▇▇ ▇.▇. Group Member (other than
those referred to in Section 12.1.5) 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
▇▇▇▇▇▇ ▇.▇. knows or ought to have known of such failure (other than
those referred to in Sections 12.1.1, 12.1.2, 12.1.3, 12.1.4 or 12.1.5
above or 12.1.7 or 12.1.17 below.
12.1.7 Cross-Default.
(a) 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).
(b) AmeriSteel or FLS defaults under any one or more agreements,
documents or instruments relating to Indebtedness in an aggregate
amount exceeding U.S.$10,000,000 (or the Equivalent Amount in
other currency).
(c) ▇▇▇▇▇▇ ▇.▇. defaults under any one or more agreements, documents
or instruments relating to Indebtedness in an aggregate amount
exceeding U.S.$25,000,000 (or the Equivalent Amount in other
currency).
(d) Any payment in respect of a Kyoei Steel Balance of Sale Notes
Refinancing Loan made without the prior written consent of the
Agent is made from monies derived, directly or indirectly, from
any ▇▇▇▇▇▇ ▇.▇. Group Member, it being the intention of the
parties that all such payments shall be fully subordinated to
repayment in full and discharge of the Loan Obligations.
(e) Any payment in respect of outstanding ▇▇▇▇▇▇ ▇.▇. Advances is
made from monies derived, directly or indirectly, from any ▇▇▇▇▇▇
▇.▇. Group Member, save for a repayment in accordance with the
terms of Section 11.3.1.18, or any payment in respect of a loan
made pursuant to Section 11.3.1.5.6 is made otherwise than in
accordance with paragraph (iii) of that Section.
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(f) Any Indebtedness of any Co-Steel Group Member in an aggregate
amount exceeding U.S.$10,000,000 (or the Equivalent Amount in
other currency) is declared due or becomes due, before its
scheduled maturity date by reason of a default or event of
default referred to and defined in any of the agreements,
documents or instruments governing the payment of such
Indebtedness (including the Co-Steel Credit Agreements) and the
Agent, in good faith, determines that there is a possibility that
the Capital Stock of any of the Intermediate Holding Company, the
Gerdau Canada Subgroup Holding Company and the Gerdau Canada
Subgroup may be exposed to risk of seizure, loss, forfeiture,
transfer or other disposal or that the arrangements contemplated
by the Status Quo Agreement may not be observed or complied with;
or any event similar to those events described in Section 12.1.9
below occurs in relation to any Capital Stock or property of any
Co-Steel Group Member; or any event similar to those events
referred to Section 12.1.11 below occurs in relation to any
Co-Steel Group Member.
12.1.8 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 ▇▇▇▇▇▇ ▇.▇. Group
Member and such Awards shall remain unsatisfied or unstayed for more
than 10 Banking Days.
12.1.9 Enforcement of Liens. Any one or more Persons entitled to any Liens on
any Capital Stock or property of any ▇▇▇▇▇▇ ▇.▇. Group Member having
an aggregate value exceeding Cdn.$1,000,000, or U.S.$5,000,000 in the
case of AmeriSteel, take possession of such Capital Stock or property
or any one or more seizures, executions, garnishments, sequestrations,
distresses, attachments or other equivalent processes are issued or
levied against any Capital Stock or property of any ▇▇▇▇▇▇ ▇.▇. Group
Member having an aggregate value exceeding Cdn.$1,000,000, or
U.S.$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 Capital Stock or property to be sold, foreclosed upon or
forfeited thereunder.
12.1.10 Impossibility. Any Change in Law occurs which has given rise or could
reasonably be expected to give rise to a Material Adverse Change.
12.1.11 Insolvency. Any ▇▇▇▇▇▇ ▇.▇. 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 ▇▇▇▇▇▇ ▇.▇. 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
- 108 -
Assets (excluding proceedings being contested by such ▇▇▇▇▇▇ ▇.▇.
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 ▇▇▇▇▇▇ ▇.▇.
Group Member takes corporate action to authorize any of the actions
set forth above in this Section 12.1.11.
12.1.12 Cessation of Business. Any ▇▇▇▇▇▇ ▇.▇. Group Member ceases or suspends
or threatens to cease or suspend all or a Substantial Portion of its
business.
12.1.13 Security Imperilled. If any Litigation is commenced which, if
determined adversely to any ▇▇▇▇▇▇ ▇.▇. Group Member or to the rights
of the Syndicate, could reasonably be expected to give rise to a
Material Adverse Change, or any ▇▇▇▇▇▇ ▇.▇. Group Member or any other
person party to any Loan Document denies that it has any or further
obligations thereunder.
12.1.14 Material Adverse Change. Any Material Adverse Change occurs.
12.1.15 Change of Ownership. Any Person, or more than one Person acting in
concert, (other than ▇▇▇▇▇▇ ▇.▇.) acquires ownership or Control of any
Capital Stock of Gerdau Steel, unless the Majority Lenders consent to
such acquisition. USP, Gerdau USA or any Gerdau Canada Group Member
(other than Gerdau Steel) ceases to be a Wholly-Owned Subsidiary of
the Gerdau Canada Subgroup Holding Company. The Gerdau Canada Subgroup
Holding Company ceases to own and Control, directly or indirectly, all
of the Capital Stock of USP or any Gerdau Canada Group Member that is
a general or limited partnership, unless the Majority Lenders consent
otherwise. NSULC or ▇▇▇▇▇ ceases to be a Wholly-Owned Subsidiary of
USP or the Gerdau Canada Subgroup Holding Company, unless the Majority
Lenders consent otherwise. Gerdau Steel ceases to own and Control at
least a majority of the Voting Capital Stock of Co-Steel determined on
a fully diluted basis, after giving effect to each of the
Reorganization Transactions, unless the Majority Lenders consent
otherwise. Any Person, other than Gerdau Steel, acquires Capital
Stock, or rights to acquire Capital Stock, in any class of Capital
Stock of Co-Steel other than common shares.
12.1.16 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
▇▇▇▇▇▇ ▇.▇. Group Member which, when taken together with all other
property of any ▇▇▇▇▇▇ ▇.▇. 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.
