EXHIBIT 10.J
SIGNATURE VERSION
12 AUGUST
FORBEARANCE AGREEMENT
DOFASCO INC., incorporated under the laws of Canada ("Dofasco"),
GALVATEK ONTARIO CORPORATION, incorporated under the laws of Delaware ("GOC"),
NATIONAL ONTARIO II, LIMITED, incorporated under the laws of Delaware ("NO II"),
DNN GALVANIZING CORPORATION, incorporated under the laws of Ontario ("DNN"),
904153 ONTARIO INC., incorporated under the laws of Ontario ("Dofasco
Participant"), GALVATEK AMERICA CORPORATION, incorporated under the laws of
Delaware ("GAC"), NATIONAL ONTARIO CORPORATION, incorporated under the laws of
Delaware ("NOC"), NKK U.S.A. CORPORATION, incorporated under the laws of
Delaware ("NAC"), NATIONAL STEEL CORPORATION, incorporated under the laws of
Delaware ("NSC"), and NKK CORPORATION, incorporated under the laws of Japan
("NKK"), this August 13, 2002 enter into this Forbearance Agreement.
Recitals
(i) Dofasco, GOC, NO II and DNN have entered into a Limited Partnership
Agreement made as of September 18, 1990 as amended on May 31, 1991
("LPA") with respect to DNN Galvanizing Limited Partnership, an
Ontario limited partnership (the "Limited Partnership").
(ii) Dofasco Participant, GAC, NOC and DNN have entered into a
Shareholders' Agreement made as of September 18, 1990 ("SA").
(iii) NAC, NSC and DNN have entered into an Amended and Restated Toll
Processing Agreement made as of July 26, 1996 ("TPA").
(iv) On March 6, 2002, NSC and NO II filed for Chapter 11 protection under
U.S. bankruptcy laws ("NSC's Chapter 11 Proceeding").
(v) On April 12, 2002, Dofasco gave notice (the "Dofasco Notice") to NO II
of the occurrence of a Financial Default, which notice resulted in the
occurrence of a Matured Default (as such terms are defined in the LPA)
on April 18, 2002.
(vi) On May 3, 2002, GOC delivered a notice (the "GOC Notice") to NO II
affirming and adopting the Dofasco Notice.
(vii) As a result of the occurrence of the Matured Default referred to in
recital (v) above, GAC and GOC are required to purchase the interests
of NOC and NO II in DNN and in the Limited Partnership, on or before
July 16, 2002.
(viii) On July 3, 2002, the valuations required by the LPA and SA were
delivered by BBK, Ltd., a Michigan corporation, as the "valuator"
within the meaning of section 8.5(1) of the LPA.
(ix) On July 9, 2002, Dofasco, NKK and NSC entered into a Letter Agreement
(the "Letter Agreement") which in part extended the date on or before
which the NSC interests referred in recital (vii) must be purchased
from July 16, 2002 to August 16, 2002.
(x) Concurrently with the date of this Forbearance Agreement, GAC and GOC
are purchasing the interests of NOC and NO II in DNN and in the
Limited Partnership; nonetheless, the parties hereto desire to allow
NSC in accordance with the terms hereof to continue to be a party to
the TPA and have the rights and preferences thereunder for a limited
period of time following such purchase.
Accordingly, each of the parties hereto in consideration of the
promises made by the other parties agrees as set forth below. Any term used in
this Forbearance Agreement and not otherwise defined has the meaning assigned to
it in the LPA.
1. Purchase of NSC's Interests.
1.1 The parties acknowledge and agree that the recitals are
true and correct and, without limiting the foregoing, acknowledge and agree that
the Dofasco Notice was properly given and was effective to create a Matured
Default under the LPA, that the Matured Default referenced in recital (v) above
has occurred, and that as matters currently stand GAC and GOC are required to
purchase the interests of NOC and NO II in DNN and the Limited Partnership as
referenced in recital (vii) above.
