Exhibit 4.3

 

 

GERDAU S.A.

 

Equity Incentive Plan

 

Effective August 30, 2010

 

 

 

Gerdau S.A.

 

Equity Incentive Plan

 

ARTICLE 1
PURPOSE

 

1.1           Purpose

 

The purpose of this Plan is to assist the Company, a subsidiary of Gerdau S.A., to attract, retain and motivate key employees, directors, officers and consultants through retention and performance related incentives, thereby advancing the interests of the Company and its shareholders.

 

ARTICLE 2
INTERPRETATION

 

2.1           Definitions

 

When used herein, unless the context otherwise requires, the following terms have the indicated meanings, respectively:

 

“ADS” means an American Depositary Share of Gerdau S.A. which represents a right to receive a preferred share of Gerdau S.A.

 

“Affiliate” means an entity which is an “affiliate” of the Company for the purposes of National Instrument 45-106 Prospectus and Registration Exemptions as amended or replaced from time to time.

 

“Associate” has the meaning set forth in the Securities Act (Ontario), as amended from time to time.

 

“Award” means any Option, Stock Appreciation Right, Deferred Share Unit, Restricted Share Unit, Performance Share Unit, Restricted Stock, or Other Share-Based Award granted under this Plan.

 

“Award Agreement” means an agreement between a Participant and the Company in the form used by the Company from time to time in accordance with its policies and practices, including forms sent and/or received electronically, subject to any amendments or additions in the discretion of the Committee evidencing the terms and conditions on which an Award has been granted under this Plan.

 

“Black Out Period” means a time when, pursuant to the policies of Gerdau S.A., any securities of Gerdau S.A. may not be traded by certain persons designated by Gerdau S.A., including any holder of an Award, but does not include any period when a regulator has halted trading in securities of Gerdau S.A.

 

 

“Board” means the board of directors of Gerdau S.A.

 

“Business Day” means a day, other than a Saturday or Sunday, on which the New York Stock Exchange is open for trading.

 

“CBCA” means the Canada Business Corporations Act and the regulations promulgated thereunder, both as amended from time to time.

 

“Change in Control” means the happening of any of the following events:

 

(i)             any transaction pursuant to which (A) the Company goes out of existence by any means, except for a corporate transaction or reorganization in which the Gerdau SA Shareholders continue to hold more than 50% of the then issued and outstanding voting securities or in which the proportionate voting power among holders of securities of the entity resulting from such corporate transaction or reorganization is substantially the same as the proportionate voting power of such holders of Company voting securities immediately prior to such corporate transaction or reorganization or (B) any Person or any group of two or more Persons acting jointly or in concert (other than the Gerdau SA Shareholders, the Company, a wholly-owned Subsidiary of the Company, an employee benefit plan of the Company or of any of its wholly-owned Subsidiaries, including the trustee of any such plan acting as trustee), hereafter acquires the direct or indirect “beneficial ownership” (as defined by the CBCA) of, or acquires the right to exercise control or direction over, securities of the Company representing more than 50% of the then issued and outstanding voting securities in any manner whatsoever, including, without limitation, as a result of a take-over bid, an exchange of securities, an amalgamation of the Company with any other entity, an arrangement, a capital reorganization or any other business combination or reorganization;

 

(ii)            the sale, assignment or other transfer of all or substantially all of the assets of the Company to a Person other than to the Gerdau SA Shareholders or to a wholly-owned Subsidiary of the Company;

 

(iii)           the dissolution or liquidation of the Company except in connection with the distribution of assets of the Company to the Gerdau SA Shareholders or to one or more Persons which were wholly-owned Subsidiaries of the Company immediately prior to such event;

 

(iv)           the occurrence of a transaction requiring approval of the Company’s shareholders whereby the Company is acquired through consolidation, merger, exchange of securities, purchase of assets, amalgamation, arrangement or otherwise by any other Person (other than a short form amalgamation or exchange of securities with a wholly-owned Subsidiary of the Company) provided such event constitutes a change in control for purposes of Section 409A of the Code; or

 

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(v)            the Committee passes a resolution to the effect that, for the purposes of some or all of the Award Agreements, an event set forth in (i), (ii), (iii) or (iv) above has occurred or is about to occur provided such event constitutes a change in control for purposes of Section 409A of the Code.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated under it.

 

“Committee” means the Human Resources Committee of the Board or such other committee or person designated by the Board from time to time.

 

“Company” means Gerdau Ameristeel Corporation.

 

“Consultant” means an individual or a consultant company, other than an Employee or a Director that:

 

(i)             is engaged to provide services to the Company or a Subsidiary other than services provided in relation to a distribution of securities of the Company or a Subsidiary;

 

(ii)            provides the services under a written contract with the Company or a Subsidiary; and

 

(iii)           spends or will spend a significant amount of time and attention on the affairs and business of the Company or a Subsidiary,

 

For the purposes of this definition, “ consultant company ” means, with respect to an individual consultant a company of which the individual consultant is the sole shareholder.

 

“controlled” means:

 

(i)             in the case of a Person,

 

(A)           voting securities of the first-mentioned Person carrying more than 50% of the votes for the election of directors are held, directly or indirectly, otherwise than by way of security only, by or for the benefit of the other Person; and

 

(B)            the votes carried by the securities are entitled, if exercised, to elect a majority of the directors of the first-mentioned Person;

 

(ii)            in the case of a partnership that does not have directors, other than a limited partnership, the second-mentioned Person holds more than 50% of the interests in the partnership; and

 

(iii)           in the case of a limited partnership, the general partner is the second-mentioned Person.

 

“Covered Employee” has the meaning set out in Section 162(m)(3) of the Code.

 

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“Date of Grant” means, for any Award, the date specified by the Committee at the time it grants the Award (which, for greater certainty, shall be no earlier than the date on which the Committee approves the grant of such Award) or if no such date is specified, the date upon which the Award was granted.

 

“Deferred Share Unit” means a unit equivalent in value to an ADS, credited by means of a bookkeeping entry in the books of the Company in accordance with Article 6.

 

“Director” means a member of the Board who is not an Employee or a Consultant.

 

“Disabled” or “Disability” means, for U.S. Taxpayers, “disability” for purposes set forth in Treasury Regulations Section 1.409A-3(i)(4) and means, for other Participants, a state of permanent and total incapacity, resulting from illness or accidental injury, which wholly prevents an employee from performing all material functions of his/her regular employment as evidenced by receipt of disability payments under an employing entity long-term disability program or a government provided disability program.

 

“Distribution Date” means the Termination Date for a U.S. Taxpayer, and for any other Participant (i) the Termination Date; or (ii) such later date as elected by the Participant provided that in no event shall a Participant be permitted to elect a date which is later than the last Business Day of the calendar year following the calendar year in which the Termination Date occurs.  An election for a Distribution Date described in (ii) above will only be valid if it is delivered to the Corporate Secretary of the Company prior to the Termination Date in the form prescribed for such purposes by the Company.

 

“Eligible Person” means an Employee, Consultant or Director.

 

“Employee” means a current full-time or part-time employee or officer of the Company or a Subsidiary (other than a Director or a Consultant).

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended from time to time.

 

“Exercise Notice” means a notice in the form used by the Company from time to time in accordance with its policies and practices, including forms sent and/or received electronically stating the Participant’s intention to exercise a particular Option or Stock Appreciation Right subject to any amendments or additions in the discretion of the Committee.

 

“Exercise Price” means the price at which an ADS may be purchased pursuant to the exercise of an Option and is the amount used to determine the SAR Amount of a Stock Appreciation Right.

 

“Exercise Period” means the period of time during which an Option or Stock Appreciation Right granted under this Plan may be exercised.

 

“Fair Market Value” means, with respect to any ADS at a particular date, the closing price on the New York Stock Exchange on such date (or if such date is not a trading day, the trading day immediately prior to such date or if ADSs did not trade on such exchange

 

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on such day, the average of the bid and ask prices of such ADSs at the close of trading on such day); provided that if such ADSs are not then listed on such stock exchange, the Fair Market Value shall be determined based on the closing price of such ADSs on any stock exchange on which such ADSs are then listed on the particular date (or if such date is not a trading day, the trading day immediately prior to such date or if such ADSs did not trade on such exchange on such day, the average of the bid and ask prices of such ADSs at the close of trading on such day); and further provided that if such ADSs are not then listed on any stock exchange, the Fair Market Value shall be the fair market value determined by the Committee through the reasonable application of a reasonable valuation method.

 

“Gerdau SA Shareholders” means the current Gerdau shareholders.

 

“Incentive Stock Option” means an option granted under Section 4.6 of the Plan that meets the requirements of Section 422 of the Code or any successor provision and is designated as such in the applicable Award Agreement.

 

“Insider” has the meaning set forth in the Securities Act , as amended from time to time, and includes Associates and Affiliates of such Person.

 

“Market Price” means the trading price of an ADS on the New York Stock Exchange at the time at which ADS’s are traded which is the closest time after the exercise of an Option or Stock Appreciation Right provided that if such ADS’s are not then listed on such stock exchange, the Market Price shall be determined based on the trading price of such ADS’s on any stock exchange on which such ADSs are then listed at the time closest to and after the time of exercise (or if such ADS’s did not trade on such exchange on the day of such exercise, the average of the bid and ask prices of such ADS’s at the close of trading on the last trading day prior to the particular day); and further provided that if such ADS’s are not then listed on any stock exchange, the Market Price shall be the fair market value determined by the Committee through the reasonable application of a reasonable valuation method.

 

“NI 45-106” means National Instrument 45-106 Prospectus and Registration Exemptions of the Canadian Securities Administrators, as amended from time to time.

 

“Non Qualified Stock Option” means an Option that is not intended to be or does not meet the requirements of an Incentive Stock Option.  Any Option granted by the Committee that is not designated as an Incentive Stock Option in the applicable Award Agreement will be deemed a Non Qualified Stock Option.

 

“Option” means a right to purchase ADSs for the Exercise Price under this Plan.

 

“Optionee” means a Participant who has been granted one or more Options under this Plan.

 

“Other Share-Based Award” means any right granted in accordance with Article 10.

 

“ Parent Corporation ” has the meaning set forth in Section 424(e) of the Code.

 

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“Participant” means an Employee, Consultant or a Director who has received an Award under this Plan.

 

“Performance Goals” means performance goals set by the Committee from time to time.  Performance Goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in a particular criteria, and may be applied to one or more of the Company, a Subsidiary, or a division or strategic business unit of the Company, or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the Committee.  The Performance Goals may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur).  The Committee shall have the authority to make adjustments to the Performance Goals in recognition of unusual or non-recurring events affecting the Company or any Subsidiary or the financial statements of the Company or any Subsidiary, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to a change in accounting principle.

 

“Performance Share Unit” means a unit equivalent in value to an ADS credited by means of a bookkeeping entry in the books of the Company in accordance with Article 8.

 

“Person” includes an individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, and a natural person in his or her capacity as trustee, executor, administrator or other legal representative.

 

“Plan” means this Gerdau Ameristeel Corporation Equity Incentive Plan.

 

“Restricted Share Unit” means a unit equivalent in value to an ADS, credited by means of a bookkeeping entry in the books of the Company in accordance with Article 7.

 

“Restricted Stock” has the meaning set out in Section 9.1.

 

“Retirement” means retirement from active employment with the Company or a Subsidiary at a time when the Participant (i) is not less than 55 years of age and has not less than 20 years of service with the Company, participating subsidiaries, or affiliated companies or (ii) is not less than 65 years of age. “ Retires ” has a corresponding meaning.

 

“SAR Amount” has the meaning set out in Section 5.2.

 

“Securities Act” means the United States Securities Act of 1933 , as amended from time to time.

 

“Security Based Compensation Arrangement” has the meaning given to that term in the TSX Rules.

 

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“Share Units” means Deferred Share Units, Performance Share Units and Restricted Share Units.

 

“Stock Appreciation Right” means a right equivalent in value to the increase in value of an ADS credited by means of a bookkeeping entry in the books of the Company in accordance with Article 5.

 

“Subsidiary” means a Person that:

 

(i)             it is controlled by,

 

(A)           another Person, or

 

(B)            another Person and one or more Persons, each of which is controlled by that other Person, or

 

(C)            two or more Persons, each of which is controlled by another Person; or

 

(ii)            it is a Subsidiary of a Person that is another Person’s Subsidiary.

 

“Subsidiary Corporation” has the meaning set forth in Section 424(f) of the Code.

 

“Termination Date” means where employment or term of office, directorship or engagement with the Company or an Affiliate terminates:

 

(i)             by reason of the death, the date of death; and

 

(ii)            for any reason other than Death, the last day of such employment, office, directorship or consulting.

 

and does not include any period of statutory, contractual or reasonable notice or any period of salary continuance or deemed employment.

 

“TSX Rules” means Part VI of the Company Manual of the Toronto Stock Exchange, as amended from time to time.

 

“U.S. Taxpayer” shall mean a Participant who is a U.S. citizen, U.S. permanent resident or U.S. tax resident for purposes of the Code.

 

2.2           Interpretation

 

(a)            Whenever the Committee is to exercise discretion in the administration of this Plan, the term “discretion” means the sole and absolute discretion of the Committee.

 

(b)            As used herein, the terms “Article” and “Section” mean and refer to the specified Article or Section of this Plan, respectively.

 

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(c)            Words importing the singular include the plural and vice versa and words importing any gender include any other gender.

 

(d)            Whenever any payment is to be made or action is to be taken on a day which is not a Business Day, such payment shall be made or such action shall be taken on the next following Business Day.

 

(e)            Unless otherwise specified, all references to money amounts are to U.S. currency.

 

ARTICLE 3
ADMINISTRATION

 

3.1           Administration

 

This Plan will be administered by the Board which retains ultimate authority under the Plan.  The Board has delegated all of its authority under the Plan to the Committee which has sole and complete authority, in its discretion, to:

 

(a)            determine to which Eligible Persons grants under the Plan are made;

 

(b)            make grants of Awards under the Plan in such amounts and in such combinations, to such Eligible Persons and, subject to the provisions of this Plan, on such terms and conditions as it determines including without limitation:

 

(i)             the time or times at which Awards may be granted;

 

(ii)            the conditions under which:

 

(A)           Awards may be granted to Participants; or

 

(B)            Awards may be forfeited,

 

including any conditions relating to the attainment of specified Performance Goals;

 

(iii)           the Exercise Price, and/or price to be paid by a Participant in connection with the granting of Awards;

 

(iv)           the time or times when each Option becomes exercisable and, subject to Section 4.3, the duration of the Exercise Period;

 

(v)            whether restrictions or limitations are to be imposed on the ADSs issuable pursuant to grants of Awards, and the nature of such restrictions or limitations, if any; and

 

(vi)           any acceleration of exercisability or vesting, or waiver of termination regarding any Award, based on such factors as the Committee may determine;

 

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(c)            interpret this Plan and adopt, amend and rescind administrative guidelines and other rules and regulations relating to this Plan; and

 

(d)            make all other determinations and take all other actions necessary or advisable for the implementation and administration of this Plan.

 

The Committee’s determinations and actions within its authority under this Plan are conclusive and binding on the Company and all other persons.  The day-to-day administration of the Plan may be delegated to such officers and employees of the Company or of a Subsidiary as the Committee determines.

 

3.2           Delegation to Committee

 

Notwithstanding any delegation or any reference to the Committee in this Plan, the Board may also take any action and exercise any powers that the Committee is authorized to take or has power to exercise under this Plan.  To the extent applicable in respect of certain Awards granted to a Participant who is a Covered Employee, the Committee shall be composed of not less than two directors of Gerdau S.A., neither of whom shall be employees of the Gerdau S.A. or its Affiliates and each of whom shall otherwise be “outside directors” for the purposes of Section 162(m) of the Code.  To the extent Gerdau S.A. is not a “foreign private issuer” as defined in Exchange Act Rule 3b-4, such Committee shall be composed of not less than two directors of Gerdau S.A., each of whom are “non-employee directors” for purposes of Section 16 of the Exchange Act and Rule 16b-3 thereunder.

 

3.3           Eligibility

 

Eligibility to participate in this Plan does not confer upon any Eligible Person any right to receive any grant of an Award pursuant to the Plan.  The extent to which any Participant is entitled to receive a grant of an Award pursuant to the Plan will be determined in the sole and absolute discretion of the Committee, provided however that the following restrictions shall also apply to this Plan, together with all other Security Based Compensation Arrangements of the Company:

 

(a)            the number of ADSs issuable to Insiders, at any time, under all Security Based Compensation Arrangements, shall not exceed 10% of issued and outstanding ADSs; and

 

(b)            the number of ADSs issued to Insiders or to any one Insider, within any one year period, under all Security Based Compensation Arrangements, shall not exceed 10% of issued and outstanding ADSs.

 

If Gerdau S.A. repurchases ADSs for cancellation such that the tests in Section 3.3(a) or (b) are not met following such repurchase, this shall not constitute non-compliance under the Plan for any Awards then outstanding.

 

3.4           Total ADSs Available

 

(a)            The maximum number of ADSs that may be issued pursuant to the Plan is 12,788,363 ADSs representing approximately 6.4 percent of the outstanding issue

 

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as at the date of approval of this Plan.  No grant may be made under the Plan if such grant would result in the issuance of ADSs in excess of the above-noted limit.  The maximum number of ADSs that may be issued under this Plan pursuant to the exercise of Incentive Stock Options is 1,000,000. Subject to applicable law, the requirements of any stock exchange upon which the ADSs may then be listed and any shareholder or other approval which may be required, the Committee may in its discretion amend the Plan to increase such limit without notice to any Participants.

 

(b)            For purposes of computing the total number of ADSs available for grant under the Plan, ADSs subject to any Award (or any portion thereof) that has expired or is forfeited, surrendered, cancelled or otherwise terminated prior to the issuance or transfer of such ADSs shall again be available for grant under the Plan.