12.1.17 Breach of Special Provisions. Any step or action is taken or omitted
by any ▇▇▇▇▇▇ ▇.▇. Group Member or any Co-Steel Group Member (or any
trustee-in-bankruptcy, liquidator or other representative thereof or
of its creditors) which authorizes or is reasonably likely to result
in any breach of any of
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Sections 11.3.1.3, 11.3.1.6, 11.3.1.12, 11.3.1.15, 11.3.1.16,
11.3.1.17, 11.3.1.20, 11.3.1.21 and 11.3.1.22.
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 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.
If an Event of Default referred to in Section 12.1.11 occurs, unless the
Majority Lenders otherwise agree, the Loan Obligations shall be accelerated and
become immediately due and payable automatically without any action on the part
of the Agent or any Lender being required. 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. For the
purposes of each Loan Document, an Event of Default which occurs or exists at
any time shall be deemed to be continuing at all times thereafter unless it is
expressly waived in writing by the Majority Lenders, whether or not the default,
breach, failure, event, state or condition that gave rise to such Event of
Default is remedied at any time.
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'
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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.
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 execute,
deliver and 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.
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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 13.
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.
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.
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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 13. 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 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 ▇▇▇▇▇▇ ▇.▇. 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.
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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.
13.9.7 Notwithstanding Section 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 collateral
deposit or 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 13 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;
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13.11.2 to any Lender, as a consequence of any failure or delay in performance
by, or any breach by, any ▇▇▇▇▇▇ ▇.▇. 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 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
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to evaluate the financial condition and affairs of each ▇▇▇▇▇▇ ▇.▇.
Group Member and that it has made an independent 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 13.15.1, 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 13 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.
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.
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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;
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";
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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 ▇▇▇▇▇▇ ▇.▇. 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 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). Subject to Section
13.20.7, 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. Subject to Section 5.6, 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.
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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 Section 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 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 Section 13.20.3, if a Lender fails so to pay any
portion of any Borrowing or its Acceptance Proceeds to the Agent
pursuant to Section 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
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or its Acceptance Proceeds to be made available by such other Lender
on any Borrowing Date.
13.20.7 If on any date amounts would be payable under this Agreement by the
Agent to any Lender and by that Lender to the Agent, then, on such
date, unless the Agent notifies the Lenders that netting is not 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
Agent (after receipt from the Relevant Borrower or the Lenders, as the
case may be) to that Lender exceeds the aggregate amount that would
otherwise have been payable by that Lender to the Agent (for the
account of the Relevant Borrower or the Lenders, as the case may be)
or vice versa, such obligation shall be replaced by an obligation upon
the Agent or the Lender 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.
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
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 an
Obligor 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 Obligor, 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 Obligor;
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provided that any cash collateral account funded by way of advances
from an Obligor as collateral for a documentary or standby credit or
letter of guarantee issued by such Lender on behalf of such Obligor
may be applied by such Lender to such amounts owed by such Obligor 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 "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 an Obligor 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 Co-ordination Agreement, 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;
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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
Obligor otherwise entitled thereto, to the extent it is so obliged;
and
13.25.4 fourthly, thereafter, in payment of the Obligor entitled thereto.
The fact that the Agent may make a payment pursuant to Sections 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 Shares
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 Section 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 Share 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.
13.26.2 Except as provided in Section 13.26.4, the obligations of each Lender
under Section 13.26.1 are unconditional, shall not be subject to any
qualification or
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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 6;
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 Section 13.26.1 (the balance thereof for the
time being unpaid being referred to in this Section 13.26.3 as an
"overdue amount") then until the Swing Line Lender has received
payment of the overdue 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, determined by the Agent to be prejudicial to the
interests of any of the Syndicate, an Advance may not be made pursuant
to Section 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 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.
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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 Advances.
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 Section 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 the execution and delivery of this Agreement and
the other Loan Documents until the Borrowers shall have satisfied, paid in full
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
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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 Gerdau Steel or any
Borrower, against and on account of Gerdau Steel's or 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 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 the Swing Line Lender shall be effective or be
deemed to be received by the Agent or the Swing Line Lender 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 Section 14.5.4. Any reference in
any such Loan Document to any
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party shall (to the extent the context so admits) be construed
accordingly to include reference to such successors and permitted
assigns.
14.5.2 Borrower. None of Gerdau Steel and the Borrowers 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 Gerdau Steel or any Borrower shall be
construed so as to include the successors of Gerdau Steel or such
Borrower.
14.5.3 Participation. Each Lender may grant a participation to any other
Person (a "PARTICIPANT") in the whole or any part of its Revolver
Commitment or Term Commitment (including its share in any Advances
made by it hereunder) under which the Participant shall be entitled to
the benefit of the same rights under this Agreement with respect to
such participation as if it were a party hereto in the place and stead
of such Lender provided that, in respect of such participated share of
its Revolver Commitment or Term Commitment and as amongst all parties
to this Agreement, such Lender shall remain entitled to enforce such
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
Advances made hereunder), or any part thereof in a minimum amount of
Cdn.$10,000,000, or such lesser amount as the Agent and Gerdau Steel
may permit, 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 Gerdau Steel, 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.
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14.5.5 Schedule A Revisions. Schedule A attached to this amended and restated
loan agreement records the Lenders and their respective Commitments
and Lending Offices as of the date of execution and delivery hereof.
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 any Borrower
or 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 may be necessary to protect the interests
of any Lender under this Agreement. Notwithstanding any other provision of this
Section 14.6, the Agent or 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;
14.6.4 to the legal, accounting and other professional advisors to the Agent
or any Lender on a privileged or confidential basis; or
14.6.5 after the occurrence of a Default and for so long as it is continuing,
as such Lender or the Agent may in good faith determine to be
necessary or of advantage 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.
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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 If any of the Agent and the Lenders receives or recovers any amount
payable under any of the Loan Documents in a currency (the "RECOVERED
AMOUNT") which is different than the currency in which the relevant
Loan Obligations are required to be paid (the "CONTRACT CURRENCY"),
the Agent or such Lender may convert the Recovered Amount to the
Contract Currency at the Spot Rate or, if a Spot Rate is not
available, at the rate of exchange for which the Agent or such Lender
is able, acting in a reasonable manner and in good faith, to purchase
the relevant amount of the Contract Currency. The amount of the
Contract Currency resulting from any such conversion shall then be
applied in accordance with the applicable provisions of this
Agreement.