1.2 For greater certainty, as of the date of the purchase of
the 9.5% Partnership Interest owned by NO II and the 50 Class B Shares owned by
NOC, NO II and NOC shall have no further rights or obligations under the LPA or
the SA (except for those, if any, which were vested or imposed in accordance
with the terms of such agreements prior to such date) and NOC shall cause the
directors nominated by it to resign from the board of DNN as provided for in
Section 6.1 of the SA.
1.3 GOC, GAC, NOC and NO II acknowledge and agree as well as
ratify that, with respect to the purchase of the 9.5% Partnership Interest owned
by NO II and the 50 Class B Shares owned by NOC, they have agreed upon the
appointment of BBK, Ltd. as valuator pursuant to section 8.5(1) of the LPA and
affirm that GAC and GOC retained BBK, Ltd. to deliver a valuation pursuant to
the terms of a retainer letter dated May 20, 2002 (the "BBK Valuation").
Further, such entities as well as Dofasco and DNN respectively acknowledge their
receipt of the BBK Valuation and respectively affirm that they have no
disagreement with it.
1.4 The parties acknowledge and agree that in the event that
the purchase of the 9.5% Partnership Interest and the 50 Class B Shares by GOC
and GAC, respectively, is not consummated on or before August 16, 2002, Dofasco
will be in a position to deliver notice of default pursuant to paragraph (f) of
the definition of Matured Default contained in section 8.1 of the LPA, and that
Dofasco would thereafter have the option, pursuant to section 8.5(1)(b) of the
LPA, to purchase the Partnership Interests of both GOC and NO II (concurrently
with which Dofasco Participant would purchase the shares of DNN owned by each of
GAC and NOC pursuant to Section 5.5 of the SA). The relevant parties agree that
in the event that Dofasco exercises its option to purchase:
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(a) for the purposes of determining the fair market value of
the Partnership Interests and shares of DNN for such purchases, the parties
confirm that Dofasco in accordance with the requirements of section 8.5 of the
LPA, shall obtain a new valuation of the Class B shares as a whole and of the
cumulative Partnership Interest then owned by GOC and NOII in accordance with
the provisions of section 8.1 of the LPA; and
(b) as of the date of the purchases, GAC, GOC, NO II and NOC
shall have no further rights or obligations under the LPA, the SA or the TPA
(except for those, if any, which were vested or imposed in accordance with the
terms of such agreements prior to such date) and both NOC and GAC shall cause
the directors nominated by them to resign from the board of DNN as provided for
in Section 6.2 of the SA.
2. Ability of NSC to Continue to Use the DNN Facility.
2.1 With respect to the Matured Default referenced in recital
(v) above, section 8.5(2) of the LPA shall be hereby deemed to be amended so as
to give effect to section 2.2 hereof.
2.2 A new Section [sic] 14.4 of the TPA is hereby added which
shall read in its entirety as follows:
"14.4 Notwithstanding any other provision in this Article
Fourteen, all rights and obligations of NSC under this
Agreement shall terminate automatically on or after the date
of purchase of the 9.5% Partnership Interest owned by NO II as
defined in, and pursuant to the terms of section 8.5(1) of,
the Partnership Agreement on the earliest to occur of (i) the
date on which (a) NKK Corporation, a Japanese corporation
("NKK"), ceases to have beneficial ownership (within the
meaning of Schedule 13D promulgated under the U.S. Securities
Exchange Act of 1934) of at least a majority of the issued and
outstanding voting capital stock of NSC or (b) NSC sells
substantially all of its assets and those of its subsidiaries,
in either case by reason of an order of the U.S. bankruptcy
court having jurisdiction over NSC, confirming a plan of
reorganization of NSC, (ii) the close of business in New York,
New York on December 31, 2002; and (iii) the date NSC fails to
make any payment which it is required to make pursuant to this
Agreement or pursuant to Section 5.3 of a Forbearance
Agreement entered into by the parties hereto, among others,
dated August 13, 2002, and such failure to pay continues for a
period of five business days (days during which commercial
banks are open for business in Toronto, Ontario and New York,
New York) after notice by Dofasco to NSC and NAC, if not
terminated earlier pursuant to Section 14.2 or Section 14.3
above.