 

3.5           Award Agreements

 

All grants of Awards under this Plan will be evidenced by Award Agreements.  Award Agreements will be subject to the applicable provisions of this Plan and will contain such provisions as are required by this Plan and any other provisions that the Committee may direct.  Any one officer of the Company is authorized and empowered to execute and deliver, for and on behalf of the Company, an Award Agreement to each Participant granted an Award pursuant to this Plan.

 

3.6           Conditions of Grant

 

Each Participant will, when requested by the Company, deliver all such documents relating to the grant of Awards or exercise of Options which the Company deems necessary or desirable.

 

3.7           Non-transferability of Awards

 

Subject to Section 11.1, Awards granted under this Plan may only be exercised during the lifetime of the Participant by such Participant personally.  Subject to Section 11.1, no assignment or transfer of Awards, whether voluntary, involuntary, by operation of law or otherwise, vests any interest or right in such Awards whatsoever in any assignee or transferee and immediately upon any assignment or transfer, or any attempt to make the same, such Awards will terminate and be of no further force or effect.

 

ARTICLE 4
GRANT OF OPTIONS

 

4.1           Grant of Options

 

The Committee may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Committee may prescribe, grant Options to any Eligible Person.

 

4.2           Exercise Price

 

The Exercise Price will be as determined by the Committee but in any event will be no less than the Fair Market Value on the Date of Grant.

 

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4.3           Term of Options

 

Subject to any accelerated termination or as otherwise set forth in this Plan, each Option, unless otherwise specified by the Committee, expires on the tenth (10 th ) anniversary of the Date of Grant provided that if such expiry would otherwise be during or within ten (10) Business Days following a Black Out Period, then the expiry of such Option (other than an Incentive Stock Option) shall be extended until ten (10) Business Days following the expiration of the Black Out Period.

 

The Committee shall have the authority to condition the grant or vesting of Options upon the attainment of specified Performance Goals, or such other factors (which may vary as between Options) as the Committee may determine in its sole discretion.

 

4.4           Exercise of Options

 

Except as otherwise provided in this Plan, the Committee will determine when each Option will vest and be exercisable.

 

Once an instalment of an Option vests and becomes exercisable, it remains exercisable until expiration or termination of the Option, unless otherwise specified by the Committee in connection with the grant of such Option or otherwise as specified herein.  Each Option may be exercised at any time or from time to time, in whole or in part, for up to the total number of ADSs with respect to which it is then exercisable.  The Committee has the right to accelerate the date upon which any instalment of any Option becomes exercisable.

 

Subject to the provisions of this Plan and any Award Agreement, Options shall be exercised by delivery of an Exercise Notice to the Company.

 

4.5           Payment of Exercise Price

 

The Exercise Notice must be accompanied by payment in full of the Exercise Price in respect of the ADSs to be purchased.  The Exercise Price must be fully paid by electronic transfer, cash, certified cheque, bank draft or money order payable to Gerdau S.A.  No ADSs will be issued or transferred until full payment therefor has been received by Gerdau S.A.  As soon as practicable after receipt of any Exercise Notice and full payment of the Exercise Price, Gerdau S.A. will, subject to Section 14.5, deliver to the Participant, a certificate or certificates representing the acquired ADSs.

 

4.6           Incentive Stock Options

 

The following provisions will apply only to Incentive Stock Options granted under the Plan:

 

(a)            No Incentive Stock Option may be granted to any Participant who, at the time such Option is granted, (i) is not an employee of the Company or any Parent Corporation or Subsidiary Corporation of the Company or (ii) owns securities possessing more than ten percent (10%) of the total combined voting power of all classes of securities of the Company or any Parent Corporation or Subsidiary Corporation of the Company, except that with respect to provision (ii) hereof such an Option may be granted to an Employee if, at the time the Option is granted, the

 

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exercise price is at least one hundred ten percent (110%) of the Fair Market Value of the ADSs subject to the Option, and the Option by its terms is not exercisable after the expiration of five (5) years from the date the Option is granted; and

 

(b)            To the extent that the aggregate Fair Market Value of the ADSs with respect to which Incentive Stock Options (without regard to this Section) are exercisable for the first time by any individual during any calendar year (under all plans of the Company or any Parent Corporation or Subsidiary Corporation of the Company) exceeds U.S. $100,000, such Options will be treated as Non Qualified Stock Options.  This Section will be applied by taking Options into account in the order in which they were granted.  If some but not all Options granted on any one day are subject to this Section, then such Options will be apportioned between Incentive Stock Option and Non Qualified Stock Option treatment in such manner as the Committee will determine.

 

(c)            No Incentive Stock Option shall be granted more than ten (10) years from the date the Plan is adopted or the date the Plan is approved by shareholders, whichever is earlier.

 

4.7           Special Rule Applicable to U.S. Taxpayers

 

With respect to Options granted to Participants who are U.S. Taxpayers, ADSs shall constitute “stock of the service recipient” within the meaning of Section 409A of the Code if such Participant performs services for any affiliate that is at least fifty percent owned by Gerdau S.A.

 

ARTICLE 5
GRANT OF STOCK APPRECIATION RIGHTS

 

5.1           Grant of Stock Appreciation Rights

 

The Committee may grant Stock Appreciation Rights to any Eligible Person either on a stand alone basis or in relation to any Option.  Where a Stock Appreciation Right is granted in relation to an Option, it shall be a right in respect of the same number of ADSs and shall have the same Exercise Price as the Option.  Where a Stock Appreciation Right is granted on a stand alone basis, the Committee shall designate the number of ADSs in respect of which the Stock Appreciation Right is granted and shall designate the Exercise Price.  No more than 6,394,181 ADSs may be issued under the Plan pursuant to Stock Appreciation Rights granted on a stand alone basis.

 

5.2           Stock Appreciation Rights

 

A Stock Appreciation Right is the right to the excess, if any, of:

 

(a)            the Market Price of an ADS at the time such Stock Appreciation Right is exercised over

 

(b)            the Exercise Price less any amount required to be withheld by applicable law,

 

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multiplied by the number of ADSs in respect of which the Stock Appreciation Right is being exercised (the “ SAR Amount ”).

 

5.3           Terms of Stock Appreciation Rights Granted in Connection with an Option

 

Stock Appreciation Rights granted in relation to an Option shall be exercisable only at the same time, by the same persons and to the same extent, that the related Option is exercisable.  Upon exercise of any Stock Appreciation Right related to an Option, the corresponding portion of the related Option shall be surrendered to Gerdau S.A. and cancelled.

 

5.4           Terms of Stock Appreciation Rights Granted on a Stand Alone Basis

 

Stock Appreciation Rights granted on a stand alone basis shall be granted on such terms as shall be determined by the Committee and set out in the Award Agreement, provided that the Exercise Price shall not be less than the Fair Market Value on the Date of Grant and provided that any such grant to a Canadian taxpayer shall be on such terms as do not make the grant a salary deferral arrangement.  Subject to any accelerated termination or as otherwise set forth in this Plan, each Stock Appreciation Right, unless otherwise specified by the Committee, expires on the tenth (10 th ) anniversary of the Date of Grant provided that if such expiry would otherwise be during or within ten (10) Business Days following a Black Out Period, then the expiry of such Stock Appreciation Right shall be extended until ten (10) Business Days following the expiration of the Black Out Period.  The Committee shall have the authority to condition the grant or vesting of Stock Appreciation Rights upon the attainment of specified Performance Goals, or such other factors (which may vary as between Stock Appreciation Rights) as the Committee may determine in its sole discretion.  Once an instalment of an Stock Appreciation Right vests and becomes exercisable, it remains exercisable until expiration or termination of the Stock Appreciation Right, unless otherwise specified by the Committee in connection with the grant of such Stock Appreciation Right or otherwise as specified herein.  Each Stock Appreciation Right may be exercised at any time or from time to time, in whole or in part, for up to the total number of ADSs with respect to which it is then exercisable.  The Committee has the right to accelerate the date upon which any instalment of any Stock Appreciation Right becomes exercisable.

 

5.5           Exercise of Stand Alone Stock Appreciation Rights

 

Subject to the provisions of the Plan and Award Agreement, a Stock Appreciation Right may be exercised from time to time by delivery to the Company of an Exercise Notice.  Upon receipt of the Exercise Notice and subject to the terms of this Plan, the Company shall within ten (10) business days pay to the Participant the SAR Amount, less the amount required to satisfy withholding tax obligations.

 

5.6           Satisfying Stock Appreciation Rights

 

In the sole discretion of the Committee, determined either at the Date of Grant or the date of exercise, the Committee may determine to satisfy the exercise of a Stock Appreciation Right in whole or in part by issuing to the Participant ADSs, subject to Section 14.5, which have a Market Price as at the time of exercise of the Stock Appreciation Right, equal to the SAR Amount.

 

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ARTICLE 6
GRANT OF DEFERRED SHARE UNITS

 

6.1           Grant of Deferred Share Units

 

The Committee may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Committee may prescribe, grant Deferred Share Units to any Participant.  No more than 799,272 ADSs may be issued under the Plan pursuant to Deferred Share Units.

 

All Deferred Share Units received by a Participant shall be credited to an account maintained for the Participant on the books of the Company, as of the Date of Grant.  The award of Deferred Share Units to a Participant shall be evidenced by an Award Agreement.

 

6.2           Distribution of Deferred Share Units

 

A Participant shall receive, on the Distribution Date, a lump sum payment in cash equal to the number of Deferred Share Units recorded in the Participant’s account on the Distribution Date multiplied by the Fair Market Value, less the amount required to satisfy withholding tax obligations.

 

6.3           Satisfying Deferred Share Units

 

In the discretion of the Committee, the Company may determine to settle the Deferred Share Units, in whole or in part, by issuing to the Participant one (1) ADS, subject to Section 14.5, for each Deferred Share Unit.  Such determination may be made at the Date of Grant or the date of settlement.  Upon payment or transfer in full of the value of the Deferred Share Units, the Deferred Share Units shall be cancelled.

 

ARTICLE 7
GRANT OF RESTRICTED SHARE UNITS

 

7.1           Grant of Restricted Share Units

 

The Committee may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Committee may prescribe, grant Restricted Share Units to any Participant.  No more than 1,998,181 ADSs may be issued under the Plan pursuant to Restricted Share Units.

 

All Restricted Share Units received by a Participant shall be credited to an account maintained for the Participant on the books of the Company, as of the Date of Grant.  The award of Restricted Share Units to a Participant shall be evidenced by an Award Agreement.

 

7.2           Vesting of Restricted Share Units

 

The Committee shall have the authority to determine at the Date of Grant, in its sole discretion, the duration of the vesting period and other vesting terms applicable to the grant of Restricted Share Units, provided that all Restricted Share Units granted to Canadian taxpayers (other than Restricted Share Units settled by the issuance of ADSs from treasury) shall vest and be payable

 

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not later than December 31 of the third year following the year in respect of which the Restricted Share Units were granted.

 

7.3           Distribution of Restricted Share Units

 

A Participant shall receive as soon as practicable following the expiry of the applicable vesting period, or at such later date as may be determined by the Committee in its sole discretion, a lump sum payment in cash equal to the number of Restricted Share Units recorded in the Participant’s account on the vesting date multiplied by the Fair Market Value on the vesting date, less the amount required to satisfy withholding tax obligations, provided, however, that all payments in respect of an Award of Restricted Share Units to a U.S. Taxpayer shall be made no later than the date that is the later of (i) the 15th day of the third month of the year following the end of the U.S. Taxpayer’s first taxable year in which payment of the Award is no longer subject to a substantial risk of forfeiture, or (ii) the 15th day of the third month following the end of the Company’s (or relevant Subsidiary’s) first taxable year in which payment of the Award is no longer subject to a substantial risk of forfeiture; provided further, however that if the Award is subject to Section 409A of the Code ( i.e. , because the Award was granted to a U.S. Taxpayer who could become eligible to satisfy the Retirement eligibility requirements during the vesting period applicable to the Award), payment in respect of such Restricted Share Units shall be paid on the applicable vesting date pursuant to the vesting schedule set forth in the Award Agreement (notwithstanding anything to the contrary in Section 11.2, hereof and regardless of whether the U.S. Taxpayer ceases to be an Eligible Person by reason of Retirement).

 

7.4           Satisfying Restricted Share Units

 

In the discretion of the Committee, the Company may determine to settle the Restricted Share Units, in whole or in part, by issuing to the Participant one (1) ADS, subject to Section 14.5, for each Restricted Share Unit.  Such determination may be made at the Date of Grant or the date of settlement.  Upon payment or transfer in full of the value of the Restricted Share Units, the Restricted Share Units shall be cancelled.

 

ARTICLE 8
GRANT OF PERFORMANCE SHARE UNITS

 

8.1           Grant of Performance Share Units

 

The Committee may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Committee may prescribe, grant Performance Share Units to any Participant payable to, or exercisable by, the holder of the Performance Share Unit, in whole or in part, upon the achievement of such Performance Goals during such performance periods as the Committee establishes.

 

All Performance Share Units received by a Participant shall be credited to an account maintained for the Participant on the books of the Company, as of the Date of Grant.  The award of Performance Share Units to a Participant shall be evidenced by an Award Agreement.

 

8.2           Terms of Performance Share Units

 

The Committee shall have the authority to determine, at the Date of Grant, in its sole discretion

 

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the Performance Goals to be achieved during any performance period, the length of any performance period and the number of Performance Share Units which vest.

 

8.3           Performance Goals

 

The Committee will set Performance Goals, or the methodology for establishing Performance Goals not later than sixty (60) days following the commencement of the performance period to which such Performance Goals pertain and prior to the grant of the award.  The Performance Goals may be based upon the achievement of corporation-wide, divisional or individual goals, or any other basis determined by the Committee.  The Committee may modify the Performance Goals as necessary to align them with the Company’s corporate objectives if there is a subsequent material change in the Company’s business, operations or capital or corporate structure.

 

8.4           Distribution of Performance Share Units

 

A Participant shall receive as soon as practicable following the expiry of the applicable vesting period, or at such later date as may be determined by the Committee in its sole discretion and to the extent Performance Goals are achieved a lump sum payment in cash equal to the number of Performance Share Units recorded in the Participant’s account on the vesting date to the extent Performance Goals are achieved, multiplied by the Fair Market Value on the vesting date, less the amount required to satisfy withholding tax obligations, provided, however, that all payments in respect of an Award of Performance Share Units to a U.S. Taxpayer shall be made no later than the date that is the later of (i) the 15th day of the third month of the year following the end of the U.S. Taxpayer’s first taxable year in which payment of the Award is no longer subject to a substantial risk of forfeiture, or (ii) the 15th day of the third month following the end of the Company’s (or relevant Subsidiary’s) first taxable year in which payment of the Award is no longer subject to a substantial risk of forfeiture; provided further, however that if the Award is subject to Section 409A of the Code ( i.e. , because the Award was granted to a U.S. Participant who could become eligible to satisfy the Retirement eligibility requirements during the vesting period applicable to the Award), payment in respect of such Performance Share Units shall be paid on the applicable vesting date pursuant to the vesting schedule set forth in the Award Agreement (notwithstanding anything to the contrary in Section 11.2 hereof and regardless of whether the U.S. Participant ceases to be an Eligible Person by reason of Retirement).

 

8.5           Satisfying Performance Share Units

 

In the discretion of the Committee, the Company may determine to settle the vested Performance Share Units, in whole or in part, by issuing to the Participant one (1) ADS, subject to Section 14.5, for each such Performance Share Unit.  Such determination may be made at the Date of Grant or the date of settlement.  Upon payment or transfer in full of the value of the Performance Share Units, the Performance Share Units shall be cancelled.

 

ARTICLE 9
RESTRICTED STOCK

 

9.1           Grants of Restricted Stock

 

The Committee may, from time to time, subject to the provisions of this Plan, Section 14.3 and

 

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such other terms and conditions as the Committee may prescribe, grant ADSs subject to specified restrictions (“ Restricted Stock ”) to Eligible Persons.  No more than [1,000,000] [Draft Note:  To be multiplied by the Exchange Ratio] ADSs may be issued under the Plan as Restricted Stock.

 

The award of Restricted Stock to a Participant shall be evidenced by an Award Agreement.

 

9.2           Restricted Stock

 

Restricted Stock is an ADS subject to restrictions which lapse based on the achievement of Performance Goals, the passage of time or both.

 

9.3           Terms of Restricted Stock

 

The Committee shall have the authority to determine at the Date of Grant, in its sole discretion, the duration of the period of restriction and any other terms applicable to the grant of Restricted Stock.  Restricted Stock shall be granted on such terms as shall be determined by the Committee and set out in the Award Agreement.

 

9.4           Lapse of Restrictions

 

Subject to the provisions of the Plan and Award Agreement, Restricted Stock may be sold, transferred or otherwise dealt with, only when all restrictions have lapsed.

 

ARTICLE 10
OTHER ADS-BASED AWARDS

 

10.1         Other ADS-Based Awards

 

The Committee may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Committee may prescribe, grant Other ADS-Based Awards to any Participant.  Each Other ADS-Based Award will consist of a right other than an Award described in Article 4, Article 5, Article 6, Article 7, Article 8 or Article 9 which is denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, ADS (including, without limitation, securities convertible into ADSs) as are deemed by the Committee to be consistent with the purposes of the Plan; provided, however, that such right will comply with applicable law.  Subject to the terms of the Plan and any applicable Award Agreement, the Committee will determine the terms and conditions of Other ADS-Based Awards.  ADSs or other securities delivered pursuant to a purchase right granted under this Section 10.1 will be purchased for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, ADSs, other securities, other Awards, other property, or any combination thereof, as the Committee determines.

 

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ARTICLE 11
TERMINATION OF EMPLOYMENT

 

11.1         Treatment of Awards on Death or Disability

 

Subject to the provisions of the Award Agreement, if a Participant dies, or becomes Disabled while an Eligible Person:

 

(a)            The executor or administrator of the Participant’s estate or the Participant may exercise Options and Stock Appreciation Rights of the Participant.  All outstanding Options and Stock Appreciation Rights shall vest on the Termination Date.  The right to exercise such Options and Stock Appreciation Rights terminates on the earlier of: (i) the date that is twelve months after the Termination Date; and (ii) the date on which the Exercise Period of the particular Option or Stock Appreciation Right expires.