14.9.2 If, for the purposes of obtaining or enforcing judgment in any court
in any jurisdiction, it becomes necessary to convert into the currency
of the country giving such judgment (the "JUDGMENT CURRENCY") any of
the Loan Obligations which are denominated in different currency (the
"AGREED CURRENCY"), then the date on which the rate of exchange for
conversion is selected by that court is referred to herein as the
"Conversion Date". If there is a change in the rate of exchange
between the Judgment Currency and the Agreed Currency between the
Conversion Date and the actual receipt by the Agent of the amount due
in respect of such Loan Obligations or judgment, Gerdau Steel or the
Relevant Borrower (as applicable) will, notwithstanding such judgment,
pay all such additional amounts as may be necessary to ensure that the
amount received by the Agent (when converted at the rate of exchange
prevailing on the date of receipt, in the case of any such amount not
received by the Agent in the Agreed Currency) will produce the amount
due in the Agreed Currency. Gerdau Steel or the Relevant Borrower's
liability hereunder constitutes a separate and independent liability
which shall not merge with any judgment or any partial payment or
enforcement of payment of sums due in respect of the Loan Obligations,
or under any 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 Gerdau Steel or the Relevant Borrower
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(the "RELEVANT OBLIGOR") is required to deduct or withhold Tax from
any such payment to any Lender or the Agent (the "AFFECTED LENDER"),
then the Relevant Obligor 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 Obligor to the
Affected Lender under this Section 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 Obligor;
14.10.1.3 promptly forward to the Agent an official receipt (or a
certified copy), or other documentation reasonably
acceptable to the 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 Obligor 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 any Relevant Obligor fails to pay to the relevant Governmental Body
when due any Tax that it was required to deduct or withhold under
Section 14.10.1 in respect of any payment to or for the benefit of any
Affected Lender under any Loan Document or fails to promptly furnish
such Affected Lender with the documentation referred to in Section
14.10.1.3, that Relevant Obligor shall forthwith on demand fully
indemnify such Affected Lender on an after-Tax basis from and against
any Taxes (including interest and penalties), losses and expenses
which such Affected Lender may suffer or incur as a result of such
failure.
14.10.3 Each Relevant Obligor shall also indemnify each Affected Lender on an
after-Tax basis, for any additional Taxes on net income that an
Affected Lender may be obliged to pay as a result of the receipt of
additional amounts under this Section 14.10.
14.10.4 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 Obligor in respect of a payment made
by it hereunder which payment shall have been increased pursuant to
Section 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
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upon receipt thereof will pay to the Relevant Obligor such amount (if
any) not exceeding the increased amount paid by the Relevant Obligor
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 Obligor
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:
14.11.1 to any ▇▇▇▇▇▇ ▇.▇. 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 ▇▇▇▇▇▇ ▇.▇. 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 SURVIVAL
The Loan Obligations payable under Sections 5.3, 7.6, 8.2, 8.3, 14.9
and 14.10 ("INDEMNITY OBLIGATIONS") shall survive the payment in full of all
other Loan Obligations and shall continue in full force and effect without time
limit until such Indemnity Obligations are irrevocably paid in full. The
survival of any Indemnity Obligations pursuant to this Section 14.12 which
relate to amounts that could become due or owing by reason of unknown facts or
unknown contingencies shall not relieve the Agent of any obligation to discharge
or assign the Security pursuant to Section 9.10.
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14.13 ENTIRE AGREEMENT
From and after the Effective Time, 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 Existing 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 of Gerdau Steel and the Borrowers hereby confirms its
obligations under the Existing Security and agrees that the Existing 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
party hereto hereby confirms that, subject to the provisions of this Agreement,
the Security shall secure, directly and/or indirectly, the obligations of each
of Gerdau Steel and the Borrowers incurred hereunder or pursuant hereto.
14.14 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which taken together shall be
deemed to constitute one and the same instrument, and it shall not be necessary
in making proof of this Agreement to produce or account for more than one such
counterpart. Delivery of an executed signature page of this Agreement (including
any amendment and Loan Transfer Agreement) by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first written above.
GERDAU STEEL INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary and Treasurer
GERDAU COURTICE STEEL INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary and Treasurer
- 131 -
GERDAU MRM STEEL INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary and Treasurer
GUSAP PARTNERS
BY ITS PARTNERS
GERDAU COURTICE STEEL INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary and Treasurer
- AND -
GERDAU MRM STEEL INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary and Treasurer
THE LENDERS:
THE TORONTO-DOMINION BANK
By:
----------------------------------
By:
----------------------------------
▇.▇. ▇▇▇ ▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ West at ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Relationship Manager,
Corporate & Financial Institutions Group
- 132 -
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CITI BANK N.A.
CANADIAN BRANCH
By:
-------------------------------
By:
-------------------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
JPMORGAN CHASE BANK
TORONTO BRANCH
By:
-------------------------------
By:
-------------------------------
JPMORGAN CHASE BANK
TORONTO BRANCH
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
- 133 -
GENERAL ELECTRIC CAPITAL CANADA, INC.
By:
-------------------------------
By:
-------------------------------
GENERAL ELECTRIC CAPITAL CANADA, INC.