3. Waiver of Certain Rights.
3.1 NSC, NOC and NO II each hereby irrevocably waives any and
all rights under applicable laws of the United States or any other jurisdiction
to seek a determination
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from any court, judicial tribunal or Governmental Body (defined below) that any
of NSC, NOC or NO II can assume, assume and assign, sell or otherwise transfer
any right or delegate any obligation they have under the LPA, SA or TPA.
4. Representations and Warranties.
4.1 Each of Dofasco and Dofasco Participant jointly and
severally makes the representations and warranties set forth in sections 4.3.1
through 4.3.4 below and acknowledges that the other parties are entering into
this Forbearance Agreement in reliance upon such representations and warranties.
4.2 Each of NKK, NAC, GAC and GOC jointly and severally makes
the representations and warranties set forth in sections 4.3.1 through 4.3.4
below and acknowledges that the other parties are entering into this Forbearance
Agreement in reliance upon such representations and warranties.
4.3 Each of NSC, NOC and NO II jointly and severally makes the
representations and warranties set forth in sections 4.3.1, through 4.3.4 below,
(provided that the representations and warranties in sections 4.3.2 and 4.3.4
below shall be qualified by the existence of NSC's Chapter 11 Proceeding) and
acknowledges that the other parties are entering into this Forbearance Agreement
in reliance upon such representations and warranties.
4.3.1 It is a company duly organized and existing and in good
standing under the laws of the jurisdiction of its organization.
4.3.2 The execution and delivery of this Forbearance Agreement
and the transactions contemplated herein, have been duly authorized, and, when
executed and delivered by it, this Forbearance Agreement will constitute valid
and binding obligations of it, enforceable against it in accordance with the
terms hereof, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights and by general
equity principles (regardless of whether considered in a proceeding in equity or
at law), including, without limitation, (i) the possible unavailability of
specific performance, injunctive relief or any other equitable remedy and (ii)
concepts of materiality, reasonableness, good faith and fair dealing.
4.3.3 No Consent of any Governmental Body (as such terms are
defined in section 4.3.5 below), judicial tribunal or any court is required of
it, other than those which have already been obtained, for the consummation of
the transactions contemplated by this Forbearance Agreement.
4.3.4 There are no Actions (as defined in section 4.3.5 below)
in law or in equity pending or, to the knowledge of it, threatened against or
affecting it, in any court, before or by any Governmental Body or before any
arbitrator, and there is no existing default by it under any applicable order,
writ, injunction or decree of any court, judicial tribunal or Governmental Body,
in each case which could reasonably be expected to materially and adversely
affect its ability to achieve the objectives of this Forbearance Agreement.
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4.3.5 "Actions" means claims, suits, proceedings and
investigations, whether at law or in equity, before any court, judicial tribunal
or Governmental Body. "Consent" means a consent, waiver, approval, allowance,
novation, authorization, permit, filing, order, registration or notification.
"Governmental Body" means any national, state, county, municipal or other local
government department, commission, board, bureau, agency, or authority of the
United States, Canada or the Province of Ontario, and any person exercising
executive, legislative, judicial or regulatory functions of or pertaining to any
of the foregoing entities, including, without limitation, all commissions,
boards, bureaus, arbitrators and arbitration panels, and any authority or other
person controlled by any of the foregoing.