 

(b)            All Awards, other than Options or Stock Appreciation Rights, continue to vest and shall be satisfied at the same time and on the same conditions as if the Participant had not died or become Disabled.

 

(c)            The Participant’s eligibility to receive further grants of Awards under the Plan ceases as of the Termination Date.

 

11.2         Treatment of Awards on Retirement

 

Subject to the provisions of the Award Agreement, if a Participant Retires while an Eligible Person:

 

(a)            The Participant may exercise Options and Stock Appreciation Rights which are exercisable at the Termination Date plus a pro-rata portion of those Options and Stock Appreciation Rights which are not exercisable at the Termination Date based on the number of months from the Date of Grant to the end of the month in which the Termination Date occurs divided by the total number of months from the Date of Grant to the last date of vesting of the particular instalment of the Options and Stock Appreciation Rights.  The right to exercise such Options and Stock Appreciation Rights terminates on the earlier of: (i) the date that is five years after Termination Date (except that in the case of Retirement of a U.S. Taxpayer, any Incentive Stock Option shall expire on the date that is three months after the Termination Date); and (ii) the date on which the Exercise Period of the Particular Option or Stock Appreciation Right expires.

 

(b)            All Awards, other than Options or Stock Appreciation Rights, which have vested at the Termination Date will be satisfied and a pro-rata portion of all Awards which were not vested at the Termination Date shall vest and be satisfied based on the number of months from the Date of Grant to the end of the month in which the Termination Date occurs divided by the total number of months from the Date of Grant to the last date of vesting of the particular instalment of the Awards.  Such pro-rata portion of the Awards shall be satisfied at the same time and on the same conditions as if the Participant had not Retired.

 

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(c)            The Participant’s eligibility to receive further grants of Awards under the Plan ceases as of the Termination Date.

 

11.3         Treatment of Awards on Termination of Employment or Services

 

Subject to the provisions of the Award Agreement, if the employment of a Participant is terminated while an Eligible Person:

 

(a)            Where a Participant’s employment or term of office or engagement terminates by reason of a Participant’s resignation or termination of employment whether for cause or without cause then all Options and Stock Appreciation Rights held by the Participant which are vested and exercisable at the Termination Date shall be exercisable for three months following the Termination Date and all Options and Stock Appreciation Rights which are not vested and exercisable at the Termination Date immediately expire and are cancelled on the Termination Date, and any other Awards held by the Participant that are not yet vested or have not had restrictions lapse at the Termination Date are immediately forfeited to the Company on the Termination Date.

 

(b)            The eligibility of a Participant to receive further grants under the Plan ceases as of the date that the Company or an Affiliate, as the case may be, provides the Participant with written notification that the Participant’s employment or term of office, directorship or consultancy is terminated, notwithstanding that such date may be prior to the Termination Date.

 

(c)            Unless the Committee, in its sole discretion, otherwise determines, at any time and from time to time, Awards are not affected by a change of employment arrangement within or among the Company or a Subsidiary for so long as the Participant continues to be an employee of the Company or a Subsidiary, including without limitation a change in the employment arrangement of a Participant whereby such Participant becomes a Director in addition to or instead of being an Employee.

 

11.4         Discretion to Permit Exercise

 

Notwithstanding the provisions of Sections 11.1, 11.2 and 11.3, the Committee may, in its discretion, at any time prior to or following the events contemplated in such Sections, permit the exercise of any or all Options held by a Participant or permit the acceleration of vesting or lapse of restrictions of any or all Awards, all in the manner and on the terms as may be authorized by the Committee, provided that the Committee will not, in any case, authorize the exercise of an Option pursuant to this Section beyond the expiration of the Exercise Period of the particular Option.

 

11.5         Incentive Stock Options

 

Notwithstanding anything to the contrary in this Article 11, any Incentive Stock Options held by a U.S. Taxpayer that are exercisable at the Termination Date continue to be exercisable by the U.S. Taxpayer until the earlier of: (A) the date that is three months after the Termination Date; (B) the date on which the Exercise Period of the particular Incentive Stock Option expires, or (C)

 

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any shorter post-Termination Date exercise period as is set forth in this Article 11 or in the U.S. Taxpayer’s Award Agreement.

 

ARTICLE 12
CHANGE IN CONTROL

 

12.1         Change in Control

 

Awards outstanding immediately prior to the occurrence of a Change in Control shall become fully vested (as if all Performance Goals had been achieved) and exercisable and be satisfied and have restrictions lapse immediately prior to a Change in Control.  The Committee may provide for the conversion or exchange of any Award into or for rights or other securities in any entity participating in or resulting from the Change in Control.  In addition, and notwithstanding this Section, the Committee may determine, in its sole discretion, that Options and Stock Appreciation Rights outstanding which are not exercised prior to or in connection with the Change of Control shall be cashed out for an amount equal to the excess, if any, of the Fair Market Value immediately prior to the Change of Control minus the Exercise Price, multiplied by the number of Options and Stock Appreciation Rights for which there is such an excess and all Options and Stock Appreciation Rights for which there is no such excess shall be cancelled without payment and shall be forfeited to the Company.

 

12.2         Parachute Payments

 

If a Participant is entitled to receive payments that would qualify as excess “parachute payments” under Section 280G of the Code, those payments shall be reduced by the necessary amount so that the Participant is not subject to excise tax under Section 4999 of the Code if such reduction would result in the Participant receiving a greater after-tax payment.

 

ARTICLE 13
SHARE CAPITAL ADJUSTMENTS

 

13.1         General

 

The existence of any Awards does not affect in any way the right or power of the Company or its shareholders to make, authorize or determine any adjustment, recapitalization, reorganization or any other change in the Company’s capital structure or its business, or any amalgamation, combination, arrangement, merger or consolidation involving the Company, to create or issue any bonds, debentures, ADSs or other securities of the Company or to determine the rights and conditions attaching thereto, to effect the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or to effect any other corporate act or proceeding, whether of a  similar character or otherwise, whether or not any such action referred to in this Section would have an adverse effect on this Plan or on any Award granted hereunder.

 

13.2         Reorganization of Gerdau S.A.’s Capital

 

Should Gerdau S.A. effect a subdivision or consolidation of ADS’s or any similar capital reorganization or a payment of a stock dividend (other than a stock dividend that is in lieu of a cash dividend), or should any other change be made in the capitalization of Gerdau S.A. and that, in the opinion of the Committee, would warrant the amendment or replacement of any existing

 

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Awards in order to adjust: (a) the number of ADSs that may be acquired on the vesting of outstanding Awards or the exercise of any outstanding Options; and/or (b) the Exercise Price of any outstanding Options and/or (c) the terms of any other Award in order to preserve proportionately the rights and obligations of the Participants holding such Awards, the Committee will authorize such steps to be taken as it may consider to be equitable and appropriate to that end.

 

13.3         Other Events Affecting Gerdau S.A.

 

In the event of an amalgamation, combination, arrangement, merger or other transaction or reorganization involving Gerdau S.A. and occurring by exchange of ADSs, by sale or lease of assets or otherwise and that, in the opinion of the Committee, warrants the amendment or replacement of any existing Awards in order to adjust: (a)  the number of ADSs that may be acquired on the vesting of outstanding Awards or the exercise of any outstanding Options; or (b) the Exercise Price of any outstanding Options and/or (c) the terms of any other Award in order to preserve proportionately the rights and obligations of the Participants holding such Awards, the Committee will authorize such steps to be taken as it may consider to be equitable and appropriate to that end provided that no such amendment or replacement shall be made that would cause a U.S. Taxpayer to be subject to tax under Section 409A of the Code.

 

13.4         Immediate Exercise of Awards

 

Where the Committee determines that the steps provided in Sections 13.2 and 13.3 would not preserve proportionately the rights, value and obligations of the Participants holding such Awards in the circumstances or otherwise determines that it is appropriate the Committee may permit the immediate exercise of any outstanding Options that are not otherwise exercisable, and the immediate vesting of any unvested Awards provided that no such accelerated vesting or payment shall be made that would cause a U.S. Taxpayer to be subject to tax under Section 409A of the Code.

 

13.5         Issue by Gerdau S.A. of Additional ADSs

 

Except as expressly provided in this Article 13, neither the issue by Gerdau S.A. of shares of any class or securities convertible into or exchangeable for shares of any class, nor the conversion or exchange of such shares or securities, affects, and no adjustment by reason thereof is to be made with respect to: (a) the number of ADSs that may be acquired as a result of a grant of Awards or upon the exercise of any outstanding Options; or (b) the Exercise Price of any outstanding Options.

 

13.6         Fractions

 

No fractional ADSs will be issued on the exercise of an Option or Stock Appreciation Right or the satisfaction of an Award.  Accordingly, if a Participant would become entitled to a fractional ADSs, the Participant has the right to acquire only the adjusted number of full ADSs and a payment will be made with respect to any fractional ADSs based on Fair Market Value at the relevant time.

 

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ARTICLE 14
GENERAL PROVISIONS

 

14.1         Legal Requirement

 

The Company is not obligated to grant any Awards, issue any ADSs or other securities, make any payments or take any other action if, in the opinion of the Committee, in its sole discretion, such action would constitute a violation by a Participant or the Company of any provision of any applicable statutory or regulatory enactment of any government or government agency or the requirements of any stock exchange upon which the ADSs may then be listed.

 

14.2         Participants’ Entitlement

 

Except as otherwise provided in this Plan, Options (whether or not exercisable) and other Awards previously granted under this Plan are not affected by any change in the relationship between, or ownership of, the Company and an Affiliate.  For greater certainty, all grants of Awards remain valid and all Options remain valid and exercisable in accordance with the terms and conditions of this Plan and are not affected by reason only that, at any time, an Affiliate ceases to be an Affiliate.

 

14.3         Dividends

 

When dividends are paid on ADSs, additional Share Units shall be credited to the Participant’s account as of the dividend payment date.  The number of additional Share Units (including fractional Share Units) to be credited to the Participant’s account shall be determined by dividing the dollar amount of dividends payable in respect of the Share Units credited to the Participant’s account by the Fair Market Value of an ADS on the date credited.  Such additional Share Units shall vest at the same time and in the same proportion as the associated Share Units.

 

14.4         Delay of Issuance and Vesting

 

The Committee may, in its discretion, delay the vesting of an Award or the issuance of ADS thereunder until three Business Days following the end of a Black Out Period or a period during which a Participant has material undisclosed information.

 

14.5         Withholding Taxes

 

The granting or vesting of each Award and exercise of each Option and Stock Appreciation Right under this Plan is subject to the satisfaction of any withholding tax obligations.  The Company may withhold the amount of withholding tax obligations from any cash amount being paid to a Participant and may direct that a number of ADSs be sold which have a Fair Market Value equal to the amount of withholding tax obligations or may withhold the number of ADSs which have a Fair Market Value equal to the amount of the withholding tax obligation from any ADSs being issued to a Participant.

 

14.6         Rights of Participant

 

No Participant has any claim or right to be granted an Award and the granting of any Award is not to be construed as giving a Participant a right to remain as an employee, officer, consultant or

 

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director of the Company or an Affiliate.  No Participant has any rights as a shareholder of the Company in respect of ADSs issuable on the exercise of any Option or issuable pursuant to any other Award until the allotment and issuance to such Participant of certificates representing such ADSs.

 

14.7         Other Incentive Awards

 

The Committee shall have the right to grant other incentive awards based upon ADSs under this Plan to Participants in accordance with applicable laws and regulations and subject to regulatory approval, including without limitation the approval of any applicable stock exchange, having such terms and conditions as the Committee may determine, including without limitation the grant of ADSs based upon certain conditions and the grant of securities convertible into ADSs.

 

14.8         Termination

 

The Plan may be terminated by the Committee at any time, provided that such termination will not affect Awards which are outstanding at the time of termination.  This Plan will automatically terminate on the date upon which no further ADSs remain available for issuance under the Plan and no Options or other Awards remain outstanding.

 

14.9         Amendment

 

(a)            Subject to the rules and policies of any stock exchange on which the ADSs are listed and applicable law, the Committee may, without notice or shareholder approval, at any time or from time to time, amend the Plan in any matter whatsoever including, but not limited to amendments for the purposes of:

 

(i)             making any amendments to the general vesting provisions of each Option or Award;

 

(ii)            making any amendments to the general term of each Option provided that no Option held by an Insider may be extended beyond its original expiry date and, subject to Section 4.3, no Option may be exercised after the tenth (10 th ) anniversary of the Date of Grant;

 

(iii)           making any amendments to the provisions set out in Article 11;

 

(iv)           making any amendments to add covenants of the Company for the protection of Participants provided that the Committee shall be of the good faith opinion that such additions will not be prejudicial to the rights or interests of the Participants;

 

(v)            making any amendments not inconsistent with the Plan as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the Committee, having in mind the best interests of the Participants, it may be expedient to make, including amendments that are desirable as a result of changes in law in any jurisdiction where a Participant resides, provided that the Committee shall be of the opinion

 

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that such amendments and modifications will not be prejudicial to the interests of the Participants; or

 

(vi)           making such changes or corrections which, on the advice of counsel to the Company, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that the Committee shall be of the opinion that such changes or corrections will not be prejudicial to the rights and interests of the Participants.

 

(b)            Subject to Section 12.1, the Committee shall not alter or impair any rights or increase any obligations with respect to an Award previously granted under the Plan without the consent of the Participant.

 

(c)            Notwithstanding any other provision of this Plan, none of the following amendments shall be made to this Plan without approval of shareholders:

 

(i)             amendments to the Plan which would increase the number of ADSs issuable under the Plan, otherwise than in accordance with the terms of this Plan;

 

(ii)            amendments to the Plan which would increase the number of ADSs issuable to Insiders, otherwise than in accordance with the terms of this Plan;

 

(iii)           amendments to the Plan which would increase the number of ADSs issuable pursuant to any form of Award for which a maximum is specified in the Plan.

 

(iv)           amendments that would extend the Exercise Period of any Options held by Insiders beyond the Exercise Period otherwise determined in accordance with this Plan;

 

(v)            amendments that would reduce the Exercise Price of any Options held by Insiders, otherwise than in accordance with the terms of this Plan; and

 

(vi)           the addition of any form of financial assistance to a Participant.

 

Any amendment that would cause an Award held by a U.S. Taxpayer to fail to comply with Section 409A of the Code shall be null and void ab initio .

 

14.10       Section 409A of the Code

 

This Plan is intended to comply with Section 409A of the Code (“Section 409A”) and will be administered, construed and interpreted to so comply to the extent required to preserve the intended tax consequences of this Plan.  The Company reserves the right to amend this Plan to the extent it reasonably determines is necessary in order to preserve the intended tax consequences of this Plan in light of Section 409A and any guidance under that section. In no event will the Company be responsible if Awards under this Plan result in tax or penalties to a

 

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U.S. Taxpayer under Section 409A.  In no event shall a U.S. Taxpayer, directly or indirectly, designate the calendar year in which payments under this Plan will be made.  Notwithstanding any provisions of the Plan to the contrary, (i) the acceleration of the time or schedule of any payment of deferred compensation under the Plan is prohibited except as permitted under Section 409A, and (ii) in the case of any “specified employee” within the meaning of Section 409A who is a U.S. Taxpayer, distributions of deferred compensation made in connection with a “separation from service” within the meaning of Section 409A may not be made prior to the date which is 6 months after the date of separation from service (or, if earlier, the date of death of the U.S. Taxpayer).  Any amounts subject to a delay in payment pursuant to the preceding sentence shall be paid on the first Business Day of the seventh month following such separation from service.

 

14.11       Requirement of Notification of Election Under Section 83(b) of the Code

 

If a Participant, in connection with the acquisition of ADSs under the Plan, is permitted under the terms of the Award Agreement to make the election permitted under Section 83(b) of the Code and the Participant makes such an election, the Participant shall notify the Company of such election within ten (10) days of filing notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code.

 

14.12       Requirement of Notification Upon Disqualifying Disposition Under Section 421(b) of the Code

 

If any Participant shall make any disposition of ADSs issued pursuant to the exercise of an Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition within ten (10) days thereof.

 

14.13       Indemnification

 

Every member of the Committee will at all times be indemnified and saved harmless by the Company from and against all costs, charges and expenses whatsoever including any income tax liability arising from any such indemnification, that such member may sustain or incur by reason of any action, suit or proceeding, taken or threatened against the member, otherwise than by the Company, for or in respect of any act done or omitted by the member in respect of this Plan, such costs, charges and expenses to include any amount paid to settle such action, suit or proceeding or in satisfaction of any judgment rendered therein.

 

14.14       Participation in the Plan

 

The participation of any Participant in the Plan is entirely voluntary and not obligatory and shall not be interpreted as conferring upon such Participant any rights or privileges other than those rights and privileges expressly provided in the Plan. In particular, participation in the Plan does not constitute a condition of employment or engagement nor a commitment on the part of the Company to ensure the continued employment or engagement of such Participant. The Plan does not provide any guarantee against any loss which may result from fluctuations in the market value of the ADSs. The Company does not assume responsibility for the income or other tax consequences for the Participants and they are advised to consult with their own tax advisors.

 

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14.15       International Participants

 

With respect to Participants who do not reside or work in either Canada or the United States, the Committee may, in its sole discretion, amend, or otherwise modify, without shareholder approval, the terms of the Plan or Awards with respect to such Participants in order to conform such terms with the provisions of local law, and the Committee may, where appropriate, establish one or more sub-plans to reflect such amended or otherwise modified provisions.

 

14.16       Effective Date

 

This Plan became effective on August 30, 2010.

 

14.17       Governing Law

 

This Plan is created under and is to be governed, construed and administered in accordance with the laws of the State of Florida and the federal laws applicable therein.

 

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Exhibit 4.4

 

GERDAU S.A.

 

EQUITY OWNERSHIP PLAN

 

ARTICLE 1

 

Establishment; Purpose

 

1.1                                Establishment . Gerdau S.A. (“Gerdau”) hereby establishes an incentive compensation plan to be known as the “Gerdau S.A. Equity Ownership Plan” (the “Plan”).