c/o GE Capital - SFG
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ / ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ / ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ / 357-3962
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-------------------------------
By:
-------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
c/o GE Capital - SFG
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ / ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ / ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ / 357-3962
- 134 -
INTESABCI CANADA
By:
-------------------------------
By:
-------------------------------
INTESABCI CANADA
One Financial Place
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ / ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ / 4753
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
BOSTON LATIN AMERICA FINANCE COMPANY
(BLAFCO) GRAND CAYMAN
By:
-------------------------------
By:
-------------------------------
BOSTON LATIN AMERICA FINANCE COMPANY
(BLAFCO) GRAND CAYMAN
▇/▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ - 9th Floor
San Paulo, SP
Brazil, 01009-000
Attention: ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇-▇▇-▇▇▇▇-▇▇▇▇
Facsimile: ▇▇-▇▇-▇▇▇▇-▇▇▇▇
- ▇▇▇ -
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
By:
-------------------------------
By:
------------------------------
THE BANK OF NOVA SCOTIA
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇ / ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ / 6983
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
COMERICA BANK - Canada Branch
By:
------------------------------
By:
------------------------------
COMERICA BANK - Canada Branch
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ #▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ / ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (416) 367-3113 ext. #242 / 222
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
- ▇▇▇ -
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
By:
-------------------------------
By:
-------------------------------
LAURENTIAN BANK OF CANADA
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
BANK ONE, NA
CANADA BRANCH
By:
------------------------------
By:
-------------------------------
BANK ONE, NA
CANADA BRANCH
BCE Place, P.O. Box 613
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇ / ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ / 8278
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
- ▇▇▇ -
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
By:
-------------------------------
By:
-------------------------------
NATIONAL BANK OF CANADA
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
BANK OF CHINA (CANADA)
By:
-------------------------------
By:
-------------------------------
BANK OF CHINA (CANADA)
The Exchange Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Don Bridge / ▇▇▇▇▇▇▇ ▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ / 6009
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
- 138 -
THE AGENT:
THE TORONTO-DOMINION BANK
By:
------------------------------------
Vice President, Loan Syndications
- 139 -
SCHEDULE A
LENDERS, LENDING OFFICES AND COMMITMENTS
REVOLVER TERM
LENDER COMMITMENT COMMITMENT LENDING OFFICE
------ ---------- ---------- --------------
The Toronto-Dominion Bank Cdn.$19,500,000 Cdn.$11,151,247.55 TD Centre Branch, 2nd Floor
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: Relationship Manager,
Corporate & Financial
Institutions Group
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇ ▇▇▇▇
Citibank N.A. Cdn.$5,166,666.67 Cdn.$5,333,205.35 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ Branch Suite 1900
Toronto, Ontario M5J 2M3
Attn: Vice President
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
JPMorgan Chase Bank, Cdn.$7,633,333.33 Cdn.$7,127,101.70 Royal Bank Plaza
Toronto Branch South Tower, Suite 1800
Toronto, Ontario M5J 2J5
Attn: Vice President
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
General Electric Capital Cdn.$9,800,000 Cdn.$13,429,980.75 c/o GE Capital - SFG
Canada, Inc. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ /
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ /
(▇▇▇) ▇▇▇-▇▇▇▇
- 140 -
REVOLVER TERM
LENDER COMMITMENT COMMITMENT LENDING OFFICE
------ ---------- ---------- --------------
IntesaBci Canada Cdn.$5,000,000 Cdn.$9,939,155.43 One Financial Place
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /
▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Boston Latin America Cdn.$7,000,000 Cdn.$9,939,155.43 c/o BankBoston
Finance Company (BLAFCO) Rua Libero Badaro,
Grand Cayman 487 - 9th Floor
San Paulo, SP
Brazil, 09009-000
Attn: ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
Tel: ▇▇-▇▇-▇▇▇▇-▇▇▇▇
Fax: ▇▇-▇▇-▇▇▇▇-▇▇▇▇
The Bank of Nova Scotia Nil Cdn.$9,939,155.43 ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇ /
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ / 6983
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Comerica Bank - Canada Cdn.$5,300,000 Cdn.$7,127,101.70 ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇▇
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇ /
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
ext.#242 / #222
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Laurentian Bank of Canada Cdn.$5,300,000 Cdn.$7,127,101.70 ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
- 141 -
REVOLVER TERM
LENDER COMMITMENT COMMITMENT LENDING OFFICE
------ ---------- ---------- --------------
Bank One, NA Cdn.$4,000,000 Cdn.$5,333,205.35 BCE Place, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ Branch ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇ /
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ / 8278
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
National Bank of Canada NIL Cdn.$5,333,205.35 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Bank of China (Canada) Cdn.$4,300,000 Cdn.$5,187,754.30 The Exchange Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: Don Bridge /
▇▇▇▇▇▇▇ ▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ / 6009
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
- 142 -
SCHEDULE B
DRAWDOWN NOTICE
TO: The Toronto-Dominion Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Vice President, Loan Syndications - Agency
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the "LOAN
AGREEMENT") initially dated as of November 8, 1996, as further amended and
restated by agreement dated as of October 22, 2002, and as further amended,
supplemented, restated or novated from time to time, among Gerdau Steel Inc. and
Gerdau Courtice Steel Inc., Gerdau MRM Steel Inc. and GUSAP Partners, 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 [ ] 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:
----------------------------------------
By:
------------------------------------
Title:
- 143 -
APPENDIX TO DRAWDOWN NOTICE
TO: The Toronto-Dominion Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Vice President, Loan Syndications - Agency
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the "LOAN
AGREEMENT") initially dated as of November 8, 1996, as further amended and
restated by agreement dated as of October 22, 2002, and as further amended,
supplemented, restated or novated from time to time, among Gerdau Steel Inc. and
Gerdau Courtice Steel Inc., Gerdau MRM Steel Inc. and GUSAP Partners, as
Borrowers, the Institutions named therein as Lenders and The Toronto-Dominion
Bank as Agent. All terms used in this Appendix which are defined in the Loan
Agreement have the respective meanings attributed to them in the Loan Agreement.
Pursuant to Section 6.1 of the Loan Agreement, the undersigned hereby
certifies to the Lenders:
(a) The representations and warranties made in Section 10.1 of the
Loan Agreement are true and accurate, except to the extent
modified by Section 10.2, with the same effect as if such
representations and warranties had been made on and as of the
date hereof and on the requested Borrowing Date.
(b) No Default or Event of Default has occurred and is continuing on
the date hereof or will result from the Borrowing requested
herein.
(c) To the knowledge of the undersigned, there is no Litigation
referred to in Section 10.1.12 in progress or threatened which
has not been disclosed to the Agent in writing.
(d) The undersigned will immediately notify you if it becomes aware
of the occurrence of any event between the date hereof and the
Borrowing Date which would mean that the statements in the
immediately preceding paragraphs (a), (b) and (c) would not be
true if made on the Borrowing Date.
(e) All other conditions precedent set out in Section 6.1 of the Loan
Agreement have been fulfilled or waived in writing by the
Lenders.
- 144 -
DATED this o day of o , o .