5. Covenants of the Parties.
5.1 Each of the parties agrees that at all times it will
cooperate fully with the other parties to endeavor to bring to full fruition the
objectives of this Forbearance Agreement, and at all times regarding the
transactions contemplated by this Forbearance Agreement act in good faith and
take such actions as may be necessary or appropriate to effect fully the
provisions of this Forbearance Agreement, except that no party shall be required
hereby to take any unlawful act, or to act contrary to public policy or to that
party's established institutional policies or guidelines. Without limiting the
generality of the foregoing, each of the parties agrees to use all reasonable
commercial efforts to cause their appropriate respective affiliates in turn to
cause DNN to adopt any and all appropriate resolutions.
5.2 During the period extending from the date on which the NSC
interests in the DNN facility are acquired through the close of business on
December 31, 2002, neither NAC nor Dofasco will allow their respective nominees
to the board of directors of DNN to increase the amount of capital expenditures
not already budgeted by the DNN board of directors or in the annual budget for
the DNN facility which would be expensed during such period without the prior
written consent of NSC, which consent shall not be unreasonably withheld.
5.3 NSC shall pay against receipt of appropriate documentation
therefor 50% of the fees and costs of an outside contractor reasonably
acceptable to NSC retained by DNN, as processor for the Facilities (as defined
in the TPA), for the sole purpose of enabling DNN to perform its obligations to
NSC set forth in a Line Access Agreement dated the date of this Forbearance
Agreement among DNN, NSC, NAC and Dofasco within 30 days of being invoiced for
such fees and costs by DNN. The balance of such fees and costs shall be payable
by NAC and the maximum aggregate amount payable by NSC under this section 5.3
shall be CN$50,000.
6. General.
6.1 Except as expressly provided herein, this Forbearance
Agreement does not amend any provision of any of the LPA, SA or TPA, each of
which shall continue to be of full force and effect as amended.
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6.2 This Forbearance Agreement shall be governed by and
construed in accordance with the laws of the Province of Ontario and the laws of
Canada applicable therein.
6.3 This Forbearance Agreement shall not be modified or
amended except by an instrument in writing signed by the parties.
6.4 If any provision of this Forbearance Agreement, or the
application thereof to any party hereto, is held illegal, unenforceable or
otherwise invalid by any court or government authority, such holding shall not
affect or invalidate any other provision of this Forbearance Agreement and to
this end, the parties agree that the provisions of this Forbearance Agreement
are and shall be severable; provided that, if such holding affects or
invalidates any provision deemed essential by any party to the satisfactory
performance of this Forbearance Agreement, then upon written notice being given
by such party to the other parties (as provided in the LPA, the SA or the TPA,
as appropriate), the parties shall promptly negotiate in good faith to the end
that this Forbearance Agreement may be amended in such manner as may be
necessary to make it fair and equitable to the other parties.
6.5 This Forbearance Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
[SIGNATURE PROVISIONS APPEAR ON FOLLOWING PAGES]
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The parties have executed or caused their duly authorized
officers or attorneys-in-fact to execute this Forbearance Agreement as of the
date set forth above.
DOFASCO INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chair and Chief Executive Officer
By: /s/ Xxxx X. X. Xxxxxxx
--------------------------------------------
Name: Xxxx X. X. Xxxxxxx
Title: Vice President
Corporate Administration
GALVATEK ONTARIO CORPORATION
By: /s/ Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
NATIONAL ONTARIO II, LIMITED
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: VP & CFO
DNN GALVANIZING CORPORATION
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Director
904153 ONTARIO INC.
By: /s/ Xxxxxxx X. x'Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. x'Xxxxxxx
Title: President
By: /s/ Xxxxx Xxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxx
Title: Secretary
GALVATEK AMERICA CORPORATION
By: /s/ Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
NATIONAL ONTARIO CORPORATION
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxx
Title:VP & CFO
NKK U.S.A. CORPORATION
By: /s/ Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
NATIONAL STEEL CORPORATION
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Sr. VP & CFO
NKK CORPORATION
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Director, American & Europe Section
International Business Planning Dept.