 

1.2                                Purpose . The purpose of the Plan is to (a) attract, retain and motivate participating employees of Gerdau AmeriSteel Corporation (the “Company”) and its subsidiaries through awards of American Depositary Shares of Gerdau (“ADSs”) options to purchase ADSs (the “Options”) and other equity-based awards, (b) encourage employee ownership of ADSs and (c) encourage participating employees to think and act like owners of the Company.

 

1.3                                Maximum Number of ADSs . The maximum number of ADSs that may be offered under the Plan is 350,762 subject to adjustment as provided in Section 10.1. If an Option is surrendered or for any other reason ceases to be exercisable in whole or in part, the ADSs that are subject to such Option, but as to which the Option has not been exercised, shall again become available for offering under the Plan. Any awards under the Plan made other than in ADSs or Options shall not reduce the maximum number of ADSs covered by the Plan.

 

1.4                                Status . It is the intention of the Company that ISOs granted under the Plan qualify as “incentive stock options” under Section 422 of the Code, and the regulations promulgated thereunder. The provisions of the Plan with respect to ISOs, accordingly, shall be construed in a manner consistent with such requirements. Except with respect to ISOs, no other Award under the Plan is intended to qualify for special treatment or status under the Code.

 

ARTICLE 2

 

Definitions

 

2.1                                Definitions . The following words and terms as used herein shall have that meaning set forth therefor in this Article 2 unless a different meaning is clearly required by the context.

 

2.1.1                                “ Award ” shall mean any Option, ADSs, SAR or any cash payment granted or awarded under the Plan.

 

2.1.2                                “ Award Agreement(s) ” shall mean any document, agreement or certificate deemed by the Board of Directors as necessary or advisable to be entered into with or delivered to a Participant in connection with or as a condition precedent to the valid completion of the grant of an Award under the Plan.

 

2.1.3                                “ Award ADS(s) ” shall mean any ADSs granted or awarded to a Participant in accordance with the provisions of Article 8.

 

 

2.1.4                                “ Board” or “Board of Directors ” shall mean the Board of Directors of Gerdau.

 

2.1.5                                “ Chief Executive Officer ” shall mean the officer so designated from time to time by the Board of Directors, or if the Board shall fail to so designate an officer to that position, the President of the Company.

 

2.1.6                                “ Code ” shall mean the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code shall include a reference to any successor provision.

 

2.1.7                                “ Committee ” means the Human Resources Committee of the Board of Directors of Gerdau, or such other committee or person designated by the Board from time to time.

 

2.1.8                                “ Company ” shall mean AmeriSteel Corporation, a Florida corporation, and its successors.

 

2.1.9                                “ Effective Date ” shall mean August 30, 2010.

 

2.1.10                         “ Eligible Employee ” shall mean any individual employed by the Company or any Subsidiary. The Committee shall have the sole power to determine if the eligibility requirements have been satisfied.

 

2.1.11                         “ Fair Market Value ” of the ADSs shall mean the closing price, on the date in question (or, if no ADSs are traded on such day, on the next preceding day on which ADSs were traded), of the ADSs as reported on the Composite Tape, or if not reported thereon, then such price as reported in the trading reports of the principal securities exchange in the United States on which such stock is listed, or if such stock is not listed on a securities exchange in the United States, the mean between the dealer closing “bid” and “ask” prices on the over-the-counter market as reported by the National Association of Security Dealers Automated Quotation System (NASDAQ), or NASDAQ’s successor, or if not reported on NASDAQ, the fair market value of such stock as determined by the Board of Directors in good faith and based on all relevant factors.

 

2.1.12                         “ ISO ” shall mean an incentive stock option granted in accordance with the provisions of Article 5 of the Plan.

 

2.1.13                         “ NSO ” shall mean a nonqualified stock option granted in accordance with the provisions of Article 6 of the Plan.

 

2.1.14                         “ Option ” shall mean an ISO or an NSO.

 

2.1.15                         “ Optionee ” shall mean an individual employed by the Company or any Subsidiary to whom an Option is granted under the Plan.

 

2.1.16                         “ Participant ” shall mean an Eligible Employee, who in accordance with the terms of the Plan, is first recommended by the Chief Executive Officer and then approved by

 

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the Committee for participation in the Plan as a recipient of an Award and who receives an Award.

 

2.1.17                         “ Plan ” shall mean the Gerdau S.A. Equity Ownership Plan, as set forth herein and as amended from time to time.

 

2.1.18                         “ Registration Date ” shall mean the effective date of the first registration statement that becomes effective under the Securities Act of 1933 (excluding any offering to employees, whether under the Plan or otherwise, registered under Form S-8) with respect to any public offering of ADSs.

 

2.1.19                         “ SAR ” shall mean a Stock Appreciation Right granted in accordance with the provisions of Article 7 of the Plan, which as to each SAR entitles the Participant to receive payment equal to the excess of (1) the Fair Market Value of an ADS at the time of payment or exercise over (2) a specified price or value set or established at the time of grant of the SAR.

 

2.1.20                         “ Subsidiary ” shall mean any corporation that at the time qualifies as a subsidiary of the Company under the definition of “subsidiary corporation” contained in Section 424(f) of the Code.

 

2.1.21                         “ 10% Stockholder ” shall mean an individual who owns more than 10% of the total combined voting power of all classes of stock of the Company or of a parent or subsidiary corporation.

 

2.1.22                         “ Merger ” shall mean the merger of a Florida corporation to be formed with and into the Company, pursuant to which merger the holder of ADSs (other than Gerdau USA, Inc.) shall have such ADSs exchanged for ADSs of Co-Steel Inc., a Canadian corporation proposed to be renamed Gerdau AmeriSteel Corporation.

 

2.2                                Usage . Whenever appropriate, words used in the singular shall be deemed to include the plural and vice versa, and the masculine gender shall be deemed to include the feminine gender.

 

ARTICLE 3

 

Administration

 

3.1                                Board of Directors . The Plan shall be administered by the Committee, subject to the overall supervision of the Board of Directors.

 

3.2                                Power and Authority . Subject to the provisions of the Plan, the Committee shall have full authority, in its discretion: (a) to determine from among Eligible Employees those persons who shall become Participants; (b) to determine the nature, amount and terms and conditions of all Awards under the Plan, in accordance with and subject to the specific limitations and requirements set forth in the Plan; and (c) to interpret the Plan, the terms of all Awards and Award Agreements and any other agreement or instrument awarded, issued or entered into under the Plan, and to prescribe, amend and rescind rules and regulations with

 

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respect the administration of the Plan. The interpretation and construction by the Committee of any provision of the Plan, any Award or any other agreement or instrument awarded, issued or entered into under the Plan, and all other determinations and decisions of the Board of Directors pursuant to the provisions of the Plan, shall be final, conclusive and binding on all Participants and other affected persons. All actions and policies of the Committee, to the extent they deal with ISOs, shall be consistent with the qualification of ISOs as incentive stock options under Section 422 of the Code.

 

3.3                                Discretionary Authority . The Committee’s decision to authorize the grant of an Award to an Eligible Employee at any time shall not require the Committee to authorize the grant of an Award to that employee at any other time or to any other employee at any time; nor shall its determination with respect to the size, type or terms and conditions of the Award to be granted to an Eligible Employee at any time require it to authorize the grant of an Award of the same type or size or with the same terms and conditions to that employee at any other time or to any other employee at any time. The Committee shall not be precluded from authorizing the grant of an Award to any Eligible Employee solely because the employee previously may have been granted an Award of any kind under the Plan.

 

3.4                                No Liability . No member of the Board of Directors or the Committee shall be liable for any action or determination made in good faith with respect to the Plan.

 

ARTICLE 4

 

Employees Eligible To Participate

 

4.1                                Generally . Any person, including any officer but not a person who is solely a director, who is in the employ of the Company or any Subsidiary on the date of a grant of an Award shall be an Eligible Employee, able to participate in the Plan in accordance with the terms of the Plan.

 

4.2                                Participant Status . The Chief Executive Officer, in his sole discretion, from time to time may select from among Eligible Employees persons to recommend to the Committee to become Participants in the Plan. Any Eligible Employee so recommended to the Committee and who remains an Eligible Employee shall become a Participant upon the approval of such status by the Committee, which approval shall be conclusively evidenced by the award or grant of an Award to a Participant.

 

4.3                                ISO Eligibility Requirement . Notwithstanding any provision of the Plan to the contrary, no person shall be eligible to receive any ISOs under the Plan if such person would not be able qualify for the benefits of incentive stock options under Section 422 of the Code.

 

ARTICLE 5

 

Terms and Conditions of Incentive Stock Options

 

5.1                                Grant . Any ISO granted pursuant to the Plan shall be authorized by the Committee and shall be evidenced by certificates or agreements in such form as the Committee from time to time shall approve, which certificates or agreements shall comply with and be

 

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subject to the terms and conditions hereinafter specified. Upon the granting of any ISO, the Committee shall promptly cause the Optionee to be notified of the fact that such Option has been granted. The date on which the Committee approves the grant of an ISO shall be considered to be the date on which such Option is granted.

 

5.2                                Number of ADSs . Each ISO shall state the number of ADSs to which it pertains.

 

5.3                                Option Price . Each ISO shall state the option price, which option price shall be determined by the Committee in its discretion. Notwithstanding the foregoing, the option price in no event shall be less than 100% of the Fair Market Value of the ADSs on the date of grant of the Option; or, in the case of an ISO being issued to an Eligible Employee who is a 10% Stockholder at the time an ISO is granted, 110% of the Fair Market Value of the ADSs on the date of grant.

 

5.4                                Method of Exercise . An Optionee may exercise an ISO during such time as may be permitted by the Option and the Plan by providing written notice to the Committee, tendering the purchase price in accordance with the provisions of Section 5.4, and complying with any other exercise requirements contained in the Option or promulgated from time to time by the Committee.

 

5.5                                Method of Payment . Payment of the option price upon the exercise of the ISO shall be in (a) United States dollars in cash or by check, bank draft or money order payable to the order of the Company; (b) in the discretion of and in the manner determined by the Committee, by the delivery of ADSs already owned by the Optionee; (c) by any other legally permissible means acceptable to the Committee at the time of grant of the Option (including cashless exercise as permitted under the Federal Reserve Board’s Regulation T, subject to applicable legal restrictions); or in the discretion of the Committee, through a combination of (a), (b) and (c) of this Section 5.5. If the option price is paid in whole or in part through the delivery of ADSs, the decision of the Committee with respect to the fair market value of such ADSs shall be final and conclusive.

 

5.6                                Term and Exercise of Options .

 

5.6.1                                Unless otherwise specified by the Committee, each ISO shall be exercisable, in whole or in part, only in accordance with the following chart:

 

Number of Years from Date Option is Granted		Percentage of ADSs Exercisable
Less than 2 years		0	%
2 years but less than 3 years		33 1 / 3	%
3 years but less than 4 years		66 2 / 3	%
4 years or more		100	%

 

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5.6.2                                Notwithstanding the foregoing, an Optionee shall be 100% vested in the number of ADSs originally covered by an ISO in the event the Optionee dies or becomes totally and permanently disabled (as determined in the sole discretion of the Committee) while still employed by the Company.

 

5.6.3                                To the extent not exercised, exercisable installments of ISOs shall be exercisable, in whole or in part, in any subsequent period, but not later than the expiration date of the Option. The Committee shall determine the expiration date of the Option at the time of the grant of the Option; provided, however, that no ISO shall be exercisable after the expiration of ten (10) years from the date it is granted; or, in the case of a 10% Stockholder, no ISO shall be exercisable after the expiration of five (5) years from the date it is granted. Not less than one hundred (100) ADSs may be exercised at any one time unless the number exercised is the total number at the time exercisable under the Option.

 

5.6.4                                Within the limits described above, the Committee may impose additional requirements on the exercise of ISOs. When it deems special circumstances to exist, the Committee in its discretion may accelerate the time at which an ISO may be exercised if, under previously established exercise terms, such Option was not immediately exercisable in full, even if the acceleration would permit the Option to be exercised more rapidly than the vesting set forth above in the chart, or as otherwise specified by the Committee, would permit.

 

5.7                                Additional Limitations . The aggregate Fair Market Value (determined as of the time an ISO is granted) of the ADSs with respect to which ISOs are exercisable for the first time by any Optionee in any calendar year under the Plan and under all other incentive stock option plans of the Company and any parent and subsidiary corporations of the Company (as those terms are defined in Section 424 of the Code) shall not exceed $100,000.

 

5.8                                Death or Other Termination of Employment .

 

5.8.1                                In the event that an Optionee shall cease to be employed by the Company or a Subsidiary for any reason other than his or her death, subject to the conditions that no ISO shall be exercisable after its expiration date, such Optionee shall have the right to exercise the ISO at any time within thirty (30) days after such termination of employment to the extent his or her right to exercise such Option had accrued pursuant to this Article 5 at the date of such termination and had not previously been exercised; such thirty (30) day period shall be increased to ninety (90) days if the termination of employment was the retirement or early retirement of the Optionee (as defined under the Company’s qualified Retirement Plan) and to one (1) year for any Optionee who dies during the thirty (30) day or ninety (90) day period, whichever may be applicable, and the Option may be exercised within such extended time limit by the Optionee or, in the case of death, the personal representative of the Optionee or by any person or persons who shall have acquired the Option directly from the Optionee by bequest or inheritance. Whether an authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive.

 

5.8.2                                In the event that an Optionee shall die while in the employ of the Company or a Subsidiary and shall not have fully exercised any ISO, the ISO may be exercised,

 

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subject to the conditions that no ISO shall be exercisable after its expiration date, to the extent that the Optionee’s right to exercise such Option had accrued pursuant to this Article 5 at the time of his or her death and had not previously been exercised, at any time within one (1) year after the Optionee’s death, by the personal representative of the Optionee or by any person or persons who shall have acquired the Option directly from the Optionee by bequest or inheritance.

 

5.8.3                                No ISO shall be transferable by the Optionee otherwise than by will or the laws of descent and distribution.

 

5.8.4                                During the lifetime of the Optionee, an ISO shall be exercisable only by him or her and shall not be assignable or transferable, and no other person shall acquire any rights therein.

 

5.9                                Delivery of Certificates Representing ADSs .

 

5.9.1                                As soon as practicable after the exercise of an ISO, Gerdau shall deliver or cause to be delivered to the Optionee exercising the ISO a certificate or certificates representing the ADSs purchased upon the exercise. Certificates representing ADSs to be delivered to a Optionee will be registered in the name of the Optionee.

 

5.9.2                                If determined by the Company in its discretion appropriate to administer the right of first refusal provisions of Article 9, but only for so long as such provisions remain in effect, certificates representing ADSs shall not be delivered to Participants but shall be delivered to the Company to be held by the Company as safekeeping agent for the benefit of each Participant. A written safekeeping receipt evidencing the ADSs so held in safekeeping, bearing the name of the Participant, indicating the number of the certificate or certificates and the number of ADSs so represented shall be delivered promptly to each Participant. In its capacity as safekeeping agent for Participants, the Company shall act in accordance with instructions received from such Participants, which instructions are to be confirmed in writing if deemed appropriate by the Company. The safekeeping agency shall not affect the rights of Participants as owners of ADSs.

 

5.9.3                                Upon the expiration of the right of first refusal provisions of Article 9, any safekeeping agency arrangement adopted pursuant to Section 5.9.2 shall terminate and the certificates representing the ADSs owned by Participants, registered in the name(s) of the Participants, shall be delivered promptly to such Participants.

 

5.10                         Rights as a Stockholder . An Optionee shall have no rights as a stockholder with respect to any ADSs covered by his or her ISO until the date on which he or she becomes a record owner of the ADSs purchased upon the exercise of the Option (the “record ownership date”). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date, except as provided in Article 10.

 

5.11                         Modification, Extension and Renewal of Options . Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify outstanding ISOs granted under the Plan, or accept the surrender of outstanding ISOs (to the extent not theretofore exercised) and authorize the granting of new Options in substitution therefor (to the extent not

 

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theretofore exercised). The Committee shall not, however, modify any outstanding ISO so as to specify a lower option price or accept the surrender of outstanding ISOs and authorize the granting of new Options in substitution therefor specifying a lower option price. Notwithstanding the foregoing, however, no modification of an ISO shall, without the consent of the Optionee, alter or impair any of the rights or obligations under any ISO theretofore granted under the Plan.

 

5.12                         Listing and Registration of ADSs . Each ISO shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the ADSs covered thereby upon any securities exchange or under any state or federal laws, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such ISO or the issuance or purchase of ADSs thereunder, such ISO may not be exercised unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Notwithstanding anything in the Plan to the contrary, if the provisions of this Section 5.12 become operative, and if, as a result thereof, the exercise of an ISO is delayed, then and in that event, the term of the ISO shall not be affected.

 

5.13                         Other Provisions . The ISO certificates or agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the Option, as the Committee shall deem advisable. Any such certificate or agreement shall contain such limitations and restrictions upon the exercise of the ISO as shall be necessary in order that such Option will be an incentive stock option as defined in Section 422 of the Code, or to conform to any change in the law.

 

ARTICLE 6

 

Terms and Conditions of Nonqualified Stock Options

 

6.1                                Grant . Any NSO granted pursuant to the Plan shall be authorized by the Committee and shall be evidenced by certificates or agreements in such form as the Committee from time to time shall approve, which certificates or agreements shall comply with and be subject to the terms and conditions hereinafter specified. Upon the granting of any NSO, the Committee shall promptly cause the Optionee to be notified of the fact that such Option has been granted. The date on which the Committee approves the grant of a NSO shall be considered to be the date on which such Option is granted.

 

6.2                                Number of ADSs . Each NSO shall state the number of ADSs to which it pertains.

 

6.3                                Option Price . Each NSO shall state the option price, which option price shall be determined by the Board of Directors in its discretion.