----------------------------------------
By:
------------------------------------
Title:
----------------------------------------
By:
------------------------------------
Title:
- 145 -
SCHEDULE C
FORM OF CONVERSION NOTICE
TO: The Toronto-Dominion Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Vice President, Loan Syndications - Agency
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the "LOAN
AGREEMENT") initially dated as of November 8, 1996, as further amended and
restated by agreement dated as of October 22, 2002, and as further amended,
supplemented, restated or novated from time to time, among Gerdau Steel Inc. and
Gerdau Courtice Steel Inc., Gerdau MRM Steel Inc. and GUSAP Partners, 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 Section 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):
- 146 -
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 o day of o , o .
----------------------------------------
By:
------------------------------------
Title:
----------------------------------------
By:
------------------------------------
Title:
- 147 -
APPENDIX TO CONVERSION NOTICE
TO: The Toronto-Dominion Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Vice President, Loan Syndications - Agency
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the "LOAN
AGREEMENT") initially dated as of November 8, 1996, as further amended and
restated by agreement dated as of October 22, 2002, and as further amended,
supplemented, restated or novated from time to time, among Gerdau Steel Inc. and
Gerdau Courtice Steel Inc., Gerdau MRM Steel Inc. and GUSAP Partners, as
Borrowers, the Institutions named therein as Lenders and The Toronto-Dominion
Bank as Agent. All terms used in this Appendix which are defined in the Loan
Agreement have the respective meanings attributed to them in the Loan Agreement.
Pursuant to Section 6.1 of the Loan Agreement, the undersigned hereby
certifies to the Lenders:
(a) The representations and warranties made in Section 10.1 of the
Loan Agreement are true and accurate, except to the extent
modified by Section 10.2, with the same effect as if such
representations and warranties had been made on and as of the
date hereof and on the requested Borrowing Date.
(b) No Default or Event of Default has occurred and is continuing on
the date hereof or will result from the Borrowing requested
herein.
(c) To the knowledge of the undersigned, there is no Litigation
referred to in Section 10.1.12 in progress or threatened which
has not been disclosed to the Agent in writing.
(d) The undersigned will immediately notify you if it becomes aware
of the occurrence of any event between the date hereof and the
Borrowing Date which would mean that the statements in the
immediately preceding paragraphs (a), (b) and (c) would not be
true if made on the Borrowing Date.
(e) All other conditions precedent set out in Section 6.1 of the Loan
Agreement have been fulfilled or waived in writing by the
Lenders.
- 148 -
DATED this [ ] day of [ ], [ ].
----------------------------------------
By:
------------------------------------
Title:
----------------------------------------
By:
------------------------------------
Title:
- 149 -
SCHEDULE D
FORM OF ROLLOVER NOTICE
TO: The Toronto-Dominion Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Vice President, Loan Syndications - Agency
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the "LOAN
AGREEMENT") initially dated as of November 8, 1996, as further amended and
restated by agreement dated as of October 22, 2002, and as further amended,
supplemented, restated or novated from time to time, among Gerdau Steel Inc. and
Gerdau Courtice Steel Inc., Gerdau MRM Steel Inc. and GUSAP Partners, 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 Section [ ] 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.
- 150 -
DATED this [ ] day of [ ], [ ].
----------------------------------------
By:
------------------------------------
Title:
----------------------------------------
By:
------------------------------------
Title:
- 151 -
APPENDIX TO ROLLOVER NOTICE
TO: The Toronto-Dominion Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Vice President, Loan Syndications - Agency
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the "LOAN
AGREEMENT") initially dated as of November 8, 1996, as further amended and
restated by agreement dated as of October 22, 2002, and as further amended,
supplemented, restated or novated from time to time, among Gerdau Steel Inc. and
Gerdau Courtice Steel Inc., Gerdau MRM Steel Inc. and GUSAP Partners, as
Borrowers, the Institutions named therein as Lenders and The Toronto-Dominion
Bank as Agent. All terms used in this Appendix which are defined in the Loan
Agreement have the respective meanings attributed to them in the Loan Agreement.
Pursuant to Section 6.1 of the Loan Agreement, the undersigned hereby
certifies to the Lenders:
(a) The representations and warranties made in Section 10.1 of the
Loan Agreement are true and accurate, except to the extent
modified by Section 10.2, with the same effect as if such
representations and warranties had been made on and as of the
date hereof and on the requested Borrowing Date.
(b) No Default or Event of Default has occurred and is continuing on
the date hereof or will result from the Borrowing requested
herein.
(c) To the knowledge of the undersigned, there is no Litigation
referred to in Section 10.1.12 in progress or threatened which
has not been disclosed to the Agent in writing.
(d) The undersigned will immediately notify you if it becomes aware
of the occurrence of any event between the date hereof and the
Borrowing Date which would mean that the statements in the
immediately preceding paragraphs (a), (b) and (c) would not be
true if made on the Borrowing Date.
(e) All other conditions precedent set out in Section 6.1 of the Loan
Agreement have been fulfilled or waived in writing by the
Lenders.
DATED this [ ] day of [ ], [ ].
- 152 -
----------------------------------------
By:
------------------------------------
Title:
----------------------------------------
By:
------------------------------------
Title:
- 153 -
SCHEDULE E - PART I
SUBSIDIARIES BEFORE THE EFFECTIVE TIME
(CORPORATE ORGANIZATION CHART)
- 154 -
SCHEDULE E - PART II
SUBSIDIARIES AFTER THE EFFECTIVE TIME
(ORGANIZATION CHART)
- 155 -
SCHEDULE F
ADDRESSES FOR NOTICES
2. if to Courtice:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
3. if to MRM:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
4. if to Gerdau Steel:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
5. if to USP:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 156 -
6. if to TD in its capacity as Swing Line Lender:
Toronto-Dominion Centre Branch
Commercial Banking
King Street West and ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: The Vice President & Manager
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
7. if to the Agent:
TO: The Toronto-Dominion Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Vice President, Loan Syndications - Agency
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 157 -
SCHEDULE G
FORM OF BORROWING BASE REPORT
TO: The Toronto-Dominion Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Vice President, Loan Syndications - Agency
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the "LOAN
AGREEMENT") initially dated as of November 8, 1996, as further amended and
restated by agreement dated as of October 22, 2002, and as further amended,
supplemented, restated or novated from time to time, among Gerdau Steel Inc. and
Gerdau Courtice Steel Inc., Gerdau MRM Steel Inc. and GUSAP Partners, 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 [ ],
[ ] to be Cdn.$ [ ] which does [not] exceed the
Outstanding Amount of all Advances under the Operating Facility at that time.