 

6.4                                Method of Exercise . An Optionee may exercise a NSO during such time as may be permitted by the Option and the Plan by providing written notice to the Committee, tendering the purchase price in accordance with the provisions of Section 6.4, and complying with any other exercise requirements contained in the Option or promulgated from time to time by the Committee.

 

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6.5                                Method of Payment . Payment of the option price upon the exercise of the NSO shall be (a) in United States dollars in cash or by check, bank draft or money order payable to the order of the Company; (b) in the discretion of and in the manner determined by the Committee, by the delivery of ADSs already owned by the Optionee; (c) by any other legally permissible means acceptable to the Committee at the time of grant of the Option (including cashless exercise as permitted under the Federal Reserve Board’s Regulation T, subject to applicable legal restrictions); or in the discretion of the Committee, through a combination of (a), (b) and (c) of this Section 6.5. If the option price is paid in whole or in part through the delivery of ADSs, the decision of the Committee with respect to the fair market value of such ADSs shall be final and conclusive.

 

6.6                                Term and Exercise of Options .

 

6.6.1                                Unless otherwise specified by the Committee, each NSO shall be exercisable, in whole or in part, only in accordance with the following chart:

 

Number of Years from Date Option is Granted		Percentage of ADSs Exercisable
Less than 2 years		0	%
2 years but less than 3 years		33 1 / 3	%
3 years but less than 4 years		66 2 / 3	%
4 years or more		100	%

 

6.6.2                                Notwithstanding the foregoing, an Optionee shall be 100% vested in the number of ADSs originally covered by a NSO in the event the Optionee dies or becomes totally and permanently disabled (as determined in the sole discretion of the Committee) while still employed by the Company.

 

6.6.3                                To the extent not exercised, exercisable installments of NSOs shall be exercisable, in whole or in part, in any subsequent period, but not later than the expiration date of the Option. The Committee shall determine the expiration date of the Option at the time of the grant of the Option; provided, however, that no NSO shall be exercisable after the expiration of ten (10) years from the date it is granted. Not less than one hundred (100) ADSs may be exercised at any one time unless the number exercised is the total number at the time exercisable under the Option.

 

6.6.4                                Within the limits described above, the Committee may impose additional requirements on the exercise of NSOs. When it deems special circumstances to exist, the Committee in its discretion may accelerate the time at which a NSO may be exercised if, under previously established exercise terms, such Option was not immediately exercisable in full, even if the acceleration would permit the Option to be exercised more rapidly than the vesting set forth above in the chart, or as otherwise specified by the Committee, would permit.

 

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6.7                                Death or Other Termination of Employment .

 

6.7.1                                In the event that an Optionee shall cease to be employed by the Company or a Subsidiary for any reason other than his or her death, subject to the conditions that no NSO shall be exercisable after its expiration date, such Optionee shall have the right to exercise the NSO at any time within thirty (30) days after such termination of employment to the extent his or her right to exercise the NSO had accrued pursuant to this Article 6 at the date of such termination and had not previously been exercised; such thirty (30) day period shall be increased to such thirty (30) day limit shall be increased to ninety (90) days if the termination of employment was the retirement or early retirement of the Optionee (as defined under the Company’s qualified Retirement Plan) and to one (1) year for any Optionee who dies during the thirty (30) day or ninety (90) day period, whichever may be applicable, and the Option may be exercised within such extended time limit by the Optionee or, in the case of death, the personal representative of the Optionee or by any person or persons who shall have acquired the Option directly from the Optionee by bequest or inheritance. Whether an authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive.

 

6.7.2                                No NSO shall be transferable by the Optionee otherwise than by will or the laws of descent and distribution.

 

6.7.3                                During the lifetime of the Optionee, an NSO shall be exercisable only by him or her and shall not be assignable or transferable, and no other person shall acquire any rights therein.

 

6.8                                Delivery of Certificates Representing ADSs .

 

6.8.1                                As soon as practicable after the exercise of a NSO, Gerdau shall deliver or cause to be delivered to the Optionee exercising the NSO a certificate or certificates representing the ADSs purchased upon the exercise. Certificates representing ADSs to be delivered to a Optionee will be registered in the name of the Optionee.

 

6.8.2                                If determined by the Company in its discretion appropriate to administer the right of first refusal provisions of Article 9, but only for so long as such provisions remain in effect, certificates representing ADSs shall not be delivered to Participants but shall be delivered to the Company to be held by the Company as safekeeping agent for the benefit of each Participant. A written safekeeping receipt evidencing the ADSs so held in safekeeping, bearing the name of the Participant, indicating the number of the certificate or certificates and the number of ADSs so represented shall be delivered promptly to each Participant. In its capacity as safekeeping agent for Participants, the Company shall act in accordance with instructions received from such Participants, which instructions are to be confirmed in writing if deemed appropriate by the Company. The safekeeping agency shall not affect the rights of Participants as owners of ADSs.

 

6.8.3                                Upon the expiration of the right of first refusal provisions of Article 9, any safekeeping agency arrangement adopted pursuant to Section 6.8.2 shall terminate and the certificates representing the ADSs owned by Participants, registered in the name(s) of the Participants, shall be delivered promptly to such Participants.

 

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6.9                                Rights as a Stockholder . An Optionee shall have no rights as a stockholder with respect to any ADSs covered by his or her NSO until the date on which he or she becomes a record owner of the ADSs purchased upon the exercise of the Option (the “record ownership date”). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date, except as provided in Article 10.

 

6.10                         Modification, Extension and Renewal of Options . Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify outstanding NSOs granted under the Plan, or accept the surrender of outstanding NSOs (to the extent not theretofore exercised) and authorize the granting of new Options in substitution therefor (to the extent not theretofore exercised). The Board of Directors shall not, however, modify any outstanding NSO so as to specify a lower option price or accept the surrender of outstanding NSOs and authorize the granting of new Options in substitution therefor specifying a lower option price. Notwithstanding the foregoing, however, no modification of an NSO shall, without the consent of the Optionee, alter or impair any of the rights or obligations under any NSO theretofore granted under the Plan.

 

6.11                         Listing and Registration of ADSs . Each NSO shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the ADSs covered thereby upon any securities exchange or under any state or federal laws, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such NSO or the issuance or purchase of ADSs thereunder, such NSO may not be exercised unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Notwithstanding anything in the Plan to the contrary, if the provisions of this Section 6.11 become operative, and if, as a result thereof, the exercise of a NSO is delayed, then and in that event, the term of the NSO shall not be affected.

 

6.12                         Other Provisions . The NSO certificates or agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the Option, as the Committee shall deem advisable.

 

ARTICLE 7

 

Stock Appreciation Rights

 

7.1                                Grant . The Committee, in its sole discretion, from time to time may authorize the grant of SARs to a Participant. An SAR may be granted in connection with all or any portion of a previously or contemporaneously granted Award (other than an SAR), or by itself and not in connection with any other Award. An SAR may be granted at the time of grant of the related Option and shall be subject to the same terms and conditions as the related Option, except as this Article 7 may otherwise provide. The grant of SAR shall be evidenced either by provisions in the Option to which it relates or by a separate written agreement between the Company and the Participant, which shall comply with and be subject to the terms and conditions of the Plan and shall be in such form as the Committee from time to time shall approve (an “SAR Agreement”). The SAR Agreement may contain such additional terms, conditions or limitations, not

 

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inconsistent with the specific provisions of the Plan, as may be approved by the Committee in it sole discretion.

 

7.2                                Terms and Conditions . Each SAR granted under the Plan shall be exercisable or payable at such time or times, or upon the occurrence of such event or events, and in such amounts or types of consideration (including cash or ADSs) as the Committee shall specify in the SAR Agreement. Subsequent to the grant of an SAR, the Committee, at any time before complete termination of such SAR, may accelerate the time or times at which such SAR may be exercised or paid in whole or in part.

 

7.3                                Exercise .

 

7.3.1                                An SAR shall be exercised by surrendering the SAR Agreement or, if the SAR was granted in connection with an Option, the surrender of the related Option together with any SAR Agreement, or the portion(s) thereof pertaining to the ADSs with respect to which the SAR is exercised, and providing the Company with a written notice in such form and containing such information (including the number of ADSs with respect to which the SAR is being exercised) as the SAR Agreement or the Committee may specify. The date on which the Company receives such surrender and notice shall be the date on which the related Option, or portion thereof, shall be deemed surrendered and the SAR shall be deemed exercised.

 

7.3.2                                An SAR granted in connection with an Option shall be exercisable only at such time or times, to such extent and by such persons as the Option to which it relates shall be exercisable, provided that an SAR granted in connection with an ISO shall not be exercisable on any date on which the Fair Market Value of an ADS is less than or equal to the per ADS exercise price of the ISO. An SAR shall be canceled when, and to the extent that, any related Option is exercised, and an Option shall be canceled when, and to the extent that, the Option is surrendered to the Company upon the exercise of a related SAR.

 

7.4                                Payment . To effect payment or exercise of an SAR, the Company shall make payment to the Participant in cash or ADSs (valued at their Fair Market Value on the date of payment or exercise) or in combination of cash and ADSs as provided in the SAR Agreement. If payment is to be made in ADSs, upon such exercise, the Participant shall be entitled to receive that number of ADSs which have an aggregate Fair Market Value on the exercise date equal to the amount by which the Fair Market Value of one ADS on the exercise date exceeds the Option price per ADS of any related Option or the Fair Market Value on the date of grant of the SAR, as the case may be, multiplied by the number of ADSs covered by the related Option or the SAR, as the case may be, or portion thereof, surrendered in connection with the exercise of the SAR. Notwithstanding the foregoing, with respect to any SARs outstanding at the time of the effectiveness of the Merger, the amount to be paid upon the exercise thereof shall be the amount, if any, equal to the product of (i) the number of SARs being exercised times (ii) the amount by which (A) the product of (1) the Stock Exchange Ratio times (2) the Currency Exchange Ratio times (3) the closing price of a Co-Steel Inc. share the day before the date of exercise on the Toronto Stock Exchange (Canadian Dollars) exceeds (B) the Fair Market Value of an ADS at the date of grant of the SAR. For purposes of this Section 7.4, the “Stock Exchange Ratio” shall be number of ADSs of Co-Steel Inc. issued pursuant to the Merger with respect to an outstanding ADS of the Company (all as provided in the Agreement of Merger entered into by the Company

 

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and other parties thereto); and the “Currency Exchange Ratio” shall mean U.S. Dollar Equivalent of a Canadian Dollar as of the day before the date of exercise as reported in the Exchange Rate chart in the Wall Street Journal (or some comparable report as determined by the Committee).

 

7.5                                Expiration . An SAR granted in connection with or related to an Option, unless previously exercised or canceled, shall expire upon the expiration of the Option to which it relates. Any other SAR, unless previously exercised or canceled, shall expire upon the tenth anniversary of its grant. The exercise of an SAR granted in connection with an Option shall result in a pro rata surrender or cancellation of any related Option to the extent the SAR has been exercised.

 

7.6                                Death or Other Termination of Employment .

 

7.6.1                                In the event that a Participant shall cease to be employed by the Company or a Subsidiary for any reason other than his or her death, subject to the conditions that no SAR shall be exercisable after its expiration date, such Participant shall have the right to exercise the SAR at any time within thirty (30) days after such termination of employment to the extent his or her right to exercise such SAR had accrued pursuant to this Article 7 at the date of such termination and had not previously been exercised; such thirty (30) day period shall be increased to ninety (90) days if the termination of employment was the retirement or early retirement of a Participant (as defined under the Company’s qualified Retirement Plan) and to one (1) year for any Participant who dies during the thirty (30) day or ninety (90) day period, whichever may be applicable, and the SAR may be exercised within such extended time limit by a Participant, or, in the case of death, the personal representative of a Participant or by any person or persons who shall have acquired the SAR directly from a Participant by bequest or inheritance. Whether an authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive.

 

7.6.2                                In the event that a Participant shall die while in the employ of the Company or a Subsidiary and shall not have fully exercised any SAR, the SAR may be exercised, subject to the conditions that no SAR shall be exercisable after its expiration date, to the extent that a Participant’s right to exercise such SAR had accrued in accordance with the provisions of this Article 7 at the time of his or her death and had not previously been exercised, at any time within one (1) year after a Participant’s death, by the personal representative of a Participant or by any person or persons who shall have acquired the SAR directly from a Participant by bequest or inheritance.

 

7.6.3                                No SAR shall be transferable by a Participant otherwise than by will or the laws of descent and distribution.

 

7.6.4                                During the lifetime of a Participant, an SAR shall be exercisable only by him or her and shall not be assignable or transferable, and no other person shall acquire any rights therein.

 

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7.7                                Delivery of Certificates Representing ADSs .

 

7.7.1                                As soon as practicable after the exercise or payment of an SAR payable in whole or in part in ADSs, the Gerdau shall deliver or cause to be delivered to the Participant exercising the SAR for ADSs a certificate or certificates representing the ADSs issuable upon such purchase or exercise. Certificates representing ADSs to be delivered to a Participant will be registered in the name of the Participant.

 

7.7.2                                If determined by the Company in its discretion appropriate to administer the right of first refusal provisions of Article 9, but only for so long as such provisions remain in effect, certificates representing ADSs issued in respect of SAR payment or exercise shall not be delivered to Participants but shall be delivered to the Company to be held by the Company as safekeeping agent for the benefit of each Participant. A written safekeeping receipt evidencing the ADSs so held in safekeeping, bearing the name of the Participant, indicating the number of the certificate or certificates and the number of ADSs so represented shall be delivered promptly to each Participant. In its capacity as safekeeping agent for Participants, the Company shall act in accordance with instructions received from such Participants, which instructions are to be confirmed in writing if deemed appropriate by the Company. The safekeeping agency shall not affect the rights of Participants as owners of ADSs.

 

7.7.3                                Upon the expiration of the right of first refusal provisions of Article 9, any safekeeping agency arrangement adopted pursuant to Section 7.7.2 shall terminate and the certificates representing the ADSs owned by Participants, registered in the name(s) of the Participants, shall be delivered promptly to such Participants.

 

7.8                                Listing and Registration of ADSs . Each SAR shall be subject to the requirement that if at any time the Board of Directors shall determine, in its discretion, that the listing, registration or qualification of any ADSs covered thereby upon any securities exchange or under any state or federal laws, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issuance or purchase of ADSs thereunder, such SAR may not be paid or exercised unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board of Directors. Notwithstanding anything in the Plan to the contrary, if the provisions of this Section 7.8 become operative, and if, as a result thereof, the exercise of an SAR is delayed, then and in that event, the term of the SAR shall not be affected.

 

7.9                                Rights as a Stockholder . In general, the holder of an SAR shall have no rights as a stockholder. The holder of an SAR under which ADSs are issuable upon payment or exercise shall have no rights as a stockholder of the Company until the date on which he or she becomes a record owner of the ADSs issued upon the payment or exercise of the SAR (the “record ownership date”). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date, except as provided in Article 10.

 

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ARTICLE 8

 

Award ADSs

 

8.1                                General . The Committee, in its sole discretion, from time to time may authorize the grant of Award ADSs to a Participant. In making any such grant of Award ADSs, the Committee may grant Award ADSs without the requirement of any cash payment or may require a cash payment from a Participant in an amount no greater than the aggregate Fair Market Value of the Award ADSs as of the date of grant in exchange for, or as a condition precedent to, the completion of the grant and the issuance of the Award ADSs.

 

8.2                                Restriction Period . All Award ADSs issued under Article 8 shall be subject to certain restrictions as set forth in Section 8.3, which restrictions shall continue in effect for such period of time as is specified in the Award Agreement entered into at the time of the grant (the “Restriction Period”). The Award Agreement may contain such additional terms, conditions or limitations, not inconsistent with the specific provisions of the Plan, as may be approved by the Board of Directors in it sole discretion.

 

8.3                                Certain Restrictions . Until the expiration of the Restriction Period, Award ADSs shall be subject to the following restrictions and any additional restrictions included in the Award Agreement that the Committee, in its sole discretion, may from time to time deem desirable in furtherance of the objectives of the Plan: (a) the Participant shall not be entitled to take possession of the certificate or certificates representing the ADSs; (b) the Award ADSs may not be sold, transferred, assigned, pledged, conveyed, hypothecated or otherwise disposed of (other than by operation of law); and (c) the ADSs may be forfeited immediately as provided in Section 8.4.

 

8.4                                Termination of Employment . If the employment of a Participant is terminated for any reason other than the retirement or early retirement (as defined under the Company’s qualified Retirement Plan), disability or death of a Participant in service before the expiration of the Restriction Period, the Award ADSs shall be forfeited immediately and all rights of a Participant to such ADSs shall terminate immediately without further obligation on the part of the Company. If a Participant’s employment is terminated by reason of the retirement or early retirement of a Participant (as defined under the Company’s qualified Retirement Plan), disability or death of a Participant in service before the expiration of the Restriction Period, (a) the number of Award ADSs held by the Company for a Participant’s account pursuant to Section 8.6 shall be reduced by partial forfeiture in an amount of Award ADSs in proportion equal to the percentage of the total Restriction Period remaining after a Participant’s termination of employment, (b) the restrictions on the unforfieted balance of such Award ADSs shall lapse on the date a Participant’s employment terminated and (c) subject to the safekeeping provisions of Section 8.6, the certificate or certificates representing the ADSs upon which the restrictions have lapsed shall be delivered to a Participant (or, in the event of a Participant’s death, to his or her legal representative).

 

8.5                                Distribution of Award ADSs . If a Participant to whom Award ADSs have been issued pursuant to Article 8 remains in the continuous employment of the Corporation or a Subsidiary until the expiration or waiver by the Committee of the Restriction Period and the

 

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satisfaction of any other conditions imposed by the Award Agreement, all restrictions applicable to the Restricted ADSs at that time still outstanding and registered in the name of a Participant shall lapse and, subject to the safekeeping provisions of Section 8.6, the certificate or certificates representing the ADSs that were granted to the Participant shall be delivered to the Participant.

 

8.6                                Delivery of Certificates Representing ADSs .

 

8.6.1                                As soon as practicable after a grant of Award ADSs, the Company shall issue certificates representing the Award ADSs registered in the name of the holder of Award ADSs.

 

8.6.2                                To administer the restrictions imposed on Award ADSs under the Plan and the Award Agreement (and if determined in the discretion of the Committee, the right of first refusal provisions of Article 9, but only for so long as such provisions remain in effect), certificates representing Award ADSs shall not be delivered to Participants but shall be delivered to the Company to be held by the Company as safekeeping agent for the benefit of each Participant. A written safekeeping receipt evidencing the ADSs so held in safekeeping, bearing the name of the Participant, indicating the number of the certificate or certificates and the number of ADSs so represented shall be delivered promptly to each Participant. In its capacity as safekeeping agent for Participants, the Company shall act in accordance with instructions received from such Participants, which instructions are to be confirmed in writing if deemed appropriate by the Company. The safekeeping agency shall not affect the rights of Participants as owners of Award ADSs, nor shall such agency affect the restrictions imposed on Award ADSs under the Plan or the Award Agreement.

 

8.6.3                                Upon the last to occur of (a) the lapse, satisfaction or waiver of the Restriction Period and any other restrictions imposed on Award ADSs under the Plan or the Award Agreement and (b) the expiration of the right of first refusal provisions of Article 9, any safekeeping agency arrangement adopted pursuant to Section 8.6.2 shall terminate and the certificates representing the ADSs owned by Participants, registered in the name(s) of the Participants, shall be delivered promptly to such Participants.

 

8.7                                Waiver of Restrictions . The Board of Directors, in its sole discretion, may at any time waive or accelerate the expiration of any or all restrictions with respect to Award ADSs issued pursuant to this Article 8.

 

8.8                                Rights as a Stockholder . A Participant receiving Award ADSs shall have no rights as a stockholder with respect to any Award ADSs grant to him or her under the Plan until the date on which he or she becomes a record owner of the Award ADSs (the “record ownership date”). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date, except as provided in Article 10.

 

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ARTICLE 9

 

Limitations on Transfer; Repurchase of ADSs

 

9.1                                Right of First Refusal . As a condition to receiving ADSs under the Plan, each Participant shall agree that he or she will not sell, assign, transfer, pledge, or otherwise dispose of any ADSs he or she may acquire under the Plan (including by the exercise of an Option granted under Article 5 or Article 6, upon payment or exercise of an SAR under Article 7, by the receipt of Award ADSs under Article 8, or otherwise), or attempt to so, without first offering to sell the ADSs to the Company in accordance with the terms and conditions of this Article 9, and any disposition or attempted disposition of ADSs in violation hereof shall be null and void.

 

9.2                                Voluntary Disposition .

 

9.2.1                                If the record owner of ADSs shall desire to sell, assign, transfer, pledge, or otherwise dispose of any ADS, such owner shall first serve notice (the “Offer to Sell”) to that effect upon the Company, offering to sell such ADSs to the Company in accordance with the terms of this Article 9. The Company shall have the right (but not the obligation) to purchase all or any part of the ADSs so offered within thirty (30) days after receipt by the Company of the Offer to Sell; provided, that if acceptance would result in a default by the Company under any loan covenants applicable to it, the Company shall have one hundred eighty (180) days rather than thirty (30) days within which to exercise its purchase rights. Notwithstanding the provisions of the preceding sentence, with respect to any Offer to Sell that is received by the Company after 5:00 p.m., Tampa time, on September 27, 2002 and before the effective date of the Merger, the period during which the Company may purchase any or all of the ADSs to which the Offer to Sell relates shall run until the later of (A) the first to occur of (i) the effective date of the Merger or (ii) the date that is ten (10) days after the Committee makes a formal determination that the Merger will not take place or (B) the last date the Company is permitted to purchase under the provisions of the preceding sentence.

 

9.2.2                                Subject to the right of the Committee in its sole discretion to discontinue or modify its repurchase program, including solely with respect to a record owner, for any reason or for no reason at any time, Gerdau agrees to repurchase any and all ADSs held by a record owner at the request of the record owner within the time specified in Section above. Subject to change or modification at any time and from time to time by the Committee, the repurchase price shall be equal to the appraised value of the ADSs as of the end of the immediately preceding fiscal year as determined by the Committee based on an appraisal made at the request of the Company (or based on the latest such appraised value if an appraisal has been obtained by the Company as of a date after the end of the immediately preceding fiscal year).

 

9.2.3                                If for any reason the Company shall fail to exercise its right to purchase all of such ADSs offered for sale pursuant to Section 9.2.1, the record owner may offer the ADSs for sale to a third party and complete the sale within 60 (sixty) days after he or she receives notice of Gerdau’s failure to repurchase. Any person acquiring the ADSs from the record owner in such event will be required, among other things, to consent to the imposition of the restrictions on resales included in this Article 9 and to enter into a similar arrangement with the Company.

 

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9.3                                Termination of Employment . If the employment of the record owner with the Company shall terminate for any reason, whether by action of the Company, by death of the employee, the resignation or retirement of the employee, or otherwise, the record owner shall be deemed to have made an Offer to Sell under the provisions of Section 9.2.1 as of the date the employee’s employment terminates. If the termination occurs by reason of the death of the employee, or if the employee should die after otherwise making or being deemed to have made an Offer to Sell, the offer shall be binding upon his estate, and the employee’s duly appointed and acting personal representative shall act in his or her behalf.

 

9.4                                Expiration of Provisions . The provisions of this Article 9 shall be applicable only during the time prior to the Registration Date; and the provisions of this Article 9 shall expire as of the Registration Date.

 

ARTICLE 10

 

Miscellaneous

 

10.1                         Stock Adjustments .

 

10.1.1                         In the event of any increase or decrease in the number of issued ADSs resulting from a stock split or other division or consolidation of ADSs or the payment of a stock dividend (but only on ADSs) or any other increase or decrease in the number of ADSs effected without any receipt of consideration by Gerdau, then, in any such event, the number of ADSs that remain available under the Plan, the number of ADSs covered by each outstanding Option, the exercise price per ADS covered by each outstanding Option, the number of ADSs covered by each outstanding SAR and the price per ADS and the number and any purchase price for any Award ADSs granted but not yet issued, in each case, shall be proportionately and appropriately adjusted for any such increase or decrease.

 

10.1.2                         Subject to any required action by the stockholders, if any change occurs in the ADSs by reason of any recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of ADSs, or of any similar change affecting ADSs, then, in any such event, the number and type of ADSs then covered by each outstanding Option, the purchase price per ADS covered by each outstanding Option, the number of ADSs covered by each outstanding SAR and the exercise price per ADS and the number and any purchase price for any Award ADSs granted but not yet issued, in each case, shall be proportionately and appropriately adjusted for any such change.

 

10.1.3                         In the event of a change in the ADSs as presently constituted that is limited to a change of all of its authorized ADSs with par value into the same number of ADSs with a different par value or without par value, the ADSs resulting from any change shall be deemed to be ADSs within the meaning of the Plan.

 

10.1.4                         To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by, and in the discretion of, the Committee, whose determination in that respect shall be final, binding and conclusive; provided, however, that any Option granted pursuant to Article 5 shall not be adjusted in a manner that causes such

 

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Option to fail to continue to qualify as an incentive stock option within the meaning of Section 422 of the Code.

 

10.1.5                         Except as hereinabove expressly provided in this Section 10.1, an Eligible Employee or a Participant shall have no rights by reason of any division or consolidation of ADSs of stock of any class or the payment of any stock dividend or any other increase or decrease the number of ADSs of stock of any class or by reason of any dissolution, liquidation, merger or consolidation, or spin-off of assets or stock of another corporation; and any issuance by the Company of ADSs of stock of any class, securities convertible into ADSs of stock of any class, or warrants or options for ADSs of stock of any class shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of ADSs, any Option, any SAR or any Award ADSs granted but not yet issued.

 

10.1.6                         The existence of the Plan, or the grant of an Option, SAR or Award ADSs under the Plan, shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate, or to dissolve, to liquidate, to sell, or to transfer all or any part of its business or assets.

 

10.2                         Tax Absorption Payments . The Company may, but is not required to, make a cash payment, either directly to any Participant or on a Participant’s behalf, in an amount that the Committee estimates to be equal (after taking into account any federal and state taxes that the Committee estimates to be applicable to such cash payment) to any additional federal and state income taxes that are imposed upon a Participant as a result of the granting of any Award under the Plan (a “Tax Absorption Payment”). In determining the amount of any Tax Absorption Payment, the Committee may adopt such methods and assumptions as it considers appropriate, and it shall not be required to examine the individual tax liability of any Participant. The decision to make any Tax Absorption Payment shall be made by the Committee at the same time as the grant of the Award to which it relates.

 

10.3                         Amendment of the Plan; Termination . The Board shall have the right to revise, amend or terminate the Plan at any time without notice, provided that no Participant’s existing rights are adversely affected thereby without the consent of such person, and provided further that, without approval of the stockholders of the Company, no such revision or amendment shall (a) increase the total number of ADSs subject to the Plan; (b) decrease the price at which Options may be granted; (c) materially modify the requirements as to eligibility for participation in the Plan; (d) otherwise materially increase the benefits under the Plan; or (e) remove the administration of the Plan from the Board of Directors. In addition, the provisions of Article 5, Article 6, Article 7 and Article 8 may not be amended more frequently than once every six (6) months other than to comply with applicable provisions of the Code or the Employee Retirement Income Security Act of 1974, as amended, or the rules promulgated thereunder. The limitation specified in the preceding sentence is intended to satisfy the requirements of Rule 16b-3(c)(2)(ii)(B) under the Securities Exchange Act of 1934, as currently in effect. The foregoing prohibitions in this Section 10.4 shall not be affected by adjustments in ADSs and purchase price made in accordance with the provisions of Section 9.1.

 

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10.4                         Application of Funds . The proceeds received by Gerdau from the sale of ADSs or the exercise of Options pursuant to the Plan will be used for general corporate purposes.

 

10.5                         No Implied Rights to Employees . The existence of the Plan and the granting of Awards under the Plan shall in no way give any employee the right to continued employment, give any employee the right to receive any additional Awards or any additional compensation under the Plan, or otherwise provide any employee any rights not specifically set forth in the Plan or in any Option, SAR or Award Agreement.

 

10.6                         Withholding . Whenever the Company proposes or is required to issue or transfer Awards under the Plan, the Company shall have the right to require a Participant to remit to the Company an amount sufficient to satisfy any federal, state or local withholding tax liability prior to the delivery of any certificate or certificates for such ADSs. Whenever under the Plan payments are to be made in cash, such payments shall be made net of an amount sufficient to satisfy any federal, state or local withholding tax liability.

 

10.7                         Conditions Precedent to Effectiveness . The Plan shall become effective upon the satisfaction of all the following conditions, with the Effective Date of the Plan after the completion of such adoption procedures being August 30, 2010, regardless of the date that the last of the following conditions is satisfied:

 

10.7.1                         the adoption of the Plan by the Board of Directors; and

 

10.7.2                         the approval of the Plan by the stockholders of the Company within twelve (12) months after its adoption by the Board.

 

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Exhibit 4.5

 

Gerdau S.A.

 

Long-Term Incentive Plan

Effective August 30, 2010

 

 

Plan Objectives

 

The goal of the Plan is to create added value for Gerdau Ameristeel Corporation (the “Company”) shareholders and participating employees.  The Plan is part of the total compensation program, which includes base salary, annual bonus opportunity, benefits, and long-term incentive opportunities.

 

An important objective of the long-term incentive Plan is to ensure that management’s interests are congruent with those of Gerdau S.A.  When the Company prospers, shareholders profit, and participating employees will have an opportunity to accumulate additional awards.  The reasons for installing this Plan are to:

 

·                   share performance rewards with those most responsible,

 

·                   reward management’s leadership and dedication,

 

·                   enhance and encourage personal and corporate growth opportunities,

 

·                   recruit, develop and retain high-calibre talent, and

 

·                   maximize return on capital employed.

 

Plan Concept

 

The Plan is designed to reward employees with additional compensation based on how well the Company achieves its budgeted ROCE for the year and on how well the ADSs perform in the market.  Thus, an incentive is provided to management to increase the profits and performance of the Company.

 

Summary of Plan Terms

 

The following are some of the primary terms of the Plan.  The Plan is discussed in detail in the body of this document.  To the extent of any conflict between the provisions of this Summary and the provisions contained hereafter, the terms and conditions provided hereafter shall control.

 

Company	Gerdau Ameristeel Corporation.
ADS	American Depositary Share of Gerdau S.A. which represents a right to receive a preferred share of Gerdau S.A.
Plan	Gerdau Ameristeel Corporation Long-Term Incentive Plan.

 

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Governance	Human Resources Committee of the Board of Directors of Gerdau S.A. or such other committee or person designated by the Board of Directors of Gerdau S.A. from time to time (the “Committee”).
Documents	This Plan document governs the Plan. Individual Award Agreements (including Option Agreements and SAR Agreements) will be issued to specify the rights of each Participant with respect to his or her Award.
Effective Date	The Plan is effective August 30, 2010.
Plan Year	January 1 to December 31.
Eligibility	Participants in the plan for a year (“Participants”) shall be determined at the discretion of the Committee on a year-by-year basis. Participation is determined by the person’s position in the Company. Persons eligible shall be those who constitute a select group of management or highly compensated employees.
Grant Frequency	Annually.
Awards	Amounts granted to Participants for a Plan Year (subject to vesting ) based on the Company’s achievement with respect to its budgeted ROCE for the Plan Year and other factors (including a Participant’s Participation Level), subject to Committee review and approval. Awards are made as of the end of each Plan Year.
ROCE	ROCE, or Return on Capital Employed, is the percentage determined by dividing Net Operating Profit for a Plan Year by the average Capital Employed for the Plan Year (based on the average of the Capital Employed as of the end of each fiscal quarter during the Plan Year).
Capital Employed	The Company’s total stockholders’ equity (book equity), plus total debt and accrued interest, less cash and deferred financing fees.
Net Operating Profit	The Company’s net operating profits after taxes, determined in accordance with generally accepted accounting principles, which amount shall be equal to the Income from Operations plus the Earnings from Joint Venture lines on the Company’s Statement of Consolidated Income, less an implied 38% tax impact on the foregoing.
Participation Level	The percentage of a Participant’s Base Salary to be awarded to the Participant for achievement equalling the budgeted (target) ROCE for a Plan Year.

 

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Base Salary	Except as provided below, a Participant’s base salary in effect on the last day of a Plan Year annualized. In the event that a Participant is not an active Participant in the Plan on the last day of the Plan Year as a result of a leave of absence or demotion, Base Salary shall mean the annualized base salary in effect on the date the Participant ceased active participation in the Plan.
Change in Participants	Participants may be added or removed from participation in the Plan during a Plan Year with no effect on other Participants. The added or removed Participants may participate on a pro-rata basis in Awards for the year as provided in this Plan.
Form of Payment	Cash, stock appreciation rights (“SARs”), and/or non-qualified stock options (“Options”). The Committee will make the determination of the form of payment at the time an Award is made.
Vesting	Awards generally vest incrementally over a period of four years, beginning on the first anniversary of the date of a cash Award or date of a grant of Options or SARs, as applicable. A Change in Control or termination of employment for normal or early retirement ( as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the Participant is also a participant in such Retirement Plan ), death or disability will result in earlier full or partial vesting for then unvested Awards.
Retirement	If a Participant’s employment is terminated by reason of normal or early retirement ( as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the Participant is also a participant in such Retirement Plan ), unvested Awards vest pro rata based on number of full months of employment during the restricted period for each Award. (The amount to be vested is calculated separately for each previously unvested Award, and equals the portion of the total vesting period worked, divided by the total vesting period.)
Death/Disability	Unvested Awards vest immediately.
Termination	Unvested Awards are forfeited if employment is terminated for reasons other than normal or early retirement ( as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the Participant is also a participant in such Retirement Plan ), death or disability. Termination shall be deemed to occur on the last day of the Participant’s active work and does not include any period of statutory or common law notice or deemed employment. Whether an authorized leave of absence or absence for military or governmental service shall constitute

 

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	termination of employment for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive.
Change in Control	A n event that constitutes a “change in control event” with respect to the Company as defined in Treasury Regulations Section 1.409A-3(i)(5)  Unvested Awards vest in full upon a Change in Control.
Taxes	The amount to be paid with respect to any Cash Award or SAR will be reduced by any required income tax withholding and applicable employment taxes. Upon exercise of an Option, the Participant shall remit to the Company the amount of the required income tax withholding and applicable employment taxes.
Cash Award Valuation	The value of Cash Awards will be tied to changes in the value of the ADSs. A Participant receiving a Cash Award will be credited with Phantom Stock (based on the Fair Market Value of the ADSs as of the date of grant) at the time of grant. The value will be reflected in a bookkeeping Investment Account until such time as the Award is paid to a Participant or is forfeited.
Phantom Stock	Phantom Stock tracks the performance of the ADSs and their Fair Market Value. One share of Phantom Stock is an award of a notional, recordkeeping ADS.
Fair Market Value	For purposes of determining the number of shares of Phantom Stock, SARs and Options awarded under the Plan, the exercise price for any Options and the base price for any SARs awarded under the Plan, the amount of any Cash Award based on the price of the ADSs, or number of shares of Phantom Stock deemed to be purchased with any deemed dividend payable on Phantom Stock, Fair Market Value means the closing price of ADSs as reported on the New York Stock Exchange on the date of the Award or other calculation, as applicable, or if such stock is not traded on such exchange, such value as reported on any stock exchange on which such stock is traded, or if no such trading price is available, then the Fair Market Value shall be determined by the Committee in its sole discretion using a reasonable valuation method taking into consideration all available material information. For purposes of determining the dollar amount payable on a SARs Award based on the date the SARs Award is exercised, or the taxable amount related to the exercise of an Option Award, Fair Market Value means the price of the ADSs as reported on the New York Stock Exchange on the date and time of exercise rather than the closing price for such date (i.e. Fair Market Value shall be determined based upon the “real-time” price of the ADSs, or if such stock is

 

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	not traded on such exchange, such value as reported on any stock exchange on which such stock is traded, or if no such trading price is available, then the Fair Market Value shall be determined by the Committee in its sole discretion using a reasonable valuation method taking into consideration all available material information.
Cash Award Payments	Payment of Cash Awards will be made automatically based on the value of the Participant’s Investment Account at the time of vesting as soon as practicable following the vesting of the Award (and in no event later than 60 days thereafter).
Options	Option Awards will be non-qualified stock options for ADSs that will be issued at an option price equal to the Fair Market Value the ADSs on the date of grant and that will vest in accordance with the same rules as Cash Awards. In general, Options will be exercisable for 10 years after the date of grant except in the case of termination of employment, in which event they must be exercised within 90 days to five years thereafter (depending on the nature of the termination).
SARs	Stock Appreciation Awards (“SARs”) will be based on the change in value of ADSs. They will be issued with a base price equal to the Fair Market Value of ADSs on the date of grant and will vest in accordance with the same rules as Cash Awards. In general, SARs will be exercisable for 10 years after the date of grant except in the case of termination of employment, in which event they must be exercised within 90 days to five years thereafter (depending on the nature of the termination). Payment for exercised, vested SARs will equal the amount by which the Fair Market Value of the ADSs on the date and time of exercise exceeds the Fair Market Value of the ADSs on the date of grant.