DATED this [ ] day of [ ], [ ].
By:
------------------------------------
Title:
* same date as the fiscal month end
- 158 -
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
- 159 -
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. and Gerdau Courtice Steel Inc., Gerdau MRM Steel
Inc. and GUSAP Partners, as Borrowers, the Institutions named therein as Lenders
and The Toronto-Dominion Bank as Agent entered into a loan agreement (the "LOAN
AGREEMENT") initially dated as of November 8, 1996, as further amended and
restated by agreement dated as of October 22, 2002, 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 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".
- 160 -
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 of this loan transfer agreement 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 hereby assigned and
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.
- 161 -
3. Transitional Provisions
Subject to the terms and conditions contained herein:
(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 Advances 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 Transferee's participation in outstanding Advances will increase in
proportion to its Rateable Share 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, each of the
other Borrowers 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 14.5.4 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.
6. Counterparts
This loan transfer 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 loan transfer agreement to
produce or account for more than one such counterpart. Delivery of an executed
signature page of this loan transfer agreement by facsimile transmission shall
be effective as delivery of a manually executed counterpart hereof.
- 162 -
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:
-----------------------------------
THE TORONTO-DOMINION BANK
as Agent
By:
------------------------------------
Vice President, Loan Syndications
- 163 -
APPENDIX 1
TRANSFEROR'S COMMITMENT
AS OF [INSERT DATE]
OUTSTANDING
OUTSTANDING OUTSTANDING BANKERS' PARTICIPATIONS IN
AMOUNT OF COMMITMENT UNDRAWN LOANS ACCEPTANCES STANDBY CREDITS
-------------------- ------------------ --------------------- -------------------- -----------------
REVOLVER FACILITY
Cdn.$[ ] [stipulate portion [stipulate types of [stipulate [stipulate
undrawn] Advances outstanding, outstanding outstanding
amount, interest rate Acceptances, amount participations in
and maturity of and maturity] Standby Credits]
current Interest
Periods]
TERM FACILITY
Cdn.$[ ] [stipulate portion [stipulate types of [stipulate [stipulate
undrawn] Advances outstanding, outstanding outstanding
amount, interest rate Acceptances, amount participations in
and maturity of and maturity] Standby Credits]
current Interest
Periods]
- 164 -
TRANSFERRED COMMITMENT
OUTSTANDING
AMOUNT OF TRANSFERRED UNDRAWN OUTSTANDING OUTSTANDING BANKERS' PARTICIPATIONS IN
COMMITMENT LOANS ACCEPTANCES STANDBY CREDITS
--------------------- ------------------- ---------------------- -------------------- -------------------
REVOLVER FACILITY
Cdn.$[ ] *[stipulate portion *[stipulate types of *[stipulate *[stipulate
undrawn] Advances outstanding, outstanding outstanding
amount, interest rate Acceptances, amount participations in
and maturity of and maturity] Standby Credits]
current Interest
Periods]
TERM FACILITY
Cdn.$[ ] **[stipulate portion **[stipulate types of **[stipulate **[stipulate
undrawn] Advances outstanding, outstanding outstanding
amount, interest rate Acceptances, amount participations in
and maturity of and maturity] Standby Credits]
current Interest
Periods]
*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.
- 165 -
SCHEDULE I
BORROWER'S COMPLIANCE CERTIFICATE
TO: The Toronto-Dominion Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Vice President, Loan Syndications - Agency
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the "LOAN
AGREEMENT") initially dated as of November 8, 1996, as further amended and
restated by agreement dated as of October 22, 2002, and as further amended,
supplemented, restated or novated from time to time, among Gerdau Steel Inc. and
Gerdau Courtice Steel Inc., Gerdau MRM Steel Inc. and GUSAP Partners, 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.
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 [ ] [ ].
- 166 -
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 of this Certificate.
DATED this [ ] day of [ ], [ ].
Yours very truly,
GERDAU STEEL INC. GERDAU COURTICE STEEL INC.
By: By:
-------------------------------- ------------------------------------
Title: Title:
GERDAU MRM STEEL INC. GUSAP PARTNERS
By: By:
-------------------------------- ------------------------------------
Title: Title:
- 167 -
SCHEDULE J
LEGAL DESCRIPTION
PIN No. 03826-0209(R)
Part ▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇ (▇▇▇▇▇▇),
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ (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;
- 168 -
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;
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 ▇▇.
▇▇▇▇▇▇▇), ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ 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 ▇▇. ▇▇▇▇▇▇▇), ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, (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;
- 169 -
Subject to an easement in favour of ▇▇▇▇ 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
(g) 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;
(h) 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;
(i) 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;
(j) Subject to an easement in favour of Ontario Hydro over Part 3 on
Reference Plan 67R-2744 as set out in Instrument No. 672553;
(k) Subject to an easement in favour of Ontario Hydro over Part 1 on
Reference Plan 67R-2721 as set out in Instrument No. 675358
AFFECTING THE LANDS SECONDLY DESCRIBED
(l) 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;
(m) 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
(n) 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
(o) 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;
(p) 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;
(q) 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;
- 170 -
AFFECTING THE LANDS FIFTHLY DESCRIBED
(r) Subject to an easement over Part 2 on Reference Plan 58R-10049,
as set out in Instrument No. 562772;
AFFECTING THE LANDS SEVENTHLY DESCRIBED
(s) 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
(t) 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;
(u) Subject to an easement in favour of ▇▇▇▇ Canada over Part 3 on
Plan 58R-10199 as set out in Instrument No. 1314826;
AFFECTING ALL LANDS
(v) a reservation of all mines and minerals to Her Majesty the Queen
registered as Instrument No. 16907;
(w) 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);
(x) 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);
(y) 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);
(z) restrictive covenants registered as Instrument Nos. 593522,
657448, 664863, 666649, 672553, 719704, 731985, 1181143 and
1272674;
(aa) 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")
(bb) Instrument No. 732365 is a demand debenture registered June 28,
1990 made between Courtice Steel Inc. and The Toronto-Dominion
Bank as amended by
- 171 -
a supplemental debenture registered as Instrument No. 1258107
registered June 28, 1995 (collectively the "Courtice Supplemental
Debenture");
(cc) 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;
(dd) Any reservations, limitations, provisos and conditions expressed
in the original grant from the Crown, as the same may be varied
by statute;
(ee) 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;
(ff) Any unregistered easements, rights of access or rights-of-way,
not disclosed by the registered title;
(gg) Any governing municipal by-laws other than those disclosed in
this opinion;
(hh) 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;
(ii) 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;
(jj) Liens for taxes not due or payable.
(kk) Liens for public utility accounts not due or payable.
(ll) Any errors, omissions, encroachments or discrepancies which may
be revealed by an up-to-date survey of the Property.
- 172 -
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 ▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇ in favour of The Toronto-Dominion Bank (the "TD
Mortgage") Mortgage No. ▇▇▇▇▇▇▇ in favour of The Canam Manac Group Inc.
(the "Canam Mortgage")
C/T NO. 1398762
ALL THAT PORTION OF RL 23, PARISH OF ST ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ 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 ▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ "A" PLAN 10373 WLTO
SECONDLY: ▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ WLTO IN RL ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇
REGISTERED ENCUMBRANCES
Easement No. J23544
Caveat No. 217089
The Permitted Mortgages
- 173 -
C/T NO. 1416136
FIRSTLY: ▇▇▇▇ ▇, ▇ ▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
IN RL 21 AND 22 PARISH OF ST ▇▇▇▇▇▇▇▇
SECONDLY: PARCELS 1 TO 5 PLAN 6736 WLTO
EXC OUT OF SAID PARCELS 4 AND 5: PLAN 32978 WLTO
IN RL 21 TO ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇
REGISTERED ENCUMBRANCES
Caveat ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇
REGISTERED ENCUMBRANCES
The Permitted Mortgages
C/T NO. 1398787
▇▇▇▇ ▇, ▇ ▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ IN RL 21 AND 22 PARISH OF ST ▇▇▇▇▇▇▇▇
- 174 -
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 ▇▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇▇
REGISTERED ENCUMBRANCES
The Permitted Mortgages
C/T NO. 1398805
ALL THAT PORTION OF RL 23, PARISH OF ST ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇,
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
REGISTERED ENCUMBRANCES
The Permitted Mortgages
C/T NO. 1398808
LOT 8 PLAN 3527 WLTO IN RL 21 AND 22 PARISH OF ST ▇▇▇▇▇▇▇▇
- 175 -
REGISTERED ENCUMBRANCES
The Permitted Mortgages
C/T NO. 1398809
ALL THAT PORTION OF THE SLY 66 FEET PERP OF RL 25 PARISH OF ST ▇▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇ BOUNDED AS
FOLLOWS: ON THE NORTH AND SOUTH BY ▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ 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 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
- 176 -
C/T NO. 1398815
▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇, THE WLY 134 FEET OF THE SLY 150 FEET IN RL 21
AND 22 PARISH OF ST ▇▇▇▇▇▇▇▇
REGISTERED ENCUMBRANCES
The Permitted Mortgages
C/T NO. 1398818
ALL THAT PORTION OF RL 23, PARISH OF ST ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇ 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 ▇▇▇ 55 FEET OF SAID LOT 8 EXC, ALL MINES AND
MINERALS
REGISTERED ENCUMBRANCES
The Permitted Mortgages
C/T NO. 1398820
▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ WLTO IN RL 28 AND 29 PARISH OF ST ▇▇▇▇▇▇▇▇
REGISTERED ENCUMBRANCES
The Permitted Mortgages
- 177 -
C/T NO. 1398821
ALL THOSE PORTIONS OF RL 26 AND 27, PARISH OF ST ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ 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
▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ WLTO IN RL 21 TO 25 PARISH OF ST ▇▇▇▇▇▇▇▇
REGISTERED ENCUMBRANCES
The Permitted Mortgages
C/T NO. 1398830
▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ WLTO IN RL 27 AND 28 PARISH OF ST ▇▇▇▇▇▇▇▇
REGISTERED ENCUMBRANCES
The Permitted Mortgages
C/T NO. 1398831
▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ WLTO IN RL 27 TO 30 PARISH OF ST ▇▇▇▇▇▇▇▇
- 178 -
REGISTERED ENCUMBRANCES
The Permitted Mortgages
C/T NO. 1398833
ALL THOSE PORTIONS OF RL 26, 27 AND 28, PARISH OF ST ▇▇▇▇▇▇▇▇ 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
▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ WLTO IN RL ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇
REGISTERED ENCUMBRANCES
Easement No. J23544
The Permitted Mortgages
C/T NO. 1507428
▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ WLTO IN RL 28 TO 31 PARIS OF ST ▇▇▇▇▇▇▇▇
REGISTERED ENCUMBRANCES
The Permitted Mortgages
Caveat No. 2059433
Caveat No. 2059434
Caveat No. 2087192
Caveat No. 2162371
C/T NO. 1507432
▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ WLTO IN RL 28 TO 31 PARISH OF ST ▇▇▇▇▇▇▇▇
REGISTERED ENCUMBRANCES
The Permitted Mortgages
Caveat No. 2059433
Caveat No. 2059434
Caveat No. 2087192
- 179 -
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
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.
- 180 -
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.
- 181 -
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) U.S.$20,000,000 Working Capital General Security Agreement (Inventory
and Receivables) dated as of November 8, 1996
(f) Guarantee of ▇▇▇▇▇▇'▇ 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
4. Given by ▇▇▇▇▇▇ ▇.▇.
(a) Cdn.$50,000,000 Guarantee of Courtice's obligations dated as of
December 18, 1998
- 182 -
(b) Cdn.$50,000,000 Guarantee of MRM's obligations dated as of December
18, 1998
5. Given by ▇▇▇▇▇▇
(a) Guarantee of MRM's obligations dated as of December 18, 1998
6. Given by GTL
(a) Subordination by GTL 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
OTHER EXISTING SECURITY
8. 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)
(i) Guarantee of obligations of USP
9. Given by MRM
(a) Guarantee of obligations of Courtice and Gerdau Steel
(b) Guarantee of MRM Holdings' obligations
(c) Cdn.$350,000,000 Fixed and Floating Demand Debenture
(d) Debenture Delivery Agreement
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(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 ▇▇▇▇▇▇, MFT and MRM America shares, with
deposit of stock certificates
(j) Guarantee of obligations of USP
10. Given by Gerdau 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
(k) Guarantee of obligations of USP
11. Given by MRM Holdings
(a) Guarantee of obligations of Gerdau Steel and MRM
(b) Cdn.$350,000,000 Fixed and Floating Charge Debenture
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(c) Debenture Delivery Agreement
(d) Share Pledge of all issued MRM shares, with deposit of share
certificates
12. Given by ▇▇▇▇▇▇
(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. 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. Given by FLS
(a) Cdn.$350,000,000 Guarantee of Gerdau Steel's obligations
(b) Stock Pledge of all issued Capital Stock of AmeriSteel held by FLS, with
deposit of stock certificate
15. Given by ▇▇▇▇▇▇ ▇.▇.
(a) Cdn.$350,000,000 Guarantee of obligations of Courtice, MRM and Gerdau Steel
(b) Subordination Agreements
16. Given by GTL Netherlands
(a) Subordination by GTL Netherlands in respect of Gerdau Canada Group
Indebtedness
17. Given by Oruscom S.A.
(a) Subordination by Oruscom S.A. in respect of Gerdau Steel promissory
note
18. Given by all ▇▇▇▇▇▇ ▇.▇. Group Members (excluding the Intermediate Holding
Company, the Gerdau Canada Subgroup Interim Holding Company and the Gerdau
Canada Subgroup Holding Company) and the Agent
(a) Security Co-ordination Agreement among all the aforesaid ▇▇▇▇▇▇ ▇.▇.
Group Members and the Agent
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19. Given by the Gerdau Canada Group and ▇▇▇▇▇▇ ▇.▇.
(a) Confirmation of Security Agreement, among the Gerdau Canada Group and
▇▇▇▇▇▇ ▇.▇. in favour of the Agent
20. Given by USP
(a) Guarantee of obligations of each of Gerdau Steel, Courtice and MRM
(b) Security Agreement
(c) Stock Pledge, with deposit of share certificates representing all
shares in NSULC
21. Given by NSULC
(a) Guarantee of obligations of each of Gerdau Steel, Courtice, MRM and
USP
(b) Stock Pledge, with deposit of stock certificates representing all
special shares in Gerdau USA and all shares in ▇▇▇▇▇
22. Given by ▇▇▇▇▇
(a) Guarantee of obligations of each of Gerdau Steel, Courtice, MRM and
USP
(b) Pledge, with deposit of U.S.$182,000,000 promissory notes issued by
Gerdau USA
23. Given by each of ▇▇▇▇▇▇ ▇.▇., Gerdau Steel, Courtice, USP, MRM, MRM
Holdings, ▇▇▇▇▇▇, Gerdau USA, FLS, NSULC and ▇▇▇▇▇
(a) Confirmation of Security Agreements in favour of the Agent
24. Given by Gerdau USA
(a) Confirmation of Deposit of Share Certificate.
NEW SECURITY
25. To be given by Gerdau Canada Subgroup Interim Holding Company
(a) Guarantee of obligations of Courtice, MRM, Gerdau Steel and USP
(b) Delivery of share certificates representing the Exchanged Co-Steel
Shares
26. To be given by Gerdau Steel
(a) Delivery of share certificates representing the issued Capital Stock
of the Gerdau Canada Subgroup Interim Holding Company and the
Exchanged Co-Steel Shares
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to be held by the Agent pursuant to the Gerdau Steel Cdn.$350,000,000
Debenture
27. To be given by each applicable ▇▇▇▇▇▇ ▇.▇. Group Member
(a) Confirmation of Guarantees and Security Agreements in favour of the
Agent
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SCHEDULE M
FORM OF REPAYMENT/CANCELLATION NOTICE
TO: The Toronto-Dominion Bank
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Vice President, Loan Syndications - Agency
RE: GERDAU STEEL INC.
Reference is made to an amended and restated loan agreement (the "LOAN
AGREEMENT") initially dated as of November 8, 1996, as further amended and
restated by agreement dated as of October 22, 2002, and as further amended,
supplemented, restated or novated from time to time, among Gerdau Steel Inc. and
Gerdau Courtice Steel Inc., Gerdau MRM Steel Inc. and GUSAP Partners, as
Borrowers, the Institutions named therein as Lenders and The Toronto-Dominion
Bank as Agent. All terms used in this Repayment Notice which are defined in the
Loan Agreement have the respective meanings attributed to them in the Loan
Agreement.
[Notice is hereby given in accordance with Section [ ] of the
Loan Agreement that the undersigned wishes to cancel the [Revolver/Term]
Facility by the amount of Cdn.$[ ].]*
Notice is hereby given in accordance with Section [ ] 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:
----------------------------------------
By:
------------------------------------
Title:
* AS APPLICABLE
- 188 -
SCHEDULE N
ENVIRONMENTAL DISCLOSURE SCHEDULE
None
- 189 -
SCHEDULE O
INTELLECTUAL PROPERTY RIGHTS
1. Courtice and MRM License the use of the Gerdau name and marks from an
affiliate of ▇▇▇▇▇▇ ▇.▇. Beheer-en Beleggingsmaatshappij Hagrola B.V.
2. Trade-▇▇▇▇: GERDAU & Design - Registration No. 410,293 - Registered April
2, 1993
Owner: Courtice Steel Inc.
This ▇▇▇▇ is registered for metal products, namely, pig iron, continuous
casting billets, concrete reinforcing bars, angles, channels, galvanized
wire, annealed wire, etc.
- 190 -
SCHEDULE P
CHIEF EXECUTIVE OFFICES
▇▇▇▇▇▇ ▇.▇. GROUP MEMBER LOCATION
------------------------ ------------
Courtice Ontario
MRM Manitoba
Gerdau Steel Ontario
USP Ontario
MRM Holdings Ontario
Gerdau Canada Subgroup Interim Holding Company Ontario
Gerdau Canada Subgroup Holding Company Nova Scotia
Gerdau USA Delaware
AmeriSteel Florida
NSULC Nova Scotia
▇▇▇▇▇ Delaware
▇▇▇▇▇▇ North Dakota
▇▇▇▇▇▇ ▇.▇. Brazil
MFT Delaware
MRM America Delaware
AmeriSteel Bright Bar Ohio