 

Plan Design and Administration

 

Plan

 

The Plan contained in this document is the Gerdau S.A. Long-Term Incentive Plan (the “Plan”).

 

Sponsor

 

The sponsor of the Plan is Gerdau S.A.  References in this Plan to financial results of the Company include the results of the Company and its subsidiaries and other entities that are included in the Company’s consolidated financial statements.

 

Governance

 

The Committee will be responsible for the administration and governance of the Plan.  The Committee may delegate authority for administering the program as it deems fit.  In carrying out its responsibilities and duties, the Committee may consult with the Board of Directors of Gerdau

 

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S.A. (the “Board”), Company officers, legal and financial advisors to the Company and others, but nevertheless the Committee shall have the full authority to act, and the Committee’s determinations, interpretations and actions shall be final, conclusive and binding on all parties.

 

The Committee’s responsibilities, to be undertaken in its sole discretion, in administering the Plan include, but are not limited to:

 

At the beginning of the Plan Year, for such Plan Year, determine the specific Company (including subsid iaries and other affiliates) positions to be covered, Participation Level, Award sizes for achievement either below or above budgeted ROCE, and the minimum performance level required for any Award to be made.

 

At the end of the Plan Year, conduct a formal review and make a final determination on any adjustments to the individual Awards.

 

At the end of the Plan Year, determine how the Award is to be paid (whether in cash, SARs, Options or any combination thereof), and, if Options and/or SARs are to be issued, the number of Options and/SARs to be issued.

 

The Committee may interpret the provisions of the Plan during the Plan Year, and resolve discrepancies in this Plan document.

 

The Committee also may amend, modify, or terminate the Plan at any time.  For example, it may change grant frequency, vesting provisions, or treatment on termination of employment for future Awards, or end the Plan altogether.  However, once an Award is granted, no such amendment, modification, or termination, without the consent of the Participant (or his or her beneficiary in the case of death of the Participant) will reduce the right of a Participant (or beneficiary) to a payment or distribution in accordance with the provisions of the Plan and Individual Award Agreements already granted to participants.

 

I t is understood and agreed that additional guidance will be issued by the Treasury Department and the Internal Revenue Service with respect to new Code Section 409A.  Accordingly, without limitation on the foregoing, the Committee reserves the right to amend the Plan, including with respect to outstanding Awards, without the consent of any Participant or any other person in order to conform the Plan provisions to the guidance provided under Code Section 409A, including assuring that the Plan is not subject to Section 409A.

 

Provided however that shareholder approval will be required for the following types of amendments: amendments to the number of ADSs issuable under the Plan, including an increase to a fixed maximum number of ADSs or a change from a fixed maximum number of ADSs to a fixed maximum percentage; any amendment to the Plan that increases the length of the period after an Option Blackout Period or an SAR Blackout Period (each as defined below and collectively a “Blackout Period”) during which Awards may be exercised; any amendment which would result in the exercise price for any Award granted under the Plan being lower than the fair market value of ADSs at the time the Award is granted (other than adjustments pursuant to the

 

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“Equitable Adjustments” provisions of the Plan); any amendment which reduces the exercise price or purchase price of an Award (other than adjustments pursuant to the “Equitable Adjustments” provisions of the Plan); any amendment expanding the categories of Participants which would have the potential of broadening or increasing insider participation; any amendment extending the term of an Award held by an insider beyond its original expiry date except the automatic extension of the term of an Award that would otherwise expire during a Blackout Period (as defined below), as currently set out in the Plan; and amendments required to be approved by shareholders under applicable law (including, without limitation, the rules, regulations and policies of the Toronto Stock Exchange or the New York Stock Exchange).

 

As of January 1, 2008, the Internal Revenue Service has issued final regulations under Code Section 409A and instituted a transition period related to Code Section 409A. The Committee intends to administer the Plan to ensure that the Plan and all Awards under the Plan do not provide for the deferral of compensation, as defined in such final regulations, and thereby remain exempt from regulation under Section 409A.

 

Effective Date

 

The Plan is adopted on August 30, 2010 and shall apply to the Plan Year beginning January 1, 2010.

 

Plan Year

 

In general, the Plan Year is the Company’s fiscal year — January 1 to December 31.

 

Eligibility

 

Participation in the Plan is at the discretion of the Committee and is based on a person’s position within the Company, including subsidiaries and other affiliates.  Persons eligible shall be those who constitute a select group of management or highly compensated employees.

 

Partial Year Participation

 

If the employment of a Participant terminates during a Plan Year for any reason, including normal or early retirement ( as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the Participant is also a participant in such Retirement Plan ), disability or death, the Participant shall not be eligible to receive an Award for such Plan Year.  Termination shall be deemed to occur on the last day of the Participant’s active work and does not include any period of statutory or common law notice or deemed employment.

 

Participants who spend a portion of a Plan Year on an approved unpaid leave of absence or on a military leave of absence, and who remain employed on the last day of a Plan Year, will be entitled to a pro-rata Award based on a fraction, the numerator of which is the time of actual service during the Plan Year, not including the leave of absence, and the denominator of which is 365.

 

If a Participant is demoted to a position not covered by the Plan, the Participant will be entitled to an Award for the Plan Year based on time spent in the position covered by the Plan.  The Award shall be otherwise calculated as provided in the foregoing paragraph related to a leave of absence.

 

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If an employee becomes a Participant during a Plan Year, the Award payable to such Participant for such Plan Year shall be calculated by multiplying the full year Award that would have been payable to him had he participated in the Plan for the full Plan Year by a fraction, the numerator of which is the number of days during the Plan Year in which the Participant participated in the Plan and the denominator of which is 365.

 

Participation in the Plan in More than One Employment Position

 

If as a result of a promotion, demotion or transfer, a Participant is employed in more than one position with the Company that is subject to an Award under the Plan, and consequently the Award target of the Participant is modified during a Plan Year, any Awards granted to the Participant under the Plan shall be pro rated based upon the days employed in each position.  For example, if in 2009 a Participant is employed for 200 days in Position 1 and 165 days in Position 2, the 2009 Award for the Participant will equal the Award amount for Position 1 (Base Salary multiplied by the Award target for Position 1 multiplied by 200/365) plus the Award amount for Position 2 (Base Salary multiplied by the Award target for Position 2 multiplied by 165/365).

 

Award Calculations

 

The Committee shall establish the parameters for Awards for each year.  These parameters shall include establishing the Company (including subsidiaries and other affiliates) positions to be covered for the year, the Participation Level for each position, the minimum performance level required for any Award to be made, and modifications to the Participation Level for achievement either below or above budgeted ROCE.

 

The Participation Level for a Participant is the percentage of the Participant’s Base Salary to be awarded to a Participant if the ROCE achieved by the Company for the Plan Year exactly equals the budgeted (target) ROCE for the year.  For these purposes, Base Salary is a Participant’s base salary in effect on the last day of a Plan Year annualized; provided, however, that in the event that the Participant is not an active Participant in the Plan on the last day of a Plan Year as a result of a leave of absence or demotion, Base Salary shall mean the Participant’s base salary in effect on the date that the Participant leaves active participation in the Plan.

 

ROCE, or Return on Capital Employed, is the percentage determined by dividing Net Operating Profit for a Plan Year by the average Capital Employed for the Plan Year (based on the average of the Capital Employed as of the end of each fiscal quarter during the Plan Year).  For these purposes, Net Operating Profit is the Company’s net operating profits after taxes, determined in accordance with generally accepted accounting principles, which amount shall be equal to the Income from Operations plus the Earnings from Joint Venture lines on the Company’s Statement of Consolidated Income, less an implied 38% tax impact on the foregoing; and Capital Employed Company’s total stockholders’ equity (book equity), plus total debt and accrued interest, less cash and deferred financing fees.

 

The Committee shall also determine how a Participant’s Participation Level is to be adjusted to reflect performance above or below the budgeted (target) ROCE for the Plan Year.  Unless further action is taken by the Committee to modify the following guidelines, which the Committee may do in its sole discretion, a minimum of 50% of the target Award for a Participant

 

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(such target Award being equal to the Participant’s Participation Level for the year times the Participant’s Base Salary for the year) shall be awarded to each Participant if the minimum performance level is achieved; achievement of 80% of the budgeted ROCE shall be required in order for an Award to be made in excess of the minimum, and achievement of 120% or more of the budgeted ROCE shall result in an Award equal to 150% of the target Award for the Participant, which shall be the maximum Award; Awards for performance between 80% and 120% of budgeted ROCE shall be calculated on a straight-line basis.

 

Notwithstanding any other provision of the Plan, the Committee has the right at or following the conclusion of a Plan Year to decrease (including to zero) the Award otherwise awardable to a Participant.

 

Awards

 

Awards are to be made annually and are calculated as of the end of each Plan Year.  Awards shall be made after the conclusion of the Plan Year on the date set forth in the minutes or resolutions of the Committee.  The Award may be made in cash (a “Cash Award”), may be made by the granting of stock appreciation rights (“SARs”), may be made by the granting of non-qualified options for ADSs (“Options”), or may be made in any combination of the foregoing.  The Committee will make this determination at the time the Award is made.

 

Cash Awards

 

Vesting

 

Except as the Committee may otherwise provide at the time of the granting of an Award, Cash Awards generally will vest in 25% increments over four years, beginning on the date of the first anniversary of the date on which the Award is made.  For example, for an Award for performance in the Plan Year ending December 31, 2008 that is made on April 1, 2009, 25% of the Award will vest on April 1, 2010, 25% on April 1, 2011, 25% on April 1, 2012, and the remaining 25% on April 1, 2013.

 

In addition, Awards may vest earlier in whole or in part in the event of a Change in Control or termination of employment for normal or early retirement ( as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the Participant is also a participant in such Retirement Plan ), death or disability, as provided in more detail in this Plan.

 

Payment Schedule

 

Payment of each Cash Award, as adjusted in accordance with the valuation provisions related to the Investment Account set forth below, will be made in cash as soon as practicable, but in no event later than 60 days, after the date that a Cash Award vests, whether vesting is as a result of the normal four-year vesting schedule or as the result of a specified event.

 

Valuation

 

The value of Cash Awards will be tied to changes in the value of ADSs.  A Participant receiving a Cash Award will be credited with Phantom Stock (based on the Fair Market Value of the ADSs as of the date of grant) at the time of grant.  The initial value of the Award and changes therein will be reflected in a bookkeeping Investment Account until such time as the Award is paid to a Participant or is forfeited.

 

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The number of shares of Phantom Stock credited to an Investment Account will equal the Cash Award amount divided by the Fair Market Value of one ADS on the date the Award is made.  The value of an Investment Account will fluctuate with the notional value of the Phantom Stock, which shall directly correlate to the Fair Market Value of the ADSs, and other economic events such as dividends and stock splits, until such time as the full Investment Account balance as of the final vesting date is distributed.  Accordingly, a Participant’s account will be credited with additional Phantom Stock based on any dividend amount paid, divided by the Fair Market Value of ADSs on the date of the dividend.  The Investment Account and Cash Awards may reflect fractional shares of Phantom Stock, as determined by the Committee.

 

On the date a Cash Award vests, the total value of the vested amount in the related Investment Account is taxable and participants are responsible for any applicable taxes.  The Company shall withhold applicable income and employment taxes from any cash payments otherwise due the Participant and remit the net cash payment to the Participant and the withheld taxes to the tax authorities.  Vested amounts remaining after payment of taxes shall be paid out in cash.

 

The value of any Cash Award that is to be distributed will be based on the Fair Market Value of the Phantom Stock and the value of the Investment Account on the date of vesting.

 

Termination of Employment

 

Upon separation from service for any reason other than normal or early retirement ( as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the Participant is also a participant in such Retirement Plan ), death, disability, or a Change in Control, Participants will receive only Cash Award amounts that have vested in the Plan.  Unvested Awards will be forfeited.

 

If a Participant terminates due to death or disability, all unvested Cash Award amounts vest immediately.  For these purposes, “disability” shall have the meaning set forth in Treasury Regulations Section 1.409A-3(i)(4).

 

If a Participant terminates due to normal or early retirement ( as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the Participant is also a participant in such Retirement Plan ), he or she will vest pro rata (based on the number of full months during the restricted period for each Cash Award) in his or her then unvested Cash Award amounts.  This calculation is made separately for each previously unvested portion, and equals the portion of the total vesting period worked, divided by the total vesting period.  For example, assume a Participant retires on May 10, 2009 and has $90,000 remaining credited to his or her Investment Account from an original Cash Award on April 1, 2008 for 2007 performance of $120,000 (assume no Cash Award for 2008 performance and that the other $30,000 vested on April 1, 2009 and has been paid out).  Thus, if the Participant had not retired but had remained in the employment of his or her employer, 25% of the Award or $30,000 (assuming a static stock value), would vest as of each of April 1, 2010, April 1, 2011, and April 1, 2012.  Upon retirement, the Participant will vest in 13/24 of the $30,000 that would have otherwise vested in 2010, 13/36 of the $30,000 that would have otherwise vested in 2011, and 13/48 of the $30,000 that would have otherwise vested in 2012.

 

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Change in Control

 

Upon a Change in Control, all unvested Cash Awards shall vest immediately.  For purposes of the Plan, a Change in Control is an event that constitutes a “change in control event” with respect to the Company as defined in Treasury Regulations Section 1.409A-3(i)(5).

 

Taxes

 

The amount to be paid with respect to any Cash Award will be reduced by any required income tax withholding and applicable employment taxes.

 

Non-Transferable

 

Cash Awards made under the Plan are non-transferable other than by will or under the laws of descent and distribution.

 

Designation of Beneficiary

 

Participants may designate a beneficiary or beneficiaries to receive any Cash Award payments due under the Plan or held in an Investment Account in the event of death while participating in the Plan.  A Designation of Beneficiary form must be completed and filed with the Company, or the Participant’s estate will be deemed to be the beneficiary of any payments otherwise due to the Participant.

 

Options

 

General

 

As indicated previously, an Award may be (in whole or in part) in the form of non-qualified stock options (“Options”) for ADSs.  Gerdau S.A. has reserved 4,795,636 ADSs for issuance upon the exercise of Options.  The number of ADSs reserved for issuance upon the exercise of Options may not be increased except with shareholder approval.  Awards of Options must comply with Company guidelines that (a) 2% of the ADSs are available for issuance to insiders and (b) no more than 2% of the ADSs may be issued to any one person or corporation.

 

Grant of Options

 

The number of ADSs that may be purchased with Options granted to an Optionee will equal (1) the amount of the Option portion of an Award divided by (2) the value of an Option to purchase one ADR at the applicable exercise price, as determined in the sole discretion of the Committee by using the Black-Scholes methodology or another appropriate valuation methodology.  The Committee shall have the sole discretion to interpret the foregoing sentence and calculate the number of Options granted thereunder.  Options will be granted only for whole ADSs, and any fractional amount will be disregarded.  The date the Award is made shall be the date of grant of the Options.  The exercise price of an Option shall not be less than the Fair Market Value of the ADSs at the date of the grant.

 

The person to whom an Option is granted is sometimes referred to in this document as an “Optionee.”

 

Upon the granting of any Option, the Committee shall promptly cause the Optionee to be notified of the fact that such Option was granted.

 

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Award Agreements

 

Any Option granted shall be authorized by the Committee in accordance with the terms of this Plan and shall be evidenced by an Award Agreement, which Agreements shall comply with and be subject to the terms and conditions hereinafter specified.  Each Award Agreement for Options shall state the number of ADSs to which it pertains and the exercise price per ADSs.

 

Term

 

To the extent not previously exercised, Options shall be exercisable, in whole or in part, at any time after they have become vested, but not later than the expiration date of the Option.  The Committee shall determine the expiration date of the Option at the time of the grant of the Option; provided, however, that no Option shall be exercisable after the expiration of ten (10) years from the date it is granted.  Notwithstanding the foregoing, if an Option would otherwise expire during a period imposed by Gerdau S.A. during which the holder is not permitted to exercise an Option in respect of the ADSs (which includes, but is not limited to, a period during which the holder has material undisclosed information) (other than any period during which a regulator has halted trading in the Company’s ADSs) (an “Option Blackout Period”), the term of such Option shall automatically be extended until 10 days after the end of the Option Blackout Period.

 

Vesting

 

Except as the Committee may otherwise provide at the time of the granting of an Award, Options generally will vest in 25% increments over four years, beginning on the date of the first anniversary of the date of the grant of the Options.  For example, for an Option granted for performance in the Plan Year ending December 31, 2008, if the date of the grant of the Option is April 1, 2009, 25% of the Options will vest on April 1, 2010, 25% on April 1, 2011, 25% on April 1, 2012, and the remaining 25% on April 1, 2013.

 

Notwithstanding the foregoing, an Optionee shall become (1) 100% vested in any unexercised Option upon the Optionee’s termination of employment by reason of his or her death or disability, (2) 100% vested in any unexercised Option in the event of a Change in Control, and (3) pro-rata vested in any unexercised Option upon his or her termination of employment due to normal or early retirement (as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the Optionee is a participant in such Retirement Plan), all as provided below.

 

When it deems special circumstances to exist, the Committee in its discretion may accelerate the time at which an Option may be exercised if, under previously established exercise terms, such Option was not immediately exercisable in full, even if the acceleration would permit the Option to be exercised more rapidly than the vesting set forth above, or as otherwise specified by the Committee, would permit.

 

Method of Exercise

 

An Optionee may exercise an Option during such time as may be permitted by the Option and this Plan by providing written or electronic notice to the person or firm, which may be a third-party administrator, designated by the Committee, tendering the purchase price for the ADSs in accordance with the provisions set forth below and complying with any other exercise

 

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requirements contained in the Option or promulgated from time to time by the Committee or its delegate.  Options may be exercised only for full ADSs; fractional ADSs will be disregarded.

 

Method of Payment and Related Taxes

 

Payment of the option price upon the exercise of the Option shall be (a) in Canadian (using the rate of exchange on the day of exercise) or United States dollars in cash or by check, bank draft or money order payable to the order of the Company; (b) in the discretion of and in the manner determined by the Committee, by the delivery of ADSs already owned by the Optionee; (c) by any other legally permissible means acceptable to the Committee at the time of grant of the Option (including cashless exercise as permitted under the Federal Reserve Board’s Regulation T, subject to applicable legal restrictions); or (d) in the discretion of the Committee, through a combination of (a), (b) and (c).  Upon exercise of an Option, the Participant shall pay to the Company the amount of the required income tax withholding and applicable employment taxes in a manner permitted under subsections (a) or (b) in this paragraph, or a combination of (a) and (b).

 

Termination of Employment

 

Upon an Optionee’s separation from service for any reason other than death, disability, or normal or early retirement (as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the Optionee is a participant in such Retirement Plan), all unvested Options will be forfeited.

 

If an Optionee’s employment terminates due to death or disability, all of his or her unvested Options will vest immediately.  For these purposes, “disability” shall have the meaning set forth in Treasury Regulations Section 1.409A-3(i)(4).

 

If an Optionee’s employment terminates due to normal or early retirement ( as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the Optionee is a participant in such Retirement Plan ), his or her unvested Options will vest pro rata (based on the number of full months during the restricted period for each Option).  This calculation is made separately for each unvested Option, and equals the portion of the total vesting period worked, divided by the total vesting period.  For example, assume an Optionee retires on May 10, 2009 and holds 900 unvested Options from an Award of Options on April 1, 2008 for 2007 performance for 1,200 ADSs (assume no Award for 2008 performance and that the other 300 Options vested on April 1, 2009).  Thus, if the Optionee had not retired but had remained in the employment of his or her employer, 25% of the Options originally granted, or 300 ADSs, would vest as of each of April 1, 2010, April 1, 2011, and April 1, 2012.  Upon retirement, the Optionee will vest in 13/24 of the 300 Options that would have otherwise vested in 2010, 13/36 of the 300 Options that would have otherwise vested in 2011, and 13/48 of the 300 Options that would have otherwise vested in 2012.

 

In the event that an Optionee separates from service, subject to the conditions that no Option shall be exercisable after its expiration date, such Optionee shall have the right to exercise the Option at any time within ninety (90) days after such termination of employment to the extent his or her right to exercise the Option was vested at the date of such termination and had not previously been exercised; provided, that such ninety (90) day limit shall be increased to one (1) 

 

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year if such termination was due to the death or disability of the Optionee or if the Optionee dies during the ninety (90) day period after termination and shall be increased to five (5) years if such separation was due to the normal or early retirement (as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the Optionee is a participant in such Retirement Plan) of the Optionee.  In the event of the death of the Optionee, any Option eligible for exercise may be exercised within such extended time limit by the personal representative of the Optionee or by any person or persons who shall have acquired the Option directly from the Optionee by bequest or inheritance.  Whether an authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive.

 

Change in Control

 

A Change in Control is defined for these purposes in the same manner as it is for Cash Awards.  All of an Optionee’s unvested Options at the date of a Change in Control shall become 100% vested at that time.

 

Non-Transferable

 

Unless the Committee provides otherwise at the time of grant, Options granted under the Plan are non-transferable other than by will or under the laws of descent and distribution.  During the lifetime of the Optionee, an Option shall be exercisable only by him or her and shall not be assignable or transferable, and no other person shall acquire any rights therein.

 

Delivery of Certificates

 

As soon as practicable after the exercise of an Option, the Company shall deliver or cause to be delivered to the Optionee (or, if permitted, other holder) exercising the Option a certificate or certificates representing the ADSs purchased upon the exercise.  Such certificates will be registered in the name of the Optionee (or, if permitted, other holder) exercising the Option.

 

Rights as a Shareholder

 

An Optionee shall have no rights as a shareholder with respect to any ADSs covered by his or her Option until the date on which he or she becomes a record owner of the ADSs purchased upon the exercise of the Option (the “record ownership date”).  Except as otherwise expressly provided in this Plan, no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date.

 

Modification, Extension or Renewal of Options

 

Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify outstanding Options granted under the Plan, or accept the surrender of outstanding Options (to the extent not theretofore exercised) and authorize the granting of new Options in substitution therefor (to the extent not theretofore exercised).  The Committee shall not, however, modify any outstanding Option so as to specify a lower option price or accept the surrender of outstanding Options and authorize the granting of new Options in substitution therefor specifying a lower option price, extend the term of any Option beyond ten (10) years (except the extension provided under the Plan for Options that would expire during an Option Blackout Period), or

 

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take any action that would cause the Options to fail to remain exempt from the provisions of Code Section 409A.  Moreover, no modification of an Option shall, without the consent of the Optionee, materially and adversely alter or impair any of the rights or obligations under any Option theretofore granted under the Plan.

 

Listing and Registration of ADSs

 

Each Option shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the ADSs covered thereby upon any securities exchange or under any state or federal laws, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issuance or purchase of ADSs thereunder, such Option may not be exercised unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.  Notwithstanding anything in the Plan to the contrary, if the provisions of this paragraph become operative, and if, as a result thereof, the exercise of an Option is delayed, then and in that event, the term of the Option shall not be affected.

 

Other Provisions

 

The Award Agreements relating to Options granted under the Plan shall contain such other provisions not inconsistent with the specific provisions of this Plan, including, without limitation, restrictions upon the exercise of the Options, as the Committee shall deem advisable, but only to the extent that any such other provision does not cause the Options or this Plan to become subject to the provisions of Code Section 409A.

 

Equitable Adjustments

 

Notwithstanding the foregoing, in the event of a stock split (where the number of outstanding ADSs is increased by at least 25%) or other similar division or consolidation of such securities, or in the event of any recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of securities or any similar change affecting ADSs, the number and type of securities that remain available for Options under the Plan, the number and type of securities covered by each outstanding Option and the exercise price per ADS for each outstanding Option shall be proportionately and appropriately adjusted for any such change.  To the extent that the foregoing adjustments related to stock or securities of Gerdau S.A. occur, such adjustments shall be made by, and in the discretion of, the Committee, whose determination in that respect shall be final, binding and conclusive; provided, however, that no Option shall be adjusted in a manner that causes such Option, or this Plan, to become subject to the requirements of Code Section 409A.

 

Stock Appreciation Rights

 

General

 

As indicated previously, an Award may be (in whole or in part) in the form of stock appreciation rights (“SARs”).

 

Grant of SARs

 

The number of ADSs underlying the SARs granted to a SAR Recipient will equal (1) the amount of the SAR portion of an Award divided by (2) the value of a SAR covering one ADS at the

 

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applicable base price on the date of the grant, as determined in the sole discretion of the Committee by using the Black-Scholes methodology or another appropriate valuation methodology.  The Committee shall have the sole discretion to interpret the foregoing sentence and calculate the number of SARs granted thereunder.  SARs will be granted only for whole ADSs, and any fractional amount will be disregarded.  The date the Award is made shall be the date of grant of the SARs.  The base price of a SAR shall not be less than the Fair Market Value of the ADSs at the date of the grant.

 

The person to whom a SAR is granted is sometimes referred to in this document as a “SAR Recipient.”

 

Upon the granting of any SAR, the Committee shall promptly cause the SAR Recipient to be notified of the fact that such SAR was granted.

 

SAR Certificates

 

Any SAR granted shall be authorized by the Committee in accordance with the terms of this Plan and shall be evidenced by an Award Agreement, which Agreements shall comply with and be subject to the terms and conditions hereinafter specified.  Each Award Agreement for a SAR shall state the number of SARs to which it pertains as well as the exercise price of each SAR.

 

Term

 

To the extent not previously exercised, SARs shall be exercisable, in whole or in part, at any time after they have become vested, but not later than the expiration date of the SAR.  The Committee shall determine the expiration date of the SAR at the time of the grant of the SAR; provided, however, that no SAR shall be exercisable after the expiration of ten (10) years from the date it is granted.  Notwithstanding the foregoing, if a SAR would otherwise expire during a period imposed by Gerdau S.A. during which the holder is not permitted to exercise an SAR in respect of the ADRs (which includes, but is not limited to, any period during which the holder has material undisclosed information) (other than any period during which a regulator has halted trading in the Company’s ADSs) (“a SAR Blackout Period”), the term of such SAR shall automatically be extended until 10 days after the end of the SAR Blackout Period.

 

Vesting

 

Except as the Committee may otherwise provide at the time of the granting of an Award, SARs generally will vest in 25% increments over four years, beginning on the date of the first anniversary of the date of the grant of the SARs.  For example, for SARs granted for performance in the Plan Year ending December 31, 2008, if the date of the grant of the SARs is April 1, 2009, 25% of the SARs will vest on April 1, 2010, 25% on April 1, 2011, 25% on April 1, 2012, and the remaining 25% on April 1, 2013.

 

Notwithstanding the foregoing, a SAR Recipient shall become (1) 100% vested in any unexercised SAR upon the SAR Recipient’s termination of employment by reason of his or her death or disability, (2) 100% vested in any unexercised SAR in the event of a Change in Control, and (3) pro-rata vested in any unexercised SAR upon his or her termination of employment due to normal or early retirement (as such terms are defined under Gerdau Ameristeel US Inc.’s

 

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qualified Retirement Plan, whether or not the SAR Recipient is a participant in such Retirement Plan), all as provided below.

 

When it deems special circumstances to exist, the Committee in its discretion may accelerate the time at which a SAR may be exercised if, under previously established exercise terms, such SAR was not immediately exercisable in full, even if the acceleration would permit the SAR to be exercised more rapidly than the vesting set forth above, or as otherwise specified by the Committee, would permit.

 

Method of Exercise

 

A SAR Recipient may exercise a SAR during such time as may be permitted by the SAR and this Plan by providing written or electronic notice to the person or firm, which may be a third-party administrator, designated by the Committee, and complying with any other exercise requirements contained in the SAR or promulgated from time to time by the Committee or its delegate.  SARs may be exercised only for full ADSs; fractional ADSs will be disregarded.

 

Method of Payment

 

Payment of the amount due the SAR Recipient upon the exercise of a SAR shall be equal to the amount by which the Fair Market Value of the underlying ADSs on the date of exercise exceeds the Fair Market Value of such ADSs on the date of grant.  Payment shall be made in Canadian (using the rate of exchange on the day of exercise) or United States dollars in cash or by check.

 

Termination of Employment

 

Upon a SAR Recipient’s separation from service for any reason other than death, disability, or normal or early retirement (as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the SAR Recipient is a participant in such Retirement Plan), all unvested SARs will be forfeited.

 

If a SAR Recipient’ employment terminates due to death or disability, all of his or her unvested SARs will vest immediately.  For these purposes, “disability” shall have the meaning set forth in Treasury Regulations Section 1.409A-3(i)(4).

 

If SAR Recipient’s employment terminates due to normal or early retirement ( as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the SAR Recipient is a participant in such Retirement Plan ), his or her unvested SARs will vest pro rata (based on the number of full months during the restricted period for each SAR).  This calculation is made separately for each unvested SAR, and equals the portion of the total vesting period worked, divided by the total vesting period.  For example, assume a SAR Recipient retires on May 10, 2009 and holds 900 unvested SARs from an Award on April 1, 2008 for 2007 performance of 1,200 SARs (assume no Award for 2008 performance and that the other 300 SARs vested on April 1, 2009).  Thus, if the SAR Recipient had not retired but had remained in the employment of his or her employer, 25% of the SARs originally granted, or 300 SARs, would vest as of each of April 1, 2010, April 1, 2011, and April 1, 2012.  Upon retirement, the SAR Recipient will vest in 13/24 of the 300 SARs that would have otherwise vested in 2010, 13/36 of the 300 SARs that would have otherwise vested in 2011, and 13/48 of the 300 SARs that would have otherwise vested in 2012.

 

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In the event that a SAR Recipient separates from service, subject to the conditions that no SAR shall be exercisable after its expiration date, such SAR Recipient shall have the right to exercise the SARs at any time within ninety (90) days after such termination of employment to the extent his or her right to exercise the SAR was vested at the date of such termination and had not previously been exercised; provided, that such ninety (90) day limit shall be increased to one (1) year if such termination was due to the death or disability of the SAR Recipient or if the SAR Recipient dies within the ninety (90) day period after termination and shall be increased to five (5) years if such termination was due to the normal or early retirement (as such terms are defined under Gerdau Ameristeel US Inc.’s qualified Retirement Plan, whether or not the SAR Recipient is a participant in such Retirement Plan) of the SAR Recipient.  In the event of the event of death of the SAR Recipient, any SARs eligible for exercise may be exercised within such extended time limit by the personal representative of the SAR Recipient or by any person or persons who shall have acquired the SAR directly from the SAR Recipient by bequest or inheritance.  Whether an authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive.

 

Change in Control

 

A Change in Control is defined for these purposes in the same manner as it is for Cash Awards.  All of a SAR Recipient’s unvested SARs at the date of a Change in Control shall become 100% vested at that time.

 

Taxes

 

Upon exercise of the SAR, the SAR Recipient shall become responsible for any applicable taxes.  The amount to be paid upon the exercise of a SAR will be reduced by any required income tax withholding and applicable employment taxes and the Company shall make a net cash payment to the Participant and remit the withheld taxes to the tax authorities.

 

Non-Transferable

 

Unless the Committee provides otherwise at the time of grant, SARs granted under the Plan are non-transferable other than by will or under the laws of descent and distribution.  During the lifetime of a SAR Recipient, a SAR shall be exercisable only by him or her and shall not be assignable or transferable, and no other person shall acquire any rights therein.

 

No Rights as a Shareholder

 

A SAR Recipient shall have no rights as a shareholder with respect to any SARs.

 

Modification, Extension or Renewal of SARs

 

Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify outstanding SARs granted under the Plan, or accept the surrender of outstanding SARs (to the extent not theretofore exercised) and authorize the granting of new SARs in substitution therefor (to the extent not theretofore exercised).  The Committee shall not, however, modify any outstanding SARs so as to specify a lower base price or a different measure of the amount to be paid, extend the term of any SAR beyond ten (10) years (except the extension period provided under the Plan for SARs that would expire during a SAR Blackout Period), or take any action that would cause the SARS to fail to remain exempt from the provisions of Code Section 409A. 

 

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Moreover, no modification of a SAR shall, without the consent of the SAR Recipient, materially and adversely alter or impair any of the rights or obligations under any SAR theretofore granted under the Plan.

 

Other Provisions

 

The Award Agreement relating to SARs authorized under the Plan shall contain such other provisions not inconsistent with specific provisions of this Plan, including, without limitation, restrictions upon the exercise of the SARs, as the Committee shall deem advisable, but only to the extent that any such other provision does not cause the SARs or this Plan to become subject to the provisions of Code Section 409A.

 

Equitable Adjustments

 

Notwithstanding the foregoing, in the event of a stock split (where the number of outstanding ADSs is increased by at least 25%) or other similar division or consolidation of such securities, or in the event of any recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of securities or any similar change affecting ADSs, the number and type of securities covered by each outstanding SAR and the base price for each outstanding SAR shall be proportionately and appropriately adjusted for any such change.  To the extent that the foregoing adjustments related to stock or securities of Gerdau S.A. occur, such adjustments shall be made by, and in the discretion of, the Committee, whose determination in that respect shall be final, binding and conclusive; provided, however, that no SAR shall be adjusted in a manner that causes such SAR, or this Plan, to become subject to the requirements of Code Section 409A.

 

Employment

 

Nothing in this Plan or any related material shall give a Participant the right to continued employment by the Company or its affiliates, or interfere with or limit in any way the Company’s right to terminate a Participant’s employment, with or without cause, at any time.

 

Limited Liability

 

In administering the Plan, neither the Company nor any officer, director or employee thereof, nor the Committee nor any member thereof, shall be liable for any act or omission performed or omitted, as the case may be, by such person with respect to the Plan, provided that the foregoing shall not relieve any person of liability for action or inaction that constitutes gross negligence, fraud or bad faith.  The Company and its officers, directors and employees, and the Committee and its members, shall be entitled to rely conclusively on all tables, valuations, certificates, opinions and reports that shall be furnished by any actuary, accountant, trustee, insurance company, consultant, counsel or other expert who shall be employed or engaged by the Committee or the Company in good faith.

 

Assets Property of Company

 

All amounts determined under this Plan that have not been paid to Participants shall remain the property of the Company and shall be subject to exclusive use by the Company.  No trust shall be established for such funds, and no person shall have any fiduciary responsibility to Participants or their beneficiaries to hold these funds apart from the general assets of the Company.  All amounts held under this Plan shall remain fully subject to claims of the Company’s creditors until such amounts are distributed to the Participants.

 

